40-2209.Group sickness and accident insurance;eligibility for coverage;open enrollment; late enrollment; special enrollment; preexisting conditions;exclusions; renewal or continuation of benefits, exceptions; factors foreligibility; participationrequirements designed for groups through negotiations; provisions required inpolicies; disability income policies with benefits integrated with socialsecurity; continued coverage and converted policies, conditions required;excluding or restricting coverage because medicaid benefits available,prohibited; penalties.(a) (1) Group sickness and accident insurance is declaredto be that form of sickness andaccident insurance covering groups of persons, with or without one or moremembers of theirfamilies or one or more dependents. Except at the option of the employee ormember and exceptemployees or members enrolling in a group policy after the close of an openenrollment opportunity,no individual employee or member of an insured group and no individualdependent or familymember may be excluded from eligibility or coverage under a policy providinghospital, medical orsurgical expense benefits both with respect to policies issued or renewedwithin this state and withrespect to policies issued or renewed outside this state covering personsresiding in this state. Forpurposes of this section, an open enrollment opportunity shall be deemed to bea period no lessfavorable than a period beginning on the employee's or member's date of initial eligibility and ending31 days thereafter.
(2) An eligible employee, member or dependent who requests enrollmentfollowing the open enrollment opportunity or any special enrollment period fordependents as specified in subsection (3) shall be considered a late enrollee.An accident and sickness insurer may exclude a late enrollee, except during anopen enrollment period. However, an eligible employee, member or dependentshall not be considered a late enrollee if:
(A) The individual:
(i) Was covered under another group policy which provided hospital, medicalor surgical expense benefits or was covered under section 607(1) of theemployee retirement income security act of 1974 (ERISA) at the time theindividual was eligible to enroll;
(ii) states in writing, at the time of the open enrollment period, thatcoverage under another group policy which provided hospital, medical orsurgical expense benefits was the reason for declining enrollment, but only ifthe group policyholder or the accident and sickness insurer required such awritten statement and provided the individual with notice of the requirementfor a written statement and the consequences of such written statement;
(iii) has lost coverage under another group policy providing hospital,medical or surgical expense benefits or under section 607(1) of the employeeretirement income security act of 1974 (ERISA) as a result of the terminationof employment, reduction in the number of hours of employment, termination ofemployer contributions toward such coverage, the termination of the otherpolicy's coverage, death of a spouse or divorce or legal separation or wasunder a COBRA continuation provision and the coverage under such provision wasexhausted; and
(iv) requests enrollment within 30 days after the termination of coverageunder the other policy; or
(B) a court has ordered coverage to be provided for a spouse or minor childunder a covered employee's or member's policy.
(3) (A) If an accident and sickness insurer issues a group policy providinghospital, medicalor surgical expenses and makes coverage available to a dependent of an eligibleemployee or member and such dependent becomes a dependent of the employee ormember through marriage, birth, adoption or placement for adoption, then suchgroup policy shall provide for a dependent special enrollment period asdescribed in subsection (3)(B) of this section during which the dependent maybe enrolled under the policy and in the case of the birth or adoption of achild, the spouse of an eligible employee or member may be enrolled ifotherwise eligible for coverage.
(B) A dependent special enrollment period under this subsection shall be aperiod of not less than 30 days and shall begin on the later of (i) the datesuch dependent coverage is made available,or (ii) the date of the marriage, birth or adoption or placement for adoption.
(C) If an eligible employee or member seeks to enroll a dependent during thefirst 30 days of such a dependent special enrollment period, the coverage ofthe dependent shall become effective: (i) in the case of marriage, not laterthan the first day of the first month beginning after the date thecompleted request for enrollment is received; (ii) in the case of the birth ofa dependent, as of the date of such birth; or (iii) in the case of adependent's adoption or placement for adoption, the date of such adoption orplacement for adoption.
(4) (A) No group policy providing hospital, medical or surgical expensebenefits issued or renewed within this state or issued or renewed outside thisstate covering residents within this state shall limit or exclude benefits forspecific conditions existing at or prior to the effective date of coveragethereunder. Such policy may impose a preexisting conditions exclusion, not toexceed 90 days following the date of enrollment for benefits for conditionswhether mental or physical, regardless of the cause of the condition for whichmedical advice, diagnosis, care or treatment was recommended or received in the90 days prior to the effective date of enrollment. Any preexisting conditionsexclusion shall run concurrently with any waiting period.
(B) Such policy may impose a waiting period after full-time employment startsbefore an employee is first eligible to enroll in any applicable group policy.
(C) A health maintenance organization which offers such policy which does notimpose any preexisting conditions exclusion may impose an affiliation periodfor such coverage, provided that: (i) such application period is applieduniformly without regard to any health status related factors and (ii) suchaffiliation period does not exceed two months. The affiliation period shall runconcurrently with any waiting period under the plan.
(D) A health maintenance organization may use alternative methods from thosedescribed in this subsection to address adverse selection if approved by thecommissioner.
(E) For the purposes of this section, the term "preexisting conditionsexclusion" shall mean, with respect to coverage, a limitation or exclusion ofbenefits relating to a condition based on the fact that the condition waspresent before the date of enrollment for such coverage whether or not anymedical advice, diagnosis, care or treatment was recommended or received beforesuch date.
(F) For the purposes of this section, the term "date of enrollment" means thedate the individual is enrolled under the group policy or, if earlier, thefirst day of the waiting period for such enrollment.
(G) For the purposes of this section, the term "waiting period" means withrespect to a group policy the period which must pass before the individual iseligible to be covered for benefits under the terms of the policy.
(5) Genetic information shall not be treated as a preexisting condition inthe absence of adiagnosis of the condition related to such information.
(6) A group policy providing hospital, medical or surgical expense benefitsmay not impose any preexisting condition exclusion relating to pregnancy as apreexisting condition.
(7) A group policy providing hospital, medical or surgical expense benefitsmay not impose any preexisting condition waiting period in the case of a childwho is adopted or placed for adoption before attaining 18 years of age and who,as of the last day of a 30-day period beginning on the date of the adoption orplacement for adoption, is covered by a policy specified in subsection (a).This subsection shall not apply to coverage before the date of such adoption orplacement for adoption.
(8) Such policy shall waive such a preexisting conditions exclusion to theextent the employee or member or individual dependent or family member wascovered by (A) a group or individual sickness and accident policy, (B) coverageunder section 607(1) of the employees retirement income security act of 1974(ERISA), (C) a group specified in K.S.A. 40-2222 andamendments thereto, (D) part A or part B of title XVIII of the social securityact, (E) title XIX of the social security act, other than coverage consistingsolely of benefits under section 1928, (F) a state children's health insuranceprogram established pursuant to title XXI of the social security act, (G)chapter 55 of title 10 United States code, (H) a medical care program of theIndian health service or of a tribal organization, (I) the Kansas uninsurablehealth plan act pursuant to K.S.A. 40-2217 et seq. and amendments thereto or asimilar health benefits risk pool of another state, (J) a health plan offeredunder chapter 89 of title 5, United States code, (K) a health benefit planunder section 5(e) of the peace corps act (22 U.S.C. 2504(e)), or (L) a groupsubject to K.S.A. 12-2616 et seq. and amendments thereto which providedhospital, medical and surgical expense benefits within 63 days prior to theeffective date of coverage with no gap in coverage. A group policy shall creditthe periods of prior coverage specified in subsection (a)(7) without regard tothe specific benefits covered during the period of prior coverage. Any periodthat the employee or member is in a waiting period for any coverage under agroup health plan or is in an affiliation period shall not be taken intoaccount in determining the continuous period under this subsection.
