20-1377

20-1377. Continuation of coverage under
individual policies; requirements; exceptions;
renewability

A. A policy of disability insurance delivered or issued for delivery in this state
shall provide for the right of covered family members to continue coverage on the death
of the named insured, the entry of a decree of dissolution of marriage of the named
insured and any other conditions, other than failure of the insured to pay the required
premium, specifically stated in the policy under which coverage would otherwise terminate
as to the covered spouse or covered dependent children of the named insured.

B. At the option of the insurer, coverage shall either continue under the existing
policy or by the issuance of a converted policy with the person exercising the right to
convert designated as the named insured. Coverage provided by a conversion policy must
provide benefits most similar to the coverage contained in the policy that was
terminated. A person entitled to continuation or conversion rights under this section
may elect a lesser form of coverage.

C. Continuation or conversion of coverage may, at the option of the spouse
exercising the right, include covered dependent children for whom the spouse has
responsibility for care or support.

D. The person exercising the continuation or conversion rights shall notify the
insurer and make payment of the appropriate premium within thirty-one days following the
termination of the existing policy. A monthly premium rate shall be offered to the
person exercising continuation or conversion rights, and payment of one monthly premium
shall be deemed sufficient consideration to enact the continuation or conversion policy.

E. Coverage provided through continuation or conversion shall be without additional
evidence of insurability and shall not impose any preexisting condition limitations,
exclusions or other contractual time limitations other than those remaining unexpired
under the policy or contract from which continuation or conversion is exercised.

F. Conversion is not available to a person who is eligible for medicare or eligible
for or covered by other similar disability benefits which together with the conversion
coverage would constitute overinsurance.

G. This section does not apply to disability income policies, to accidental death
or dismemberment policies or to single term nonrenewable policies.

H. Each policy of disability insurance shall include notice of the continuation and
conversion privilege.

I. Except as provided in subsection J of this section, any policy, including a
conversion or continuation policy, that is issued under this section shall not be
cancelled or nonrenewed except for the following reasons:

1. The individual has failed to pay premiums or contributions in accordance with
the terms of the coverage or the insurer has not received premium payments in a timely
manner.

2. The individual has performed an act or practice that constitutes fraud or the
individual made an intentional misrepresentation of material fact under the terms of the
coverage.

3. The insurer has ceased to offer coverage to individuals that is consistent with
the requirements of sections 20-1379 and 20-1380.

4. If the insurer offers health care coverage in this state through a network plan,
the individual no longer resides, lives or works in the service area served by the
network plan or in an area for which the insurer is authorized to transact business but
only if the coverage is terminated uniformly without regard to any health status-related
factor of any covered individual.

5. If the insurer offers health care coverage in this state in the individual
market only through one or more bona fide associations, the membership of the individual
in the association has ceased but only if that coverage is terminated uniformly without
regard to any health status-related factor of any covered individual.

J. An insurer who offers only one form of an individual medical expense policy may
modify the conversion policy if the modification complies with the notice and disclosure
requirements set forth in the policy and applies uniformly to the policy offered to the
general public and to the conversion policy.

K. At the time of filing a petition for dissolution of marriage, the clerk of the
court shall provide to the petitioner for a dissolution of marriage two copies of the
notice of the right of a dependent spouse to convert health insurance coverage under this
section. The petitioner shall cause one copy of the notice to be served on the
respondent together with a copy of the petition, summons and preliminary injunction. The
director shall prepare the notice which must include a summary of this section. The
clerk of the court or the director is not liable for damages arising from information
contained in or omitted from the notices prepared or provided under this section.

L. Any person who is a United States armed forces reservist, who is ordered to
active military duty on or after August 22, 1990 and who had coverage under an individual
disability insurance policy at such time shall have the right to reinstate such coverage
upon release from active military duty subject to the following conditions:

1. The reservist shall make written application to the insurer within ninety days
of discharge from active military duty or within one year of hospitalization continuing
after discharge. Coverage shall be effective upon receipt of application by the insurer.

2. The insurer may exclude from such coverage any health or physical condition
arising during and occurring as a direct result of active military duty.

M. Each dependent of a person eligible for reinstatement under this section shall
be afforded the same rights and be subject to the same conditions as the insured, if the
dependent was insured under the individual disability insurance policy at the time the
eligible person entered active duty. Any dependent of such person born during the period
of active military duty shall have the same rights as other dependents noted in this
section.

N. The director shall adopt emergency rules applicable to persons who are leaving
active service in the armed forces of the United States and returning to civilian status
consistent with the provisions of subsection L of this section, including:

1. Conditions of eligibility.

2. Coverage of dependents.

3. Preexisting conditions.

4. Termination of insurance.

5. Probationary periods.

6. Limitations.

7. Exceptions.

8. Reductions.

9. Elimination periods.

10. Requirements for replacement.

11. Any other conditions of coverage.