§ 27-8-8-2.3 — Coverage provided; exclusions; limitations

Indiana § 27-8-8-2.3

• Jurisdiction: Indiana
• Title 27: INSURANCE
• Art. 8: LIFE, ACCIDENT, AND HEALTH
• Ch. 8: Indiana Life and Health Insurance Guaranty Association

Text

3. (a) Except as otherwise excluded or limited
by this chapter, this chapter provides coverage for policies and
contracts specified in subsection (d) as follows:
(1) To a person, other than a certificate holder or enrollee under
a group policy or a group contract, that, regardless of where the
person resides, is the health care provider, beneficiary, nonowner
assignee, or payee of a person covered under subdivision (2).
(2) To a person that is a certificate holder under a group policy or
group contract, and to a person that is the owner of a nongroup
policy or nongroup contract that is not an unallocated annuity
contract or a structured settlement annuity, and that:
(A) is a resident; or
(B) is not a resident if all the following conditions are satisfied:
(i) The member insurer that issued the policy or contract is
domiciled in Indiana.
(ii) The state in which the person resides has an association
similar to the association.
(iii) The nonresident is not eligible for coverage by the other
association referred to in item (ii) solely because the member
insurer was not licensed in the state of residence at the time
specified in the guaranty association law of the state of
residence.
(3) For an unallocated annuity contract, subdivisions (1) and (2)
do not apply, and this chapter provides coverage to the following:
(A) A person that is the owner of the unallocated annuity
contract, if the contract was issued to or in connection with a
benefit plan whose plan sponsor is a resident or, if the plan
sponsor is not a resident, if all the following conditions are
satisfied:
(i) The member insurer that issued the unallocated annuity
contract is domiciled in Indiana.
(ii) The state in which the plan sponsor resides has an
association similar to the association.
(iii) The other association referred to in item (ii) does not
provide coverage of the unallocated annuity contract solely
because the member insurer was not licensed in the state of
residence at the time specified in the guaranty association law
of the state of residence.
(B) A person that is the owner of an unallocated annuity
contract issued to or in connection with a government lottery,
if the owner is a resident or, if the owner is not a resident, if all
the following conditions are satisfied:
(i) The member insurer that issued the unallocated annuity
contract is domiciled in Indiana.
(ii) The state in which the owner resides has an association
similar to the association.
(iii) The other association referred to in item (ii) does not
provide coverage of the unallocated annuity contract solely
because the member insurer was not licensed in the state of
residence at the time specified in the guaranty association law
of the state of residence.
(4) For a structured settlement annuity, subdivisions (1) and (2)
do not apply, and this chapter provides coverage to a person that
is a payee under the structured settlement annuity (or beneficiary
of a payee if the payee is deceased), if the payee:
(A) is a resident, regardless of where the contract owner
resides; or
(B) is not a resident if all the following conditions are satisfied:
(i) The member insurer that issued the structured settlement
annuity is domiciled in Indiana.
(ii) The state in which the payee resides has an association
similar to the association.
(iii) Neither the payee nor the beneficiary of the payee (if the
payee is deceased) is eligible for coverage by the other
association referred to in item (ii) solely because the member
insurer was not licensed in the state of residence at the time
specified in the guaranty association law of the state of
residence.
(b) This chapter does not provide coverage to a person that is:
(1) a payee or beneficiary of a contract owner that is a resident, if
the payee or beneficiary is afforded any coverage by the
association of another state; or
(2) otherwise covered under subsection (a)(3), if any coverage is
provided to the person by the association of another state.
(c) To avoid duplicate coverage, if a person that would otherwise
receive coverage under this chapter is provided coverage under the
laws of another state, the person is not eligible for coverage under this
chapter. In determining the application of this subsection when a
person may be covered by the association of more than one (1) state as
an owner, a payee, a beneficiary, or an assignee, this chapter must be
construed in conjunction with the laws of the other state to result in
coverage by only one (1) association.
(d) Except as otherwise excluded or limited by this chapter, this
chapter provides coverage to the persons specified in subsection (a)
for:
(1) direct nongroup life insurance and health insurance policies
or contracts, including health maintenance organization
subscriber contracts and certificates;
(2) direct nongroup annuity contracts;
(3) supplemental contracts to direct nongroup policies and
contracts described in subdivisions (1) and (2);
(4) certificates under direct group life insurance and health
insurance policies and contracts;
(5) certificates under direct group annuity contracts; and
(6) unallocated annuity contracts;
issued by member insurers.
(e) This chapter does not provide coverage for or with respect to the
following:
(1) A part of a certificate, policy, or contract:
(A) not guaranteed by the member insurer; or
(B) under which the risk is borne by the payee, certificate
holder, or the policy or contract owner.
(2) A reinsurance policy or contract, unless and to the extent that
assumption certificates have been issued under the reinsurance
policy or contract.
(3) A part of a certificate, policy, or contract to the extent that the
certificate's, policy's, or contract's interest rate, crediting rate, or
similar factor employed in calculating returns or changes in
values, whether expressly stated in the certificate, policy, or
contract or determined by use of an index or other external
referent stated in the certificate, policy, or contract, either:
(A) when averaged over a period of four (4) years immediately
before the applicable coverage date, exceeds the rate of interest
determined by subtracting two (2) percentage points from
Moody's Corporate Bond Yield Average averaged for the same
four (4) year period or for a lesser period if the certificate,
policy, or contract was issued less than four (4) years before the
applicable coverage date; or
(B) in effect under the certificate, policy, or contract on and
after the applicable coverage date, exceeds the rate of interest
determined by subtracting three (3) percentage points from
Moody's Corporate Bond Yield Average as most recently
available on the applicable coverage date.
However, this subdivision does not apply to a part of a certificate,
policy, or contract (including a rider) that provides long term care
or another health insurance benefit.
(4) The obligations of a plan or program of an employer, an
association, or another person to provide life, health, or annuity
benefits to the employer's, association's, or other person's
employees, members, or others, including obligations arising
under and benefits payable by the employer, association, or other
person under a multiple employer welfare arrangement.
(5) A minimum premium group insurance plan.
(6) A stop-loss or excess loss insurance policy or contract
providing for the indemnification of or payment to a policy owner,
a contract owner, a plan, or another person obligated to pay life,
health, or annuity benefits or to provide services in connection
with a benefit plan or another plan, fund, or program for the
provision of employee welfare or pension benefits.
(7) An administrative services only contract.
(8) A part of a certificate, policy, or contract to the extent that the
certificate, policy, or contract provides for:
(A) dividends or experience rating credits;
(B) voting rights; or
(C) payment of fees or allowances to a person, including the
certificate holder or policy or contract owner, in connection
with service with respect to or administration of the certificate,
policy, or contract.
(9) A certificate, policy, or contract issued in Indiana by a
member insurer when the member insurer did not have a
certificate of authority to issue the certificate, policy, or contract
in Indiana.
(10) An unallocated annuity contract issued to or in connection
with a benefit plan protected by the federal Pension Benefit
Guaranty Corporation, regardless of whether the federal Pension
Benefit Guaranty Corporation has yet been required to make
payments with respect to the benefit plan.
(11) An unallocated annuity contract or part of an unallocated
annuity contract that is not issued to or in connection with a
benefit plan or a government lottery.
(12) A certificate, policy, or contract or part of a certificate,
policy, or contract with respect to which the Class B assessments
contemplated by section 6 of this chapter may not be made or
collected under federal or state law.
(13) An obligation or claim that does not arise under the express
written terms of the policy or contract issued by the member
insurer to the contract owner or policy owner, including any of the
following obligations and claims:
(A) Obligations and claims based on marketing materials.
(B) Obligations and claims based on side letters, riders, or other
documents issued by the member insurer without meeting
applicable policy or contract form filing or approval
requirements.
(C) Obligations and claims based on actual or alleged
misrepresentations.
(D) Obligations and claims that are extracontractual claims.
(E) Obligations and claims for penalties or consequential,
incidental, punitive, or exemplary damages.
(14) An obligation 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:
(A) benefit plan; or
(B) benefit plan's trustee;
that is not an affiliate of the member insurer.
(15) A part of a certificate, policy, or contract to the extent the:
(A) certificate, policy, or contract provides for the certificate's,
policy's, or contract's interest rate, crediting rate, or similar
factor employed in calculating returns or changes in values, to
be determined by use of an index or other external referent
stated in the certificate, policy, or contract; and
(B) returns or changes in value have not been credited to the
certificate, policy, or contract, or as to which the certificate
holder's or policy or contract owner's rights are subject to
forfeiture, as of the applicable coverage date.
If a certificate's, policy's, or contract's returns or changes in values
are credited to the certificate, policy, or contract less frequently
than annually, for purposes of determining the returns and values
that have been credited and are not subject to forfeiture under this
subdivision, the returns and changes in value determined by using
the procedures defined in the certificate, policy, or contract must
be considered credited as if the contractual date of crediting
returns or changes in values were the applicable coverage date,
and those credited returns or changes in value are not subject to
forfeiture under this subdivision, but will be subject to any other
applicable limitations under this chapter.
(16) A funding agreement.
(17) An annuity not subject to regulation as described in IC 27-1-12.4.
(18) A certificate, policy, or contract that provides a hospital,
medical, prescription drug, or other health care benefit under:
(A) Part C of Title XVIII of the federal Social Security Act (42
U.S.C. 1395w-21 through 1395w-28);
(B) Part D of Title XVIII of the federal Social Security Act (42
U.S.C. 1395w-101 through 1395w-153);
(C) Title XIX of the federal Social Security Act (42 U.S.C.
1396 et seq.); or
(D) regulations adopted under a law specified in clause (A),
(B), or (C).
(f) The benefits that the association is obligated to cover do not
exceed the lesser of the following:
(1) The contractual obligations for which the member insurer is
liable or would have been liable if the member insurer were not
an impaired insurer or insolvent insurer.
(2) The applicable limitations as follows:
(A) With respect to certificates, policies, and contracts not
subject to clause (B), (C), (E), or (F), with respect to one (1)
life, regardless of the number of policies or contracts, the
following limitations:
(i) Three hundred thousand dollars ($300,000) in life
insurance death benefits, but not more than one hundred
thousand dollars ($100,000) in net cash surrender and net
cash withdrawal values.
(ii) One hundred thousand dollars ($100,000) in health
insurance benefits (other than those relating to disability
income insurance, health benefit plans, and long term care
insurance), including net cash surrender and net cash
withdrawal values.
(iii) Three hundred thousand dollars ($300,000) in disability
income insurance.
(iv) Three hundred thousand dollars ($300,000) in long term
care insurance benefits (as defined in IC 27-8-12-5).
(v) Five hundred thousand dollars ($500,000) in health
benefit plan benefits.
(vi) Two hundred fifty thousand dollars ($250,000) in the
present value of annuity benefits, including net cash
surrender and net cash withdrawal values.
(B) With respect to unallocated annuity contracts issued to or
in connection with a governmental benefit plan established
under Section 401, 403(b), or 457 of the United States Internal
Revenue Code, two hundred fifty thousand dollars ($250,000)
in the present value of annuity benefits, including net cash
surrender and net cash withdrawal values, per participant.
(C) With respect to structured settlement annuities, two
hundred fifty thousand dollars ($250,000) in the present value
of annuity benefits, including net cash surrender and net cash
withdrawal values, per payee.
(D) In addition to the foregoing limitations, the association is
not obligated to cover more than:
(i) an aggregate of three hundred thousand dollars ($300,000)
in benefits with respect to any one (1) person under clauses
(A), (B), and (C), except with respect to benefits for health
benefit plans under clause (A)(v), an aggregate of five
hundred thousand dollars ($500,000) with respect to any one
(1) person; or
(ii) with respect to one (1) owner of multiple nongroup
policies of life insurance, whether the policy owner is an
individual, a firm, a corporation, or another person, and
whether the persons insured are officers, managers,
employees, or other persons, five million dollars ($5,000,000)
in benefits, including net cash surrender and net cash
withdrawal values, regardless of the number of policies and
contracts held by the owner.
(E) With respect to unallocated annuity contracts issued to or
in connection with a government lottery, five million dollars
($5,000,000) in benefits per contract owner, regardless of the
number of contracts held by the contract owner.
(F) With respect to unallocated annuity contracts:
(i) issued to or in connection with a benefit plan; and
(ii) not subject to clause (B);
five million dollars ($5,000,000) in benefits per plan sponsor,
regardless of the number of unallocated annuity contracts
entitled to coverage under this chapter.
(g) The limitations set forth in subsection (f) are limitations on the
benefits for which the association is obligated before taking into
account the:
(1) association's subrogation and assignment rights; or
(2) extent to which the benefits could be provided out of the
assets of the impaired insurer or insolvent insurer attributable to
covered policies.
The costs of discharging the association's obligations under this chapter
may be met by the use of assets attributable to covered policies or
reimbursed to the association under the association's subrogation and
assignment rights.
(h) In discharging the association's obligations to provide coverage
under this chapter, the association is not required to:
(1) guarantee, assume, reissue, reinsure, or perform;
(2) cause to be guaranteed, assumed, reissued, reinsured, or
performed; or
(3) otherwise assure the discharge of;
the obligations of the insolvent insurer or impaired insurer under a
covered policy that do not materially affect the economic values or
economic benefits of the covered policy.

Legislative History

As added by P.L.193-2006, SEC.11. Amended by P.L.276-2013, SEC.33; P.L.208-2018, SEC.14.