Current through August 26, 2024
(1) PURPOSE.
This section is intended to promote the fair and equitable treatment of group
policyholders, insurers, employees and dependents, and the general public by
setting out procedures to be followed when a group life or disability insurance
policy is terminated or replaced, and to interpret ss.
632.79 and
632.897,
Stats.
(2) SCOPE. This section
shall apply to all group life and group disability policies covering employees
or employees and dependents, issued by insurers providing insurance as defined
in s.
Ins 6.75(1) (a) or
(c) or (2) (c). It shall apply to blanket
policies only if they provide 24-hour coverage for both injury and sickness;
any blanket policy, covering any type of group, which provides for renewal
shall be subject to subs. (4) and (5); any blanket policy covering students of
a college or university, regardless of whether it provides for renewal, shall
be subject to subs. (6) and (7). Subsection (4) (a) shall apply only to group
policies as defined in sub. (3) (c) 2. Subsections (6) and (7) do not apply to
excess or stop-loss insurance purchased under s.
120.13(2) (c), Stats., by a county or school district
that self-insures employee health benefits.
(3) DEFINITIONS.
(a) "Blanket policy" has the meaning in s.
600.03(4),
Stats.
(b) "Employee" means an
employee of an employer or a member of a union or association or a student of a
college or university.
(c) "Group
policy":
1. Means a policy or contract
covering employees issued by an insurer to an employer, labor union,
association or trust fund or, in the case of a blanket policy, a college or
university, or a group type plan, except that;
2. In sub. (4) (a), means only a policy or
contract issued by an insurer or a s.
185.981,
Stats., co-operative or a group type plan issued by a ch. 613, Stats.,
corporation, providing hospital, surgical or medical expense coverage to or on
behalf of an employer.
(d) A "group policy providing medical expense
coverage" does not include a policy providing coverage for dental, vision care,
hearing care or prescription drug expense coverage only.
(e) "Group policyholder" means an employer,
labor union, association, trust fund or other entity responsible for making
group policy premium payments to an insurer.
(f) "Group type plan" means an insurance plan
using individual policies which meets the following conditions:
1. Coverage is provided to classes of
employees defined in terms of conditions pertaining to employment or
membership.
2. The coverage is not
available to the general public and can be obtained and maintained only because
of the covered person's connection with the particular organization or
group.
3. Premiums are paid by the
group policyholder to the insurer on behalf of covered employees, and
4. An employer, union, association or trust
fund sponsors or authorizes the plan.
(g) "Individual policy" means an individual
or family policy or subscriber contract issued by an insurer.
(h) "Insurer" means an insurance company
subject to chs. 631 and 632, Stats., or a service insurance corporation subject
to ch. 613, Stats.
(i) "Premium"
means a policy premium or a subscriber contract subscription fee.
(j) "Pre-existing condition" means a disease
or physical condition including pregnancy which manifested itself prior to the
effective date of coverage through medical diagnosis or treatment or the
existence of symptoms which would cause an ordinarily prudent person to seek
diagnosis or treatment.
(k)
"Validly covered" means that the individual involved was covered and met all
policy requirements regarding eligibility for coverage, as opposed to an
individual who was covered without having met all such requirements.
(4) EFFECTIVE DATE OF TERMINATION
FOR NON-PAYMENT OF PREMIUM; NOTICE OF TERMINATION; LIABILITY OF INSURER.
(a) A group policy subject to s.
632.79,
Stats., as defined in sub. (3) (c) 2. may not be terminated by the insurer
unless it has provided the termination notices required by s.
632.79(2),
Stats., except as provided in s.
632.79(5),
Stats. The insurer shall be liable for valid claims for covered losses as
provided in s.
632.79(3),
Stats.
(b) Under a group policy
other than one subject to s.
632.79,
Stats., the insurer shall be liable for valid claims for covered losses
incurred prior to the end of the grace period provided in the policy. This
provision does not prevent a group policyholder from giving written notice of
termination of the group policy, prior to the termination date, in accordance
with the group policy terms, to reduce or eliminate the grace period.
(c)
1. The
insurer shall also be liable for valid claims for covered losses beginning
prior to the effective date of written notice of termination to the group
policyholder if, after the end of the grace period provided in the policy:
a. It continues to recognize claims
subsequently incurred for which recognition is not required by an applicable
extension of coverage provision, or
b. It fails to request that the group
policyholder notify covered employees of the termination and, except for life
and disability income coverages, describe their rights, if any, upon
termination.
2. The
effective date of termination shall not be prior to midnight at the end of the
third scheduled work day after the date on which the notice is
delivered.