(b) (1) An accident and sickness insurer which offers group policiesproviding hospital, medical or surgical expense benefits shall provide acertification as described in subsection (b)(2): (A) At the time an eligibleemployee, member or dependent ceases to be covered under such policy orotherwise becomes covered under a COBRA continuation provision; (B) in the caseof an eligible employee, member or dependent being covered under a COBRAcontinuation provision, at the time such eligible employee, member or dependentceases to be covered under a COBRA continuation provision; and (C) on therequest on behalf of such eligible employee, member or dependent made not laterthan 24 months after the date of the cessation of the coverage described insubsection (b)(1) (A) or (b)(1) (B), whichever is later.
(2) The certification described in this subsection is a written certificationof (A) the period of coverage under a policy specified in subsection (a) andany coverage under such COBRA continuation provision, and (B) any waitingperiod imposed with respect to the eligible employee, member or dependent forany coverage under such policy.
(c) Any group policy may impose participation requirements, define full-timeemployees or members and otherwise be designed for the group as a whole throughnegotiations between the group sponsor and the insurer to the extent suchdesign is not contrary to or inconsistent with this act.
(d) (1) An accident and sickness insurer offering a group policy providinghospital, medical or surgical expense benefits must renew or continue in forcesuch coverage at the option of the policyholder or certificateholder except asprovided in paragraph (2) below.
(2) An accident and sickness insurer may nonrenew or discontinue coverageunder a group policy providing hospital, medical or surgical expense benefitsbased only on one or more of the following circumstances:
(A) If the policyholder or certificateholder has failed to pay any premium orcontributions in accordance with the terms of the group policy providinghospital, medical or surgical expense benefits or the accident and sicknessinsurer has not received timely premium payments;
(B) if the policyholder or certificateholder has performed an act or practicethat constitutes fraud or made an intentional misrepresentation of materialfact under the terms of such coverage;
(C) if the policyholder or certificateholder has failed to comply with amaterial planprovision relating to employer contribution or group participation rules;
(D) if the accident and sickness insurer is ceasing to offer coverage in suchgroup market in accordance with subsections (d)(3) or (d)(4);
(E) in the case of accident and sickness insurer that offers coverage under apolicy providing hospital, medical or surgical expense benefits through anenrollment area, there is no longer any eligible employee, member or dependentin connection with such policy who lives, resides or works in the medicalservice enrollment area of the accident and sickness insurer or in the area forwhich the accident and sickness insurer is authorized to do business; or
(F) in the case of a group policy providing hospital, medical or surgicalexpense benefits which is offered through an association or trust pursuant tosubsections (f)(3) or (f)(5), the membership of the employer in suchassociation or trust ceases but only if such coverage is terminated uniformlywithout regard to any health status related factor relating to any eligibleemployee, member or dependent.
(3) In any case in which an accident and sickness insurer which offers agroup policy providing hospital, medical or surgical expense benefits decidesto discontinue offering such type of group policy, such coverage may bediscontinued only if:
(A) The accident and sickness insurer notifies all policyholders andcertificateholders and all eligible employees or members of suchdiscontinuation at least 90 days prior to the date of the discontinuation ofsuch coverage;
(B) the accident and sickness insurer offers to each policyholder who isprovided such group policy providing hospital, medical or surgical expensebenefits which is being discontinued the option to purchase any other grouppolicy providing hospital, medical or surgical expense benefits currently beingoffered by such accident and sickness insurer; and
(C) in exercising the option to discontinue coverage and in offering theoption of coverage under subparagraph (B), the accident and sickness insureracts uniformly without regard to the claims experience of those policyholdersor certificateholders or any health status related factors relating to anyeligible employee, member or dependent covered by such group policy or newemployees or members who may become eligible for such coverage.
(4) If the accident and sickness insurer elects to discontinue offering grouppolicies providing hospital, medical or surgical expense benefits or groupcoverage to a small employer pursuant to K.S.A. 40-2209f and amendmentsthereto, such coverage may be discontinued only if:
(A) The accident and sickness insurer provides notice to the insurancecommissioner, to all policyholders or certificateholders and to all eligibleemployees and members covered by such group policy providing hospital, medicalor surgical expense benefits at least 180 days prior to the date ofthe discontinuation of such coverage;
(B) all group policies providing hospital, medical or surgical expensebenefits offered by such accident and sickness insurer are discontinued andcoverage under such policies are not renewed; and
(C) the accident and sickness insurer may not provide for the issuance of anygroup policies providing hospital, medical or surgical expense benefits in thediscontinued market during a five year period beginning on the date of thediscontinuation of the last such group policy which is nonrenewed.
(e) An accident and sickness insurer offering a group policy providinghospital, medical or surgical expense benefits may not establish rules foreligibility (including continued eligibility) of any employee, member ordependent to enroll under the terms of the group policy based on any of thefollowing factors in relation to the eligible employee, member or dependent:(A) Health status, (B) medical condition, including both physical and mentalillness, (C) claims experience, (D) receipt of health care, (E) medicalhistory, (F) genetic information, (G) evidence of insurability, includingconditions arising out of acts of domestic violence, or (H) disability. Thissubsection shall not be construed to require a policy providing hospital,medical or surgical expense benefits to provide particular benefits other thanthose provided under the terms of such group policy or to prevent a grouppolicy providing hospital, medical or surgical expense benefits fromestablishing limitations or restrictions on the amount, level, extent or natureof the benefits or coverage for similarly situated individuals enrolled underthe group policy.
(f) Group accident and health insurance may be offered to a group underthe following basis:
(1) Under a policy issued to an employer or trustees of a fund established byan employer, who is the policyholder, insuring at least two employees of suchemployer, for the benefit of persons other than the employer. The term"employees" shall include the officers, managers, employees and retiredemployees of the employer, the partners, if the employer is a partnership, theproprietor, if the employer is an individual proprietorship, the officers,managers and employees and retired employees of subsidiary or affiliatedcorporations of a corporation employer, and the individual proprietors,partners, employees and retired employees of individuals and firms, thebusiness of which and of the insured employer is under common control throughstock ownership contract, or otherwise. The policy may provide that the term"employees" may include the trustees or their employees, or both, if theirduties are principally connected with such trusteeship. A policy issued toinsure the employees of a public body may provide that the term "employees"shall include elected or appointed officials.
(2) Under a policy issued to a labor union which shall have a constitutionand bylaws insuring at least 25 members of such union.
(3) Under a policy issued to the trustees of a fund established by two ormore employers or business associations or by one or more labor unions or byone or more employers and one or more labor unions, which trustees shall be thepolicyholder, to insure employees of the employers or members of the union ormembers of the association for the benefit of persons other than the employersor the unions or the associations. The term "employees" shall include theofficers, managers, employees and retired employees of the employer and theindividual proprietor or partners if the employer is an individual proprietoror partnership. The policy may provide that the term "employees" shall includethe trustees or their employees, or both, if their duties are principallyconnected with such trusteeship.
(4) A policy issued to a creditor, who shall be deemed the policyholder, toinsure debtors of the creditor, subject to the following requirements: (a) Thedebtors eligible for insurance under the policy shall be all of the debtors ofthe creditor whose indebtedness is repayable in installments, or all of anyclass or classes determined by conditions pertaining to the indebtedness or tothe purchase giving rise to the indebtedness. (b) The premium for the policyshall be paid by the policyholder, either from the creditor's funds or fromcharges collected from the insured debtors, or from both.
