40-2257. Individual policies; renewal or continuation of coverage; exceptions; discontinuance of policy; definitions.
40-2257
40-2257. Individual policies; renewal orcontinuation of coverage; exceptions; discontinuance of policy;definitions.(a) Except as provided in this section, an accident andsickness insurer which offers individual policies providing hospital, medicalor surgical expense benefits shall renew or continue in force such coverage atthe option of the individual.
(b) An accident and sickness insurer may nonrenew or discontinue anindividual policy providing hospital, medical or surgical expense benefitsbased only on one or more of the following:
(1) If the individual has failed to pay premiums or contributions inaccordance with the terms of the health insurance coverage or the accident andsickness insurer has not received timely premium payments;
(2) if the individual has performed an act or practice that constitutesfraud or made an intentional misrepresentation of material fact under the termsof the coverage;
(3) if the accident and sickness insurer is ceasing to offer individualpolicies providing hospital, medical or surgical expense benefits in accordancewith subsection (c);
(4) in the case of accident and sickness insurer which offers individualpolicies providing hospital, medical or surgical expense benefits throughenrollment area, if the individual no longer resides, lives orworks in the medical service enrollment area (or in an area for which theaccident and sickness insurer is authorized to do business) but only if suchcoverage is terminated under this paragraph uniformly without regard to anyhealth status-related factor of covered individuals; or
(5) if the case of a policy providing hospital, medical or surgical expensebenefits that is made available to individuals only through one or more bonafide associations, the membership of the individual in the association (on thebasis of which the coverage is provided) ceases but only if such coverage isterminated under this paragraph uniformly without regard to any healthstatus-related factor of covered individuals.
(c) If the accident and sickness insurer decides to discontinue offering aparticular individual policy providing hospital, medical or surgical expensebenefits such policy may only be discontinue if:
(1) The accident and sickness insurer provides notice to each coveredindividual who is provided such policy providing hospital, medical or surgicalexpense benefits at least 90 days prior to the date of the discontinuation ofsuch coverage;
(2) the accident and sickness insurer offers to each covered individual whois provided such policy providing hospital, medical or surgical expensebenefits the option to purchase any other individual policy providing hospital,medical or surgical expense benefits which is being sold by the accident andsickness insurer; and
(3) in exercising the option to discontinue coverage and in offering theoption of coverage under subsection (b), the accident and sickness insurer actsuniformly without regard to any health status-related factor of enrolledindividuals or individuals who may become eligible for coverage under thepolicy.
(d) Subject to subsection (c), if the accident and sickness insurer electsto discontinue offering any individual policies providing hospital, medical orsurgical expense benefits in this state, such insurance coverage may bediscontinued only if:
(1) The accident and sickness insurer provides notice to the commissionerand to each individual policyholder of such discontinuation at least 180 daysprior to the date of the expiration of such coverage; and
(2) the accident and sickness insurer is prohibited from the issuance of anyindividual policies providing hospital, medical or surgical expense benefits inthe state during a five-year period beginning on the date of thediscontinuation of the last individual policy providing hospital, medical orsurgical expense benefits which is not renewed.
(e) An accident and sickness insurer may modify the terms and conditions ofthe individual policy providing hospital, medical or surgical expense benefitsso long as such modification is consistent with other provisions of theinsurance code and is effective on a uniform basis among all individuals whoare covered by such policy.
(f) In applying this section in the case of individual policies providinghospital, medical or surgical expense benefits that are made available byaccident and sickness insurer to individuals only through one or moreassociations, a reference to an "individual" is deemed to include a referenceto such an association of which the individual is a member.
(g) As used in this section, "health status-related factor" means: (1) Aphysical or mental illness medical condition; (2) claims experience; (3)receipt of health care; (4) medical history; (5) genetic information; (6)evidence of insurability including conditions arising out of acts of domesticviolence; and (7) disability.
(h) As used in this section, "policies providing hospital, medical orsurgical expense benefits" does not include short term, limited durationpolicies of insurance.
(i) The commissioner is hereby authorized to adopt such rules andregulations as may be necessary to carry out the provisions of this section.
History: L. 1997, ch. 190, § 12; July 1.