3. This paragraph shall
not apply if a group policy is terminated and immediately replaced by another
group policy providing similar coverage.
(5) CONTENT OF NOTICE OF TERMINATION.
(a) A notice of termination given by an
insurer to a group policyholder in accordance with sub. (4) (a) or (c) shall
include:
1. The date as of which the group
policy will be terminated,
2. A
request to notify covered employees of the termination and, except for life and
disability income coverages, the rights, if any, available to them under the
group policy,
3. A statement that,
unless otherwise provided in the group policy, the insurer will not be liable
for claims for losses incurred after the termination date, and
4. If the group policy involves employee
contributions, a statement that, if the group policyholder continues to collect
contributions for the coverage beyond the date of termination, the group
policyholder may be held solely liable for the benefits with respect to which
the contributions have been collected.
(b) At the same time, the insurer shall
furnish to the group policyholder for distribution to covered employees a
supply of a notice form indicating the termination, its effective date and the
rights, if any, available to them upon termination, except that, for life and
disability income coverages, the notice need only urge the covered employees to
refer to their certificate or individual policy to determine what rights, if
any, are available upon termination.
(6) EXTENSION OF COVERAGE.
(a) A group policy shall, if a covered
employee or dependent is totally disabled at the date of termination of the
policy, provide an extension of coverage for the individual, beginning at the
date of termination of the group policy and continuing during the period of
total disability as provided in this subsection.
(b) Under a group life policy 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 termination of the group policy
shall not operate to terminate the extension.
(c) Under a group policy providing benefits
for loss of time from work or a specific indemnity during hospital confinement,
termination of the group policy during a period of total disability or
confinement shall have no effect on benefits payable for the condition or
conditions causing continuing total disability or continuing confinement. The
extension of coverage provision for loss of time benefits may provide for the
integration of social security disability or retirement benefit increases which
occur after the date of termination of the group policy only if integration of
these benefit increases is also applicable prior to termination of the group
policy.
(d) Under a group policy
providing hospital, surgical or medical expense coverages, the extension of
coverage shall be at least 12 months under major medical or comprehensive
medical coverage and at least 90 days under other hospital, surgical or medical
expense coverage, subject to the following:
1.
Coverage need not be extended beyond the date on which:
a. Total disability terminates,
b. The benefit period specified in the policy
ends,
c. The maximum benefit is
paid or
d. Coverage for the
condition or conditions causing total disability is provided under similar
coverage, other than temporary coverage under sub. (7m) (b) 2., under the
succeeding insurer's group policy.
2. Extended coverage need not cover dental or
uncomplicated pregnancy expenses or a condition other than the condition or
conditions causing total disability.
3. The extension of coverage is not required
where the succeeding insurer agrees, or the prior and succeeding insurers
agree, to provide coverage, for individuals who are totally disabled at the
date of termination of the group policy, which is not less favorable to them
than would otherwise be required by this paragraph.
4. After the termination of extended basic
hospital, surgical or medical expense coverage, extended major medical expense
coverage shall cover expenses eligible under the major medical expense coverage
which are normally covered under the basic coverage, subject to subd.
1.
5. A policy providing hospital,
surgical or medical expense coverage which covers only expenses in excess of
those covered by basic hospital-surgical-medical expense coverage and major
medical coverage or comprehensive medical coverage, issued to the same group
policyholder, need not provide extended coverage if the underlying coverage
provides extended coverage.
Note: The effect of sub. (6) (d), with respect to
pregnancy expense coverage, is to require that extended coverage provide
benefits only for pregnancy complication expenses, to be consistent with s.
Ins 6.55(4) (b) 5. However, employers and
insurers may wish to consider the provisions of federal public law 95-555
enacted October 31, 1978, which requires that employers subject to it provide
benefits for pregnancy, including extended benefits, under employee benefit
programs to the same extent that benefits are provided for injury and sickness.
Also, the equal rights division of the Wisconsin department of workforce
development has taken the position, based on Wisconsin case law, that the
Wisconsin fair employment act, ss.
111.31 to
111.37,
Stats., applies to temporary disability resulting from pregnancy and requires
that employee benefit programs provide loss of time benefits for temporary
disability resulting from pregnancy, including extended benefits, to the same
extent that such benefits are provided for injury and sickness.
(e) A provision for
extending coverage shall be contained in each group policy as well as in
corresponding certificates.
(f) The
benefits payable during any period of extended coverage shall be subject to the
group policy's regular coverage limits. The extended coverage shall terminate
at the end of a normal benefit period or when the maximum benefit amount has
been paid.
(7) LIABILITY
OF PRIOR INSURER. The prior insurer shall be liable only to the extent of its
extensions of coverage. Its liability shall be the same whether the group
policyholder secures replacement coverage from another insurer, self-insures or
declines to provide the group with insurance.
(7m) LIABILITY OF SUCCEEDING INSURER. The
succeeding insurer shall be liable as provided in this paragraph where its
group policy replaces another providing similar coverage:
(a)
Regular coverage.
Regular coverage shall be provided under the succeeding insurer's group policy
to:
1. Each employee who is eligible for
coverage in accordance with the succeeding insurer's group policy provisions
regarding classes eligible and actively at work requirements.
2. Each dependent who is eligible for
coverage in accordance with the succeeding insurer's group policy provisions
regarding classes eligible and non-hospital confinement requirements.
3. A dependent of a disabled employee if the
dependent is eligible for coverage in accordance with the succeeding insurer's
group policy provisions regarding classes eligible and non-hospital confinement
requirements and if the disabled employee is covered under the succeeding
insurer's group policy, and
4. Each
terminated insured who has elected to continue coverage under s.
632.897(3),
Stats.
(b)
Temporary coverage. Each employee or dependent not covered
under the succeeding insurer's group policy in accordance with par. (a) shall
be provided with temporary coverage by the succeeding insurer, for losses
occurring or beginning under the replacement policy, subject to:
1. Temporary coverage need be provided only
if the individual was validly covered under the prior group policy on the date
of its termination and meets the requirements necessary to be a member of an
eligible class under the succeeding insurer's group policy, other than
requirements for working full time, part time or a stated number of
hours.
2. The coverage to be
provided by the succeeding insurer shall be the coverage of the prior group
policy reduced by any benefits payable under such policy. The benefits of the
succeeding insurer's group policy shall be determined after the benefits of the
prior group policy have been determined.
3. Temporary coverage shall be provided by
the succeeding insurer until the first of:
a.
The date the individual becomes eligible under the coverage and under the
circumstances described in par. (a).
b. For each type of coverage, the date the
individual's coverage would terminate in accordance with the succeeding
insurer's group policy provisions regarding individual termination of coverage,
such as at termination of employment or when ceasing to be an eligible
dependent.
c. For an individual who
is totally disabled on the effective date of the succeeding group policy, under
a type of coverage for which sub. (6) requires an extension of coverage, the
end of any period of extended coverage required of the prior insurer or, if the
prior insurer's group policy was not subject to sub. (6), would have been
required of the prior insurer had its group policy been so subject.
(c)
Pre-existing conditions. If the succeeding insurer's group
policy contains a pre-existing condition limitation, the coverage for these
conditions of persons becoming covered by the succeeding group policy under
par. (a) or (b), during the period the limitation applies under that group
policy, shall be the lesser of:
1. The
coverage of the succeeding group policy determined without application of the
limitation and
2. The coverage of
the prior group policy determined after application of any such limitation
contained in the policy.
(d)
Deductibles and waiting
periods. The succeeding insurer, in applying any deductibles or
waiting periods contained in its group policy, including pre-existing condition
waiting periods, shall give credit for the satisfaction or partial satisfaction
of the same or similar provisions under the prior group policy, to the extent
that the prior and succeeding group policies provide similar coverage.
Deductible provision credit shall be given for the same or overlapping benefit
periods for expenses incurred and applied against the deductible provisions of
the prior group policy during the 90 days preceding the effective date of the
succeeding group policy, but only to the extent that these expenses are
recognized under the succeeding group policy and are subject to a similar
deductible provision.
(e)
Determination of prior insurer's coverage. Where a
determination of the prior insurer's coverage is required by the succeeding
insurer, the prior insurer, at the succeeding insurer's request, shall furnish
a statement of the coverage available and a copy of pertinent group policy
provisions to permit the succeeding insurer to verify the coverage statement or
make its own coverage determination. Coverage of the prior group policy shall
be determined in accordance with the definitions, conditions and covered
expense provisions of that group policy rather than those of the succeeding
group policy. The coverage determination shall be made as if coverage had not
been replaced by the succeeding insurer.
(8) MORE FAVORABLE PROVISIONS PERMITTED. This
section sets out minimum requirements. It does not prohibit a group
policyholder and an insurer from agreeing to policy provisions which are more
favorable to insured persons.
(9)
EFFECTIVE DATE. As provided in s.
227.22,
Stats., this section shall take effect on the first day of the month following
its publication.