(5) A policy issued to an association which has been organized and ismaintained for the purposes other than that of obtaining insurance, insuring atleast 25 members, employees, or employees of members of the association for thebenefit of persons other than the association or its officers. The term"employees" shall include retired employees. The premiums for the policiesshall be paid by the policyholder, either wholly from association funds, orfunds contributed by the members of such association or by employees of suchmembers or any combination thereof.
(6) Under a policy issued to any other type of group which the commissionerof insurance may find is properly subject to the issuance of a group sicknessand accident policy or contract.
(g) Each such policy shall contain in substance: (1) A provision that a copyof the application, if any, of the policyholder shall be attached to the policywhen issued, that all statements made by the policyholder or by the personsinsured shall be deemed representations and not warranties, and that nostatement made by any person insured shall be used in any contest unless a copyof the instrument containing the statement is or has been furnished to suchperson or the insured's beneficiary.
(2) A provision setting forth the conditions under which an individual'scoverage terminates under the policy, including the age, if any, to which anindividual's coverage under the policy shall be limited, or, the age, if any,at which any additional limitations or restrictions are placed upon anindividual's coverage under the policy.
(3) Provisions setting forth the notice of claim, proofs of loss and claimforms, physical examination and autopsy, time of payment of claims, to whombenefits are payable, payment of claims, change of beneficiary, and legalaction requirements. Such provisions shall not be less favorable to theindividual insured or the insured's beneficiary than those corresponding policyprovisions required to be contained in individual accident and sicknesspolicies.
(4) A provision that the insurer will furnish to the policyholder, for thedelivery to each employee or member of the insured group, an individualcertificate approved by the commissioner of insurance setting forth in summaryform a statement of the essential features of the insurance coverage of suchemployee or member, the procedure to be followed in making claim under thepolicy and to whom benefits are payable. Such certificate shall also contain asummary of those provisions required under paragraphs (2) and (3) of thissubsection (g) in addition to the other essential features of the insurancecoverage. If dependents are included in the coverage, only one certificate needbe issued for each family unit.
(h) No group disability income policy which integrates benefits with socialsecurity benefits, shall provide that the amount of any disability benefitactually being paid to the disabled person shall be reduced by changes in thelevel of social security benefits resulting either from changes in the socialsecurity law or due to cost of living adjustments which become effective afterthe first day for which disability benefits become payable.
(i) A group policy of insurance delivered or issued for delivery or renewedwhich provides hospital, surgical or major medical expense insurance, or anycombination of these coverages, on an expense incurred basis, shall providethat an employee or member or such employee's or member's covered dependentswhose insurance under the group policy has been terminated for any reason,including discontinuance of the group policy in its entirety or with respect toan insured class, and who has been continuously insured under the group policyor under any group policy providing similar benefits which it replaces for atleast three months immediately prior to termination, shall be entitled to havesuch coverage nonetheless continued under the group policy for a period of 18months and have issued to the employee or member or such employee's or member'scovered dependents by the insurer, at the end of such eighteen-month period ofcontinuation, a policy of health insurance which conforms to the applicablerequirements specified in this subsection. This requirement shall not apply toa group policy which provides benefits for specific diseases or for accidentalinjuries only or a group policy issued to an employer subject to thecontinuation and conversion obligations set forth at title I, subtitle B, part6 of the employee retirement income security act of 1974 or at title XXII ofthe public health service act, as each act was in effect on January 1, 1987 tothe extent federal law provides the employee or member or such employee's ormember's covered dependents with equal or greater continuation or conversionrights; or an employee or member or such employee's or member's covereddependents shall not be entitled to have such coverage continued or a convertedpolicy issued to the employee or member or such employee's or member's covereddependents if termination of the insurance under the group policy occurredbecause:
(1) The employee or member or such employee's or member's covered dependentsfailed to pay any required contribution after receiving reasonable notice ofsuch required contribution from the insurer in accordance with rules andregulations adopted by the commissioner of insurance; (2) any discontinuedgroup coverage was replaced by similar group coverage within 31 days; (3) theemployee or member is or could be covered by medicare (title XVIII of theUnited States social security act as added by the social security amendmentsof 1965 or as later amended or superseded); (4) the employee or member is orcould be covered to the same extent by any other insured or lawful self-insuredarrangement which provides expense incurred hospital, surgical or medicalcoverage and benefits for individuals in a group under which the person was notcovered prior to such termination; or (5) coverage for the employee or member,or any covered dependent thereof, was terminated for cause as permitted by thegroup policy or certificate of coverage approved by the commissioner. In theevent the group policy is terminated and not replaced the insurer may issue anindividual policy or certificate in lieu of a conversion policy or thecontinuation of group coverage required herein if the individual policy orcertificate provides substantially similar coverage for the same or lesspremium as the group policy. In any event, the employee or member shall havethe option to be issued a conversion policy which meets the requirements setforth in this subsection in lieu of the right to continue group coverage.
(j) The continued coverage and the issuance of a converted policy shall besubject to the following conditions:
(1) Written application for the converted policy shall be made and the firstpremium paid to the insurer not later than 31 days after termination ofcoverage under the group policy or not later than 31 days after notice isreceived pursuant to paragraph (20) of this subsection.
(2) The converted policy shall be issued without evidence of insurability.
(3) The employer shall give the employee andsuch employee's covereddependents reasonable notice of the right to continuation of coverage. Theterminated employee or member shall pay to the insurancecarrier the premium for theeighteen-month continuation of coverage and such premium shall be the same asthat applicable to members or employees remaining in the group. Failure to paysuch premium shall terminate coverage under the group policy at the end of theperiod for which the premium has been paid. The premium rate charged forconverted policies issued subsequent to the period of continued coverage shallbe such that can be expected to produce an anticipated loss ratio of not lessthan 80% based upon conversion, morbidity and reasonable assumptions forexpected trends in medical care costs. In the event the group policy isterminated and is not replaced, converted policies may be issued atself-sustaining rates that are not unreasonable in relation to the coverageprovided based on conversion, morbidity and reasonable assumptions for expectedtrends in medical care costs. The frequency of premium payment shall be thefrequency customarily required by the insurer for the policy form and planselected, provided that the insurer shall not require premium payments lessfrequently than quarterly.
(4) The effective date of the converted policy shall be the day following thetermination of insurance under the group policy.
(5) The converted policy shall cover the employee or member and theemployee's or member's dependents who were covered by the group policy on thedate of termination of insurance. At the option of the insurer, a separateconverted policy may be issued to cover any dependent.
(6) The insurer shall not be required to issue a converted policy coveringany person if such person is or could be covered by medicare (title XVIII ofthe United States social security act as added by the social securityamendments of 1965 or as later amended or superseded). Furthermore, the insurershall not be required to issue a converted policy covering any person if:
(A) (i) Such person is covered for similar benefits by another hospital,surgical, medical or major medical expense insurance policy or hospital ormedical service subscriber contract or medical practice or other prepaymentplan or by any other plan or program, or
(ii) such person is eligible for similar benefits (whether or not coveredtherefor) under any arrangement of coverage for individuals in a group, whetheron an insured or uninsured basis, or
(iii) similar benefits are provided for or available to such person, pursuantto or in accordance with the requirements of any state or federal law, and
(B) the benefits provided under the sources referred to in clause (A) (i)above for such person or benefits provided or available under the sourcesreferred to in clauses (A) (ii) and (A) (iii) above for such person, togetherwith the benefits provided by the converted policy, would result inover-insurance according to the insurer's standards. The insurer's standardsmust bear some reasonable relationship to actual health care costs in the areain which the insured lives at the time of conversion and must be filed with thecommissioner of insurance prior to their use in denying coverage.
