§ 408-F:5 — Coverage and Limitations

New Hampshire § 408-F:5

• Jurisdiction: New Hampshire
• Title XXXVII: INSURANCE
• Ch. 408-F: LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION OF 2019

Text

I. This chapter shall provide coverage for the policies and contracts specified in paragraph II:
(a) To persons who, regardless of where they reside (except for nonresident certificate holders under group policies or contracts), are the beneficiaries, assignees, or payees, including health care providers rendering services covered under health insurance policies or certificates of the persons covered under subparagraph (b); and
(b) To persons who are owners of or certificate holders or enrollees under the policies or contracts, (other than unallocated annuity contracts and structured settlement annuities) and in each case who:
(1) Are residents; or
(2) Are not residents, but only under all of the following conditions:
(A) The member insurers that issued the policies or contracts are domiciled in this state;
(B) The states in which the persons reside have associations similar to the association created by this chapter; and
(C) The persons are not eligible for coverage by an association in any other state because the insurer or health maintenance organization was not licensed in the state at the time specified in the state's guaranty association law.
(c) For unallocated annuity contracts specified in paragraph II, subparagraphs (a) and (b) shall not apply, and this chapter shall, except as provided in subparagraphs (e) and (f), provide coverage to:
(1) Persons who are the owners of the unallocated annuity contracts if the contracts are issued to or in connection with a specified benefit plan whose plan sponsor has its principal place of business in this state; and
(2) Persons who are owners of unallocated annuity contracts issued to or in connection with government lotteries if the owners are residents.
(d) For structured settlement annuities specified in paragraph II; subparagraphs (a) and (b) shall not apply, and this chapter shall, except as provided in subparagraphs (e) and (f), provide coverage to a person who is a payee under a structured settlement annuity, or beneficiary of a payee if the payee is deceased, if the payee:
(1) Is a resident, regardless of where the contract owner resides; or
(2) Is not a resident, but only under both of the following conditions:
(A)(i) The contract owner of the structured settlement annuity is a resident; or
(ii) The contract owner of the structured settlement annuity is not a resident, but the insurer that issued the structured settlement annuity is domiciled in this state, and the state in which the contract owner resides has an association similar to the association created by this chapter; and
(B) Neither the payee or beneficiary nor the contract owner is eligible for coverage by the association of the state in which the payee or contract owner resides.
(e) This chapter shall not provide coverage to:
(1) A person who is a payee or beneficiary of a contract owner resident of this state, if the payee or beneficiary is afforded any coverage by the association of another state;
(2) A person covered under subparagraph (c), if any coverage is provided by the association of another state to the person; or
(3) A person who acquires rights to receive payments through a structured settlement factoring transaction as defined in 26 U.S.C. section 5891(c)(3)(A), regardless of whether the transaction occurred before or after such section became effective.
(f) This chapter is intended to provide coverage to a person who is a resident of this state and, 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, the person shall not be provided coverage under this chapter. In determining the application of the provisions of this paragraph in situations where a person could be covered 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 only one association.
II. (a) This chapter shall provide coverage to the persons specified in paragraph I for policies and contracts of direct, non-group life insurance, health insurance, including health maintenance organization subscriber contracts and certificates, or annuities, and supplemental contracts to any of these, for certificates under direct group policies and contracts, and for supplemental contracts to any of these, and for unallocated annuity contracts issued by member insurers, except as limited by this chapter. Annuity contracts and certificates under group annuity contracts include, but are not limited to, guaranteed investment contracts, deposit administration contracts, unallocated funding agreements, allocated funding agreements, structured settlement annuities, annuities issued to or in connection with government lotteries and any immediate or deferred annuity contracts.
(b) Except as otherwise provided in subparagraph (c), this chapter shall not provide coverage for:
(1) A portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy or contract owner;
(2) Any policy or contract of reinsurance, unless assumption certificates have been issued;
(3) A 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 similar factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or change in value:
(A) Averaged over the period of 4 years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds a rate of interest determined by subtracting 2 percentage points from Moody's Corporate Bond Yield Average averaged for that same 4-year period or for such lesser period if the policy or contract was issued less than 4 years before the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier; and
(B) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting 3 percentage points from Moody's Corporate Bond Yield Average as most recently available;
(4) Any plan or program of an employer, association, or similar entity to provide life, health, or annuity benefits to its employees or members 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 similar entity under:
(A) A multiple-employer welfare arrangement as defined in 29 U.S.C. section 1002(40);
(B) A minimum premium group insurance plan;
(C) A stop-loss group insurance plan; or
(D) An administrative services only contract;
(5) Any portion of a policy or contract to the extent that it provides dividends or experience rating credits, or provides that any fees or allowances be paid to any person, including the policy or contract holder, in connection with the service to or administration of the policy or contract;
(6) Any policy or contract issued in this state by a member insurer at a time when it was not licensed or did not have a certificate of authority to issue the policy or contract in this state;
(7) Any unallocated annuity contract issued to an employee benefit plan protected under the federal Pension Benefit Guaranty Corporation;
(8) Any portion of any unallocated annuity contract which is not issued to or in connection with a specific employee, union, or association of natural persons benefit plan or a government lottery;
(9) Any portion of a policy or contract to the extent that the assessments required by RSA 408-F:9 with respect to the policy or contract are preempted by federal or state law;
(10) A portion of a policy or contract 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 policy or contract, but which have not been credited to the policy or contract, or as to which the policy or contract 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 policy's or contract'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 this subparagraph, the interest or change in value determined by using the procedures defined in the policy or contract shall be credited as if the contractual date of the crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and shall not be subject to forfeiture;
(11) A policy or contract providing any hospital, medical, prescription drug or other health care benefits pursuant to Part C or Part D of subchapter XVIII, chapter 7 of Title 42 of the United States Code, commonly known as Medicare Part C and D, or subchapter XIX, chapter 7 of Title 42 of the United States Code (commonly known as Medicaid), or any regulations issued pursuant thereto; and
(12) Structured settlement annuity benefits to which a payee or beneficiary has transferred his or her rights in a structured settlement factoring transaction as defined in 26 U.S.C. section 5891(c)(3)(A), regardless of whether the transaction occurred before or after such section became effective.
(c) The exclusion from coverage referenced in subparagraph (b)(3) of this section shall not apply to any portion of a policy or contract, including a rider, that provides long-term care or any other health insurance benefits.
III. The benefits for which the association may become liable shall in no event exceed the lesser of:
(a) The contractual obligations for which the insurer is liable or would have been liable if it were not an impaired or insolvent insurer; or
(b)(1) With respect to any one life, regardless of the number of policies or contracts:
(A) $300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance;
(B) For health insurance benefits:
(i) $100,000 for coverages not defined as disability income insurance or health benefit plans or long-term care insurance, as defined in RSA 415-D, including any net cash surrender and net cash withdrawal values;
(ii) $300,000 for disability income insurance, and $300,000 for long-term care insurance, as defined in RSA 415-D; or
(iii) $500,000 for health benefit plans;
(C) $250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; or
(2) With respect to each individual participating in a governmental retirement plan established under Section 401, 403(b) or 457 of the United States Internal Revenue Code covered by an unallocated annuity contract or the beneficiaries of each such individual if deceased, in the aggregate, $250,000 in present value annuity benefits, including net cash surrender and net cash withdrawal values; or
(3) With respect to each payee of a structured settlement annuity or beneficiary or beneficiaries of the payee if deceased, $250,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal value, if any.
(4) However, in no event shall the association be obligated to cover more than:
(A) An aggregate of $300,000 in benefits with respect to any one life under subparagraphs (b)(1), (2) and (3) except with respect to benefits for health benefit plans under subparagraph (b)(1)(B)(iii), in which case the aggregate liability of the association shall not exceed $500,000 with respect to any one individual; or
(B) With respect to one owner of multiple, non-group policies of life insurance, whether the policy or contract owner is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees, or other persons, more than $5,000,000 in benefits, regardless of the number of policies and contracts held by the owner.
(5) With respect to either one contract owner provided coverage under subparagraph I(c)(2); or one plan sponsor whose plans own directly or in trust one or more unallocated annuity contracts not included in subparagraph (b)(2) of this paragraph, $5,000,000 in benefits, irrespective of the number of contracts with respect to the contract owner or plan sponsor. However, in the case where one or more unallocated annuity contracts are covered contracts under this chapter and are owned by a trust or other entity for the benefit of 2 or more plan sponsors, coverage shall be afforded by the association if the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in this state and in no event shall the association be obligated to cover more than $5,000,000 in benefits with respect to all these unallocated contracts.
(6) The limitations set forth in this paragraph are limitations on the benefits for which the association is obligated before taking into account either its subrogation and assignments rights or the extent to which those benefits could be provided out of the assets of the impaired or insolvent insurer attributable to covered policies. The costs of the association's obligations under this chapter may be met by the use of assets attributable to covered policies or reimbursed to the association pursuant to its subrogation and assignment rights.
(7) For purposes of this chapter, benefits provided by a long-term care rider to a life insurance policy or annuity contract shall be considered the same type of benefits as the base life insurance policy or annuity contract to which it relates.
(8) In performing its obligations to provide coverage under RSA 408-F:8, the association shall not be required to guarantee, assume, reinsure, reissue or perform, or cause to be guaranteed, assumed, reinsured, reissued or performed, the contractual obligations of the insolvent or impaired insurer under a covered policy or contract that do not materially affect the economic values or economic benefits of the covered policy or contract.

Legislative History

2019, 314:1, eff. Jan. 1, 2020.