§ 508C.3 — Scope

Iowa § 508C.3

• Jurisdiction: Iowa
• Title XIII: COMMERCE
• Ch. 508C: IOWA LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION

Text

1. This chapter shall provide coverage under the policies and contracts specified in
subsection 2 to all of the following:
a. Persons, regardless of where they reside, except for nonresident certificate holders
under group policies or contracts, who are the beneficiaries, assignees, or payees, including
health care providers rendering services covered under health insurance policies, contracts,
or certificates, of the persons covered under paragraph “b”.
b. Persons who are owners of or certificate holders or enrollees under the policies or
contracts specified in subsection 2, other than unallocated annuity contracts and structured
settlement annuities, or are enrollees, insureds, or annuitants under the policies or contracts,
and who are either of the following:
(1) Residents of this state.
(2) Nonresidents of this state if all of the following conditions are met:
(a) The state in which the person resides has an association similar to the association
created in this chapter.
(b) The person is not eligible for coverage by an association described in subparagraph
division (a) in any other state due to the fact that the insurer or the health maintenance
organization was not licensed in the state at the time specified in that state’s guaranty
association law.
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(c) The member insurer that issued the policy or contract is domiciled in this state.
c. Persons who are the owners of unallocated annuity contracts if the contracts are issued
to or in connection with a specific benefit plan whose plan sponsor has its principal place of
business in this state.
d. (1) A payee, or the beneficiary of a payee if the payee is deceased, of a structured
settlement annuity, if the payee or beneficiary of the structured settlement annuity is either
of the following:
(a) The payee or beneficiary of the structured settlement annuity is a resident of this state
regardless of where the owner of the structured settlement annuity resides.
(b) The payee or beneficiary of the structured settlement annuity is not a resident of this
state and either of the following conditions is met:
(i) The owner of the structured settlement annuity is a resident of this state.
(ii) The owner of the structured settlement annuity is not a resident of this state and both
of the following are applicable:
(A) The insurer that issued the structured settlement annuity is domiciled in this state.
(B) The state in which the owner of the structured settlement annuity resides has an
association similar to the association created by this chapter.
(2) Subparagraph(1), subparagraphdivision(b)shallnotbeapplicableifeitherthepayee
or beneficiary of the payee if the payee is deceased, or the owner of the structured settlement
annuity is eligible for coverage by the association of the state in which the payee, beneficiary,
or owner resides.
e. A person who is a resident of this state and, only in special circumstances, to a
nonresident. In order to avoid duplicate coverage, if a person who would otherwise receive
coverage under this chapter is provided coverage under the laws of any other state, that
person shall not be provided coverage under this chapter. In determining the application of
the provisions of this paragraph in a situation where a person could be provided coverage
by the association of more than one state, whether as an owner, payee, enrollee, beneficiary,
or assignee, this chapter shall be construed in conjunction with other state laws to result in
coverage by the association of only one state.
2. This chapter shall provide coverage to the persons specified in subsection 1 under
policies or contracts of direct life insurance, health insurance, or annuities, supplemental
contracts, certificates under group policies or contracts, and unallocated annuity contracts
issued by member insurers. For purposes of this chapter, health insurance shall include
without limitation health maintenance organization subscriber contracts and certificates,
long-term care insurance, and disability insurance policies.
3. Coverage under this chapter shall not be provided to any of the following:
a. A person who is a payee, or a beneficiary of a payee if the payee is deceased, of a
contract owner who is a resident of this state, if the payee or the beneficiary of the payee is
provided any coverage by the association of another state.
b. A person who is covered pursuant to subsection 1, paragraph “c”, if that person is
provided any coverage by the association of another state.
c. A person who acquires rights to receive payments through a structured settlement
factoring transaction as defined in 26 U.S.C. §5891(c)(3)(A), regardless of when the
transaction occurred.
4. This chapter does not apply to any of the following:
a. Except for a portion of a policy or contract, including a rider, that provides coverage
for long-term care or any health insurance benefits, any portion of a policy or contract to
the extent that the rate of interest on which it is based or the interest rate, crediting rate, or
similarfactordeterminedbyuseofanindexorotherexternalreferencestatedinthepolicyor
contract and employed in calculating returns or changes in value, averaged over the period
of four years prior to the date on which the association becomes obligated with respect to
the policy or contract, exceeds a rate of interest determined by subtracting two percentage
points from Moody’s corporate bond yield average for the same four-year period or over such
lesser period if the policy or contract was issued less than four years before the association
became obligated; and on or after the date on which the association becomes obligated with
3 IOWA LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION, §508C.3
respect to the policy or contract, exceeds the rate of interest determined by subtracting three
percentage points from Moody’s corporate bond yield average as most recently available.
b. That portion or part of a policy or contract not guaranteed by the member insurer, or
under which the risk is borne by the policy or contract holder.
c. A policy or contract or part of a policy or contract assumed by the impaired or insolvent
insurer under a contract of reinsurance, other than reinsurance for which assumption
certificates have been issued.
d. An unallocated annuity contract issued to or in connection with an employee benefit
plan protected under the federal pension benefit guaranty corporation, regardless of whether
thefederalpensionbenefitguarantycorporationhasyetbecomeliabletomakeanypayments
with respect to the benefit plan.
e. Aportionofanunallocatedannuitycontractwhichisnotissuedtoorinconnectionwith
a specific employee, union, or association of natural persons, or any portion of a financial
guarantee.
f. A policy or contract issued by a company which is licensed under chapter 509A, 512A,
512B, 514, 518, 518A, or 520, or under section 514B.33.
g. Except for a policy issued pursuant to section 515.48, subsection 5, paragraph “a”, a
policy or contract issued by a company which is licensed under chapter 515.
h. A charitable gift annuity under chapter 508F.
i. An annuity contract issued to a government lottery.
j. A funding agreement under section 508.31A.
k. An obligation that does not arise under the express written terms of a covered policy
or contract issued by the member insurer to the enrollee, certificate holder, policy owner, or
contract owner including without limitation all of the following:
(1) A claim based on marketing materials.
(2) A claim based on side letters, riders, or other documents that were issued by the
member insurer without meeting applicable policy or contract form filing or approval
requirements.
(3) A claim based on misrepresentation of or misrepresentation regarding policy or
contract benefits.
(4) An extra-contractual claim.
(5) A claim for penalties, consequential damages, or incidental damages.
l. A contractual agreement that establishes a member insurer’s obligations to provide
a book value accounting guaranty for defined contribution benefit plan participants by
reference to a portfolio of assets that is owned by the benefit plan or its trustee, which in
each case is not an affiliate of the member insurer.
m. A portion of a covered policy to the extent it provides for interest or other changes
in value to be determined by the use of an index or other external reference stated in the
covered policy, but which have not been credited to the covered policy, or as to which the
covered policy owner’s rights are subject to forfeiture, as of the date the member insurer
becomes an impaired or insolvent insurer under this chapter, whichever is earlier. If a
covered policy’s interest or changes in value are credited less frequently than annually,
then for purposes of determining the values that have been credited and are not subject
to forfeiture under the covered policy, the interest or change in value determined by using
the procedures defined in the covered policy will be credited as if the contractual date of
crediting interest or changing values was the date of impairment or insolvency, whichever is
earlier, and the crediting interest or changing value shall not be subject to forfeiture.
n. A policy or contract issued in this state by a member insurer at a time the insurer was
not licensed or did not have a certificate of authority to issue the policy or contract in this
state.
o. Aportionofapolicyorcontractissuedtoaplanorprogramofanemployer, association,
or other person to provide life, health, or annuity benefits to employees, members, or others,
to the extent that the plan or program is self-funded or uninsured, including but not limited
to benefits payable by an employer, association, or other person under any of the following:
(1) A multiple employer welfare arrangement as defined in section 3 of the federal
Employee Retirement Income Security Act of 1974, 29 U.S.C. §1002, paragraph 40.
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(2) A minimum premium group insurance plan.
(3) A stop-loss group insurance plan.
(4) An administrative services-only contract.
p. A portion of a policy or contract to the extent that it provides for any of the following:
(1) Dividends or experience rating credits.
(2) Voting rights.
(3) Payment of any fees or allowances to any person, including the policy or contract
owner, in connection with service to or administration of the policy or contract.
q. Aportionofapolicyorcontracttotheextentthattheassessmentsauthorizedbysection