(7) A converted policy may include a provision whereby the insurer mayrequest information in advance of any premium due date of such policy of anyperson covered as to whether:
(A) Such person is covered for similar benefits by another hospital,surgical, medical or major medical expense insurance policy or hospital ormedical service subscriber contract or medical practice or other prepaymentplan or by any other plan or program;
(B) such person is covered for similar benefits under any arrangement ofcoverage forindividuals in a group, whether on an insured or uninsured basis; or
(C) similar benefits are provided for or available to such person,pursuant to or in accordancewith the requirements of any state or federal law.
(8) The converted policy may provide that the insurer may refuse to renew thepolicy and the coverage of any person insured for the following reasons only:
(A) Either the benefits provided under the sources referred to in clauses(A)(i) and (A)(ii) of paragraph (6) for such person or benefits provided oravailable under the sources referred to in clause (A)(iii) of paragraph (6)forsuch person, together with the benefits provided by the converted policy, wouldresult in over-insurance according to the insurer's standards on file with thecommissioner of insurance, or the converted policyholder fails to provide therequested information;
(B) fraud or material misrepresentation in applying for any benefits underthe convertedpolicy; or
(C) other reasons approved by the commissioner of insurance.
(9) An insurer shall not be required to issue a converted policy whichprovides coverage and benefits in excess of those provided under the grouppolicy from which conversion is made.
(10) If the converted policy provides that any hospital, surgical or medicalbenefits payable may be reduced by the amount of any such benefits payableunder the group policy after the termination of the individual's insurance orthe converted policy includes provisions so that during the first policy yearthe benefits payable under the converted policy, together with the benefitspayable under the group policy, shall not exceed those that would have beenpayable had the individual's insurance under the group policy remained in forceand effect, the converted policy shall provide credit for deductibles,copayments and other conditions satisfied under the group policy.
(11) Subject to the provisions and conditions of this act, if the groupinsurance policy from which conversion is made insures the employee or memberfor major medical expense insurance,the employee or member shall be entitled to obtain a converted policy providingcatastrophic or major medical coverage under a plan meeting the followingrequirements:
(A) A maximum benefit at least equal to either, at the option of the insurer,paragraphs (i) or (ii) below:
(i) The smaller of the following amounts:
The maximum benefit provided under the group policy or a maximum payment of$250,000 per covered person for all covered medical expenses incurred duringthe covered person's lifetime.
(ii) The smaller of the following amounts:
The maximum benefit provided under the group policy or a maximum payment of$250,000for each unrelated injury or sickness.
(B) Payment of benefits at the rate of 80% of covered medical expenses whichare in excess of the deductible, until 20% of such expenses in a benefit periodreaches $1,000, after which benefits will be paid at the rate of 100% duringthe remainder of such benefit period. Payment of benefits for outpatienttreatment of mental illness, if provided in the converted policy, may be at alesser rate but not less than 50%.
(C) A deductible for each benefit period which, at the option of the insurer,shall be (i) the sum of the benefits deductible and $100, or (ii) thecorresponding deductible in the group policy. The term "benefits deductible,"as used herein, means the value of any benefits provided on an expense incurredbasis which are provided with respect to covered medical expenses by any otherhospital, surgical, or medical insurance policy or hospital or medical servicesubscriber contract or medical practice or other prepayment plan, or any otherplan or program whether on an insured or uninsured basis, or in accordance withthe requirements of any state or federal law and, if pursuant to the conditionsof paragraph (13), the converted policy provides both basic hospital orsurgical coverage and major medical coverage, the value of such basic benefits.
If the maximum benefit is determined by clause (A)(ii) of this paragraph, theinsurer may require that the deductible be satisfied during a period of notless than three months if the deductible is $100 or less, and not less than sixmonths if the deductible exceeds $100.
(D) The benefit period shall be each calendar year when the maximum benefitis determined by clause (A)(i) of this paragraph or 24 months when the maximumbenefit is determined by clause (A)(ii) of this paragraph.
(E) The term "covered medical expenses," as used above, shall include atleast, in the case of hospital room and board charges 80% of the averagesemiprivate room and board rate for the hospital in which the individual isconfined and twice such amount for charges in an intensive care unit. Anysurgical schedule shall be consistent with those customarily offered by theinsurer under group or individual health insurance policies and must provide atleast a $1,200 maximum benefit.
(12) The conversion privilege required by this act shall, if the groupinsurance policy insures the employee or member for basic hospital or surgicalexpense insurance as well as major medical expense insurance, make availablethe plans of benefits set forth in paragraph (11). At the option of theinsurer,such plans of benefits may be provided under one policy.
The insurer may also, in lieu of the plans of benefits set forth in paragraph(11), provide a policy of comprehensive medical expense benefits without firstdollar coverage. The policy shall conform to the requirements of paragraph(11). An insurer electing to provide such a policy shall make available a lowdeductible option, not to exceed $100, a high deductible option between $500and $1,000, and a third deductible option midway between the high andlow deductible options.
(13) The insurer, at its option, may also offer alternative plans for grouphealth conversion in addition to those required by this act.
(14) In the event coverage would be continued under the group policy on anemployee following the employee's retirement prior to the time the employee isor could be covered by medicare, the employee may elect, in lieu of suchcontinuation of group insurance, to have the same conversion rights as wouldapply had such person's insurance terminated at retirement by reason oftermination of employment or membership.
(15) The converted policy may provide for reduction of coverage on any personupon such person's eligibility for coverage under medicare (title XVIII of theUnited States social security act as added by the social security amendments of1965 or as later amended or superseded) or under any other state or federal lawproviding for benefits similar to those provided by the converted policy.
(16) Subject to the conditions set forth above, the continuation andconversion privileges shall also be available:
(A) To the surviving spouse, if any, at the death of the employee or member,with respect to the spouse and such children whose coverage under the grouppolicy terminates by reason of such death, otherwise to each surviving childwhose coverage under the group policy terminates by reason of such death, or,if the group policy provides for continuation of dependents' coverage followingthe employee's or member's death, at the end of such continuation;
(B) to the spouse of the employee or member upon termination of coverage ofthe spouse, while the employee or member remains insured under the grouppolicy, by reason of ceasing to be a qualified family member under the grouppolicy, with respect to the spouse and such children whose coverage under thegroup policy terminates at the same time; or
(C) to a child solely with respect to such child upon termination of suchcoverage by reason of ceasing to be a qualified family member under the grouppolicy, if a conversion privilege is not otherwise provided above with respectto such termination.
(17) The insurer may elect to provide group insurance coverage which complieswith this act in lieu of the issuance of a converted individual policy.
(18) A notification of the conversion privilege shall be included in eachcertificate of coverage.
(19) A converted policy which is delivered outside this state must be on aform which could be delivered in such other jurisdiction as a converted policyhad the group policy been issued in that jurisdiction.
(20) The insurer shall give the employee or member and such employee's ormember's covered dependents: (A) Reasonable notice of the right to convert atleast once during the eighteen-month continuation period; or (B) for personscovered under 29 U.S.C. 1161 et seq., notice of the right to a conversionpolicy required by this subsection (d) shall be given at least 30 days prior tothe end of the continuation period provided by 29 U.S.C. 1161 et seq. or fromthe date the employer ceases to provide any similar group health plan to anyemployee. Such notices shall be provided in accordance with rules andregulations adopted by the commissioner of insurance.
(k) (1) No policy issued by an insurer to which this section applies shallcontain a provision which excludes, limits or otherwise restricts coveragebecause medicaid benefits as permitted by title XIX of the social security actof 1965 are or may be available for the same accident or illness.
(2) Violation of this subsection shall be subject to the penalties prescribedby K.S.A. 40-2407 and 40-2411, and amendments thereto.
(l) The commissioner is hereby authorized to adopt such rules and regulationsas may be necessary to carry out the provisions of this section.
40-2209.Group sickness and accident insurance;eligibility for coverage;open enrollment; late enrollment; special enrollment; preexisting conditions;exclusions; renewal or continuation of benefits, exceptions; factors foreligibility; participationrequirements designed for groups through negotiations; provisions required inpolicies; disability income policies with benefits integrated with socialsecurity; continued coverage and converted policies, conditions required;excluding or restricting coverage because medicaid benefits available,prohibited; penalties.(a) (1) Group sickness and accident insurance is declaredto be that form of sickness andaccident insurance covering groups of persons, with or without one or moremembers of theirfamilies or one or more dependents. Except at the option of the employee ormember and exceptemployees or members enrolling in a group policy after the close of an openenrollment opportunity,no individual employee or member of an insured group and no individualdependent or familymember may be excluded from eligibility or coverage under a policy providinghospital, medical orsurgical expense benefits both with respect to policies issued or renewedwithin this state and withrespect to policies issued or renewed outside this state covering personsresiding in this state. Forpurposes of this section, an open enrollment opportunity shall be deemed to bea period no lessfavorable than a period beginning on the employee's or member's date of initial eligibility and ending31 days thereafter.
(2) An eligible employee, member or dependent who requests enrollmentfollowing the open enrollment opportunity or any special enrollment period fordependents as specified in subsection (3) shall be considered a late enrollee.An accident and sickness insurer may exclude a late enrollee, except during anopen enrollment period. However, an eligible employee, member or dependentshall not be considered a late enrollee if:
(A) The individual:
(i) Was covered under another group policy which provided hospital, medicalor surgical expense benefits or was covered under section 607(1) of theemployee retirement income security act of 1974 (ERISA) at the time theindividual was eligible to enroll;
(ii) states in writing, at the time of the open enrollment period, thatcoverage under another group policy which provided hospital, medical orsurgical expense benefits was the reason for declining enrollment, but only ifthe group policyholder or the accident and sickness insurer required such awritten statement and provided the individual with notice of the requirementfor a written statement and the consequences of such written statement;
(iii) has lost coverage under another group policy providing hospital,medical or surgical expense benefits or under section 607(1) of the employeeretirement income security act of 1974 (ERISA) as a result of the terminationof employment, reduction in the number of hours of employment, termination ofemployer contributions toward such coverage, the termination of the otherpolicy's coverage, death of a spouse or divorce or legal separation or wasunder a COBRA continuation provision and the coverage under such provision wasexhausted; and
(iv) requests enrollment within 30 days after the termination of coverageunder the other policy; or
(B) a court has ordered coverage to be provided for a spouse or minor childunder a covered employee's or member's policy.
(3) (A) If an accident and sickness insurer issues a group policy providinghospital, medicalor surgical expenses and makes coverage available to a dependent of an eligibleemployee or member and such dependent becomes a dependent of the employee ormember through marriage, birth, adoption or placement for adoption, then suchgroup policy shall provide for a dependent special enrollment period asdescribed in subsection (3)(B) of this section during which the dependent maybe enrolled under the policy and in the case of the birth or adoption of achild, the spouse of an eligible employee or member may be enrolled ifotherwise eligible for coverage.
(B) A dependent special enrollment period under this subsection shall be aperiod of not less than 30 days and shall begin on the later of (i) the datesuch dependent coverage is made available,or (ii) the date of the marriage, birth or adoption or placement for adoption.
(C) If an eligible employee or member seeks to enroll a dependent during thefirst 30 days of such a dependent special enrollment period, the coverage ofthe dependent shall become effective: (i) in the case of marriage, not laterthan the first day of the first month beginning after the date thecompleted request for enrollment is received; (ii) in the case of the birth ofa dependent, as of the date of such birth; or (iii) in the case of adependent's adoption or placement for adoption, the date of such adoption orplacement for adoption.
(4) (A) No group policy providing hospital, medical or surgical expensebenefits issued or renewed within this state or issued or renewed outside thisstate covering residents within this state shall limit or exclude benefits forspecific conditions existing at or prior to the effective date of coveragethereunder. Such policy may impose a preexisting conditions exclusion, not toexceed 90 days following the date of enrollment for benefits for conditionswhether mental or physical, regardless of the cause of the condition for whichmedical advice, diagnosis, care or treatment was recommended or received in the90 days prior to the effective date of enrollment. Any preexisting conditionsexclusion shall run concurrently with any waiting period.
(B) Such policy may impose a waiting period after full-time employment startsbefore an employee is first eligible to enroll in any applicable group policy.
(C) A health maintenance organization which offers such policy which does notimpose any preexisting conditions exclusion may impose an affiliation periodfor such coverage, provided that: (i) such application period is applieduniformly without regard to any health status related factors and (ii) suchaffiliation period does not exceed two months. The affiliation period shall runconcurrently with any waiting period under the plan.
(D) A health maintenance organization may use alternative methods from thosedescribed in this subsection to address adverse selection if approved by thecommissioner.
(E) For the purposes of this section, the term "preexisting conditionsexclusion" shall mean, with respect to coverage, a limitation or exclusion ofbenefits relating to a condition based on the fact that the condition waspresent before the date of enrollment for such coverage whether or not anymedical advice, diagnosis, care or treatment was recommended or received beforesuch date.
(F) For the purposes of this section, the term "date of enrollment" means thedate the individual is enrolled under the group policy or, if earlier, thefirst day of the waiting period for such enrollment.
(G) For the purposes of this section, the term "waiting period" means withrespect to a group policy the period which must pass before the individual iseligible to be covered for benefits under the terms of the policy.
(5) Genetic information shall not be treated as a preexisting condition inthe absence of adiagnosis of the condition related to such information.
(6) A group policy providing hospital, medical or surgical expense benefitsmay not impose any preexisting condition exclusion relating to pregnancy as apreexisting condition.
(7) A group policy providing hospital, medical or surgical expense benefitsmay not impose any preexisting condition waiting period in the case of a childwho is adopted or placed for adoption before attaining 18 years of age and who,as of the last day of a 30-day period beginning on the date of the adoption orplacement for adoption, is covered by a policy specified in subsection (a).This subsection shall not apply to coverage before the date of such adoption orplacement for adoption.
(8) Such policy shall waive such a preexisting conditions exclusion to theextent the employee or member or individual dependent or family member wascovered by (A) a group or individual sickness and accident policy, (B) coverageunder section 607(1) of the employees retirement income security act of 1974(ERISA), (C) a group specified in K.S.A. 40-2222 andamendments thereto, (D) part A or part B of title XVIII of the social securityact, (E) title XIX of the social security act, other than coverage consistingsolely of benefits under section 1928, (F) a state children's health insuranceprogram established pursuant to title XXI of the social security act, (G)chapter 55 of title 10 United States code, (H) a medical care program of theIndian health service or of a tribal organization, (I) the Kansas uninsurablehealth plan act pursuant to K.S.A. 40-2217 et seq. and amendments thereto or asimilar health benefits risk pool of another state, (J) a health plan offeredunder chapter 89 of title 5, United States code, (K) a health benefit planunder section 5(e) of the peace corps act (22 U.S.C. 2504(e)), or (L) a groupsubject to K.S.A. 12-2616 et seq. and amendments thereto which providedhospital, medical and surgical expense benefits within 63 days prior to theeffective date of coverage with no gap in coverage. A group policy shall creditthe periods of prior coverage specified in subsection (a)(7) without regard tothe specific benefits covered during the period of prior coverage. Any periodthat the employee or member is in a waiting period for any coverage under agroup health plan or is in an affiliation period shall not be taken intoaccount in determining the continuous period under this subsection.
(b) (1) An accident and sickness insurer which offers group policiesproviding hospital, medical or surgical expense benefits shall provide acertification as described in subsection (b)(2): (A) At the time an eligibleemployee, member or dependent ceases to be covered under such policy orotherwise becomes covered under a COBRA continuation provision; (B) in the caseof an eligible employee, member or dependent being covered under a COBRAcontinuation provision, at the time such eligible employee, member or dependentceases to be covered under a COBRA continuation provision; and (C) on therequest on behalf of such eligible employee, member or dependent made not laterthan 24 months after the date of the cessation of the coverage described insubsection (b)(1) (A) or (b)(1) (B), whichever is later.
(2) The certification described in this subsection is a written certificationof (A) the period of coverage under a policy specified in subsection (a) andany coverage under such COBRA continuation provision, and (B) any waitingperiod imposed with respect to the eligible employee, member or dependent forany coverage under such policy.
(c) Any group policy may impose participation requirements, define full-timeemployees or members and otherwise be designed for the group as a whole throughnegotiations between the group sponsor and the insurer to the extent suchdesign is not contrary to or inconsistent with this act.
(d) (1) An accident and sickness insurer offering a group policy providinghospital, medical or surgical expense benefits must renew or continue in forcesuch coverage at the option of the policyholder or certificateholder except asprovided in paragraph (2) below.
(2) An accident and sickness insurer may nonrenew or discontinue coverageunder a group policy providing hospital, medical or surgical expense benefitsbased only on one or more of the following circumstances:
(A) If the policyholder or certificateholder has failed to pay any premium orcontributions in accordance with the terms of the group policy providinghospital, medical or surgical expense benefits or the accident and sicknessinsurer has not received timely premium payments;
(B) if the policyholder or certificateholder has performed an act or practicethat constitutes fraud or made an intentional misrepresentation of materialfact under the terms of such coverage;
(C) if the policyholder or certificateholder has failed to comply with amaterial planprovision relating to employer contribution or group participation rules;
(D) if the accident and sickness insurer is ceasing to offer coverage in suchgroup market in accordance with subsections (d)(3) or (d)(4);
(E) in the case of accident and sickness insurer that offers coverage under apolicy providing hospital, medical or surgical expense benefits through anenrollment area, there is no longer any eligible employee, member or dependentin connection with such policy who lives, resides or works in the medicalservice enrollment area of the accident and sickness insurer or in the area forwhich the accident and sickness insurer is authorized to do business; or
(F) in the case of a group policy providing hospital, medical or surgicalexpense benefits which is offered through an association or trust pursuant tosubsections (f)(3) or (f)(5), the membership of the employer in suchassociation or trust ceases but only if such coverage is terminated uniformlywithout regard to any health status related factor relating to any eligibleemployee, member or dependent.
(3) In any case in which an accident and sickness insurer which offers agroup policy providing hospital, medical or surgical expense benefits decidesto discontinue offering such type of group policy, such coverage may bediscontinued only if:
(A) The accident and sickness insurer notifies all policyholders andcertificateholders and all eligible employees or members of suchdiscontinuation at least 90 days prior to the date of the discontinuation ofsuch coverage;
(B) the accident and sickness insurer offers to each policyholder who isprovided such group policy providing hospital, medical or surgical expensebenefits which is being discontinued the option to purchase any other grouppolicy providing hospital, medical or surgical expense benefits currently beingoffered by such accident and sickness insurer; and
(C) in exercising the option to discontinue coverage and in offering theoption of coverage under subparagraph (B), the accident and sickness insureracts uniformly without regard to the claims experience of those policyholdersor certificateholders or any health status related factors relating to anyeligible employee, member or dependent covered by such group policy or newemployees or members who may become eligible for such coverage.
(4) If the accident and sickness insurer elects to discontinue offering grouppolicies providing hospital, medical or surgical expense benefits or groupcoverage to a small employer pursuant to K.S.A. 40-2209f and amendmentsthereto, such coverage may be discontinued only if:
(A) The accident and sickness insurer provides notice to the insurancecommissioner, to all policyholders or certificateholders and to all eligibleemployees and members covered by such group policy providing hospital, medicalor surgical expense benefits at least 180 days prior to the date ofthe discontinuation of such coverage;
(B) all group policies providing hospital, medical or surgical expensebenefits offered by such accident and sickness insurer are discontinued andcoverage under such policies are not renewed; and
(C) the accident and sickness insurer may not provide for the issuance of anygroup policies providing hospital, medical or surgical expense benefits in thediscontinued market during a five year period beginning on the date of thediscontinuation of the last such group policy which is nonrenewed.
(e) An accident and sickness insurer offering a group policy providinghospital, medical or surgical expense benefits may not establish rules foreligibility (including continued eligibility) of any employee, member ordependent to enroll under the terms of the group policy based on any of thefollowing factors in relation to the eligible employee, member or dependent:(A) Health status, (B) medical condition, including both physical and mentalillness, (C) claims experience, (D) receipt of health care, (E) medicalhistory, (F) genetic information, (G) evidence of insurability, includingconditions arising out of acts of domestic violence, or (H) disability. Thissubsection shall not be construed to require a policy providing hospital,medical or surgical expense benefits to provide particular benefits other thanthose provided under the terms of such group policy or to prevent a grouppolicy providing hospital, medical or surgical expense benefits fromestablishing limitations or restrictions on the amount, level, extent or natureof the benefits or coverage for similarly situated individuals enrolled underthe group policy.
(f) Group accident and health insurance may be offered to a group underthe following basis:
(1) Under a policy issued to an employer or trustees of a fund established byan employer, who is the policyholder, insuring at least two employees of suchemployer, for the benefit of persons other than the employer. The term"employees" shall include the officers, managers, employees and retiredemployees of the employer, the partners, if the employer is a partnership, theproprietor, if the employer is an individual proprietorship, the officers,managers and employees and retired employees of subsidiary or affiliatedcorporations of a corporation employer, and the individual proprietors,partners, employees and retired employees of individuals and firms, thebusiness of which and of the insured employer is under common control throughstock ownership contract, or otherwise. The policy may provide that the term"employees" may include the trustees or their employees, or both, if theirduties are principally connected with such trusteeship. A policy issued toinsure the employees of a public body may provide that the term "employees"shall include elected or appointed officials.
(2) Under a policy issued to a labor union which shall have a constitutionand bylaws insuring at least 25 members of such union.
(3) Under a policy issued to the trustees of a fund established by two ormore employers or business associations or by one or more labor unions or byone or more employers and one or more labor unions, which trustees shall be thepolicyholder, to insure employees of the employers or members of the union ormembers of the association for the benefit of persons other than the employersor the unions or the associations. The term "employees" shall include theofficers, managers, employees and retired employees of the employer and theindividual proprietor or partners if the employer is an individual proprietoror partnership. The policy may provide that the term "employees" shall includethe trustees or their employees, or both, if their duties are principallyconnected with such trusteeship.
(4) A policy issued to a creditor, who shall be deemed the policyholder, toinsure debtors of the creditor, subject to the following requirements: (a) Thedebtors eligible for insurance under the policy shall be all of the debtors ofthe creditor whose indebtedness is repayable in installments, or all of anyclass or classes determined by conditions pertaining to the indebtedness or tothe purchase giving rise to the indebtedness. (b) The premium for the policyshall be paid by the policyholder, either from the creditor's funds or fromcharges collected from the insured debtors, or from both.
(5) A policy issued to an association which has been organized and ismaintained for the purposes other than that of obtaining insurance, insuring atleast 25 members, employees, or employees of members of the association for thebenefit of persons other than the association or its officers. The term"employees" shall include retired employees. The premiums for the policiesshall be paid by the policyholder, either wholly from association funds, orfunds contributed by the members of such association or by employees of suchmembers or any combination thereof.
(6) Under a policy issued to any other type of group which the commissionerof insurance may find is properly subject to the issuance of a group sicknessand accident policy or contract.
(g) Each such policy shall contain in substance: (1) A provision that a copyof the application, if any, of the policyholder shall be attached to the policywhen issued, that all statements made by the policyholder or by the personsinsured shall be deemed representations and not warranties, and that nostatement made by any person insured shall be used in any contest unless a copyof the instrument containing the statement is or has been furnished to suchperson or the insured's beneficiary.
(2) A provision setting forth the conditions under which an individual'scoverage terminates under the policy, including the age, if any, to which anindividual's coverage under the policy shall be limited, or, the age, if any,at which any additional limitations or restrictions are placed upon anindividual's coverage under the policy.
(3) Provisions setting forth the notice of claim, proofs of loss and claimforms, physical examination and autopsy, time of payment of claims, to whombenefits are payable, payment of claims, change of beneficiary, and legalaction requirements. Such provisions shall not be less favorable to theindividual insured or the insured's beneficiary than those corresponding policyprovisions required to be contained in individual accident and sicknesspolicies.
(4) A provision that the insurer will furnish to the policyholder, for thedelivery to each employee or member of the insured group, an individualcertificate approved by the commissioner of insurance setting forth in summaryform a statement of the essential features of the insurance coverage of suchemployee or member, the procedure to be followed in making claim under thepolicy and to whom benefits are payable. Such certificate shall also contain asummary of those provisions required under paragraphs (2) and (3) of thissubsection (g) in addition to the other essential features of the insurancecoverage. If dependents are included in the coverage, only one certificate needbe issued for each family unit.
(h) No group disability income policy which integrates benefits with socialsecurity benefits, shall provide that the amount of any disability benefitactually being paid to the disabled person shall be reduced by changes in thelevel of social security benefits resulting either from changes in the socialsecurity law or due to cost of living adjustments which become effective afterthe first day for which disability benefits become payable.
(i) A group policy of insurance delivered or issued for delivery or renewedwhich provides hospital, surgical or major medical expense insurance, or anycombination of these coverages, on an expense incurred basis, shall providethat an employee or member or such employee's or member's covered dependentswhose insurance under the group policy has been terminated for any reason,including discontinuance of the group policy in its entirety or with respect toan insured class, and who has been continuously insured under the group policyor under any group policy providing similar benefits which it replaces for atleast three months immediately prior to termination, shall be entitled to havesuch coverage nonetheless continued under the group policy for a period of 18months and have issued to the employee or member or such employee's or member'scovered dependents by the insurer, at the end of such eighteen-month period ofcontinuation, a policy of health insurance which conforms to the applicablerequirements specified in this subsection. This requirement shall not apply toa group policy which provides benefits for specific diseases or for accidentalinjuries only or a group policy issued to an employer subject to thecontinuation and conversion obligations set forth at title I, subtitle B, part6 of the employee retirement income security act of 1974 or at title XXII ofthe public health service act, as each act was in effect on January 1, 1987 tothe extent federal law provides the employee or member or such employee's ormember's covered dependents with equal or greater continuation or conversionrights; or an employee or member or such employee's or member's covereddependents shall not be entitled to have such coverage continued or a convertedpolicy issued to the employee or member or such employee's or member's covereddependents if termination of the insurance under the group policy occurredbecause:
(1) The employee or member or such employee's or member's covered dependentsfailed to pay any required contribution after receiving reasonable notice ofsuch required contribution from the insurer in accordance with rules andregulations adopted by the commissioner of insurance; (2) any discontinuedgroup coverage was replaced by similar group coverage within 31 days; (3) theemployee or member is or could be covered by medicare (title XVIII of theUnited States social security act as added by the social security amendmentsof 1965 or as later amended or superseded); (4) the employee or member is orcould be covered to the same extent by any other insured or lawful self-insuredarrangement which provides expense incurred hospital, surgical or medicalcoverage and benefits for individuals in a group under which the person was notcovered prior to such termination; or (5) coverage for the employee or member,or any covered dependent thereof, was terminated for cause as permitted by thegroup policy or certificate of coverage approved by the commissioner. In theevent the group policy is terminated and not replaced the insurer may issue anindividual policy or certificate in lieu of a conversion policy or thecontinuation of group coverage required herein if the individual policy orcertificate provides substantially similar coverage for the same or lesspremium as the group policy. In any event, the employee or member shall havethe option to be issued a conversion policy which meets the requirements setforth in this subsection in lieu of the right to continue group coverage.
(j) The continued coverage and the issuance of a converted policy shall besubject to the following conditions:
(1) Written application for the converted policy shall be made and the firstpremium paid to the insurer not later than 31 days after termination ofcoverage under the group policy or not later than 31 days after notice isreceived pursuant to paragraph (20) of this subsection.
(2) The converted policy shall be issued without evidence of insurability.
(3) The employer shall give the employee andsuch employee's covereddependents reasonable notice of the right to continuation of coverage. Theterminated employee or member shall pay to the insurancecarrier the premium for theeighteen-month continuation of coverage and such premium shall be the same asthat applicable to members or employees remaining in the group. Failure to paysuch premium shall terminate coverage under the group policy at the end of theperiod for which the premium has been paid. The premium rate charged forconverted policies issued subsequent to the period of continued coverage shallbe such that can be expected to produce an anticipated loss ratio of not lessthan 80% based upon conversion, morbidity and reasonable assumptions forexpected trends in medical care costs. In the event the group policy isterminated and is not replaced, converted policies may be issued atself-sustaining rates that are not unreasonable in relation to the coverageprovided based on conversion, morbidity and reasonable assumptions for expectedtrends in medical care costs. The frequency of premium payment shall be thefrequency customarily required by the insurer for the policy form and planselected, provided that the insurer shall not require premium payments lessfrequently than quarterly.
(4) The effective date of the converted policy shall be the day following thetermination of insurance under the group policy.
(5) The converted policy shall cover the employee or member and theemployee's or member's dependents who were covered by the group policy on thedate of termination of insurance. At the option of the insurer, a separateconverted policy may be issued to cover any dependent.
(6) The insurer shall not be required to issue a converted policy coveringany person if such person is or could be covered by medicare (title XVIII ofthe United States social security act as added by the social securityamendments of 1965 or as later amended or superseded). Furthermore, the insurershall not be required to issue a converted policy covering any person if:
(A) (i) Such person is covered for similar benefits by another hospital,surgical, medical or major medical expense insurance policy or hospital ormedical service subscriber contract or medical practice or other prepaymentplan or by any other plan or program, or
(ii) such person is eligible for similar benefits (whether or not coveredtherefor) under any arrangement of coverage for individuals in a group, whetheron an insured or uninsured basis, or
(iii) similar benefits are provided for or available to such person, pursuantto or in accordance with the requirements of any state or federal law, and
(B) the benefits provided under the sources referred to in clause (A) (i)above for such person or benefits provided or available under the sourcesreferred to in clauses (A) (ii) and (A) (iii) above for such person, togetherwith the benefits provided by the converted policy, would result inover-insurance according to the insurer's standards. The insurer's standardsmust bear some reasonable relationship to actual health care costs in the areain which the insured lives at the time of conversion and must be filed with thecommissioner of insurance prior to their use in denying coverage.
(7) A converted policy may include a provision whereby the insurer mayrequest information in advance of any premium due date of such policy of anyperson covered as to whether:
(A) Such person is covered for similar benefits by another hospital,surgical, medical or major medical expense insurance policy or hospital ormedical service subscriber contract or medical practice or other prepaymentplan or by any other plan or program;
(B) such person is covered for similar benefits under any arrangement ofcoverage forindividuals in a group, whether on an insured or uninsured basis; or
(C) similar benefits are provided for or available to such person,pursuant to or in accordancewith the requirements of any state or federal law.
(8) The converted policy may provide that the insurer may refuse to renew thepolicy and the coverage of any person insured for the following reasons only:
(A) Either the benefits provided under the sources referred to in clauses(A)(i) and (A)(ii) of paragraph (6) for such person or benefits provided oravailable under the sources referred to in clause (A)(iii) of paragraph (6)forsuch person, together with the benefits provided by the converted policy, wouldresult in over-insurance according to the insurer's standards on file with thecommissioner of insurance, or the converted policyholder fails to provide therequested information;
(B) fraud or material misrepresentation in applying for any benefits underthe convertedpolicy; or
(C) other reasons approved by the commissioner of insurance.
(9) An insurer shall not be required to issue a converted policy whichprovides coverage and benefits in excess of those provided under the grouppolicy from which conversion is made.
(10) If the converted policy provides that any hospital, surgical or medicalbenefits payable may be reduced by the amount of any such benefits payableunder the group policy after the termination of the individual's insurance orthe converted policy includes provisions so that during the first policy yearthe benefits payable under the converted policy, together with the benefitspayable under the group policy, shall not exceed those that would have beenpayable had the individual's insurance under the group policy remained in forceand effect, the converted policy shall provide credit for deductibles,copayments and other conditions satisfied under the group policy.
(11) Subject to the provisions and conditions of this act, if the groupinsurance policy from which conversion is made insures the employee or memberfor major medical expense insurance,the employee or member shall be entitled to obtain a converted policy providingcatastrophic or major medical coverage under a plan meeting the followingrequirements:
(A) A maximum benefit at least equal to either, at the option of the insurer,paragraphs (i) or (ii) below:
(i) The smaller of the following amounts:
The maximum benefit provided under the group policy or a maximum payment of$250,000 per covered person for all covered medical expenses incurred duringthe covered person's lifetime.
(ii) The smaller of the following amounts:
The maximum benefit provided under the group policy or a maximum payment of$250,000for each unrelated injury or sickness.
(B) Payment of benefits at the rate of 80% of covered medical expenses whichare in excess of the deductible, until 20% of such expenses in a benefit periodreaches $1,000, after which benefits will be paid at the rate of 100% duringthe remainder of such benefit period. Payment of benefits for outpatienttreatment of mental illness, if provided in the converted policy, may be at alesser rate but not less than 50%.
(C) A deductible for each benefit period which, at the option of the insurer,shall be (i) the sum of the benefits deductible and $100, or (ii) thecorresponding deductible in the group policy. The term "benefits deductible,"as used herein, means the value of any benefits provided on an expense incurredbasis which are provided with respect to covered medical expenses by any otherhospital, surgical, or medical insurance policy or hospital or medical servicesubscriber contract or medical practice or other prepayment plan, or any otherplan or program whether on an insured or uninsured basis, or in accordance withthe requirements of any state or federal law and, if pursuant to the conditionsof paragraph (13), the converted policy provides both basic hospital orsurgical coverage and major medical coverage, the value of such basic benefits.
If the maximum benefit is determined by clause (A)(ii) of this paragraph, theinsurer may require that the deductible be satisfied during a period of notless than three months if the deductible is $100 or less, and not less than sixmonths if the deductible exceeds $100.
(D) The benefit period shall be each calendar year when the maximum benefitis determined by clause (A)(i) of this paragraph or 24 months when the maximumbenefit is determined by clause (A)(ii) of this paragraph.
(E) The term "covered medical expenses," as used above, shall include atleast, in the case of hospital room and board charges 80% of the averagesemiprivate room and board rate for the hospital in which the individual isconfined and twice such amount for charges in an intensive care unit. Anysurgical schedule shall be consistent with those customarily offered by theinsurer under group or individual health insurance policies and must provide atleast a $1,200 maximum benefit.
(12) The conversion privilege required by this act shall, if the groupinsurance policy insures the employee or member for basic hospital or surgicalexpense insurance as well as major medical expense insurance, make availablethe plans of benefits set forth in paragraph (11). At the option of theinsurer,such plans of benefits may be provided under one policy.
The insurer may also, in lieu of the plans of benefits set forth in paragraph(11), provide a policy of comprehensive medical expense benefits without firstdollar coverage. The policy shall conform to the requirements of paragraph(11). An insurer electing to provide such a policy shall make available a lowdeductible option, not to exceed $100, a high deductible option between $500and $1,000, and a third deductible option midway between the high andlow deductible options.
(13) The insurer, at its option, may also offer alternative plans for grouphealth conversion in addition to those required by this act.
(14) In the event coverage would be continued under the group policy on anemployee following the employee's retirement prior to the time the employee isor could be covered by medicare, the employee may elect, in lieu of suchcontinuation of group insurance, to have the same conversion rights as wouldapply had such person's insurance terminated at retirement by reason oftermination of employment or membership.
(15) The converted policy may provide for reduction of coverage on any personupon such person's eligibility for coverage under medicare (title XVIII of theUnited States social security act as added by the social security amendments of1965 or as later amended or superseded) or under any other state or federal lawproviding for benefits similar to those provided by the converted policy.
(16) Subject to the conditions set forth above, the continuation andconversion privileges shall also be available:
(A) To the surviving spouse, if any, at the death of the employee or member,with respect to the spouse and such children whose coverage under the grouppolicy terminates by reason of such death, otherwise to each surviving childwhose coverage under the group policy terminates by reason of such death, or,if the group policy provides for continuation of dependents' coverage followingthe employee's or member's death, at the end of such continuation;
(B) to the spouse of the employee or member upon termination of coverage ofthe spouse, while the employee or member remains insured under the grouppolicy, by reason of ceasing to be a qualified family member under the grouppolicy, with respect to the spouse and such children whose coverage under thegroup policy terminates at the same time; or
(C) to a child solely with respect to such child upon termination of suchcoverage by reason of ceasing to be a qualified family member under the grouppolicy, if a conversion privilege is not otherwise provided above with respectto such termination.
(17) The insurer may elect to provide group insurance coverage which complieswith this act in lieu of the issuance of a converted individual policy.
(18) A notification of the conversion privilege shall be included in eachcertificate of coverage.
(19) A converted policy which is delivered outside this state must be on aform which could be delivered in such other jurisdiction as a converted policyhad the group policy been issued in that jurisdiction.
(20) The insurer shall give the employee or member and such employee's ormember's covered dependents: (A) Reasonable notice of the right to convert atleast once during the eighteen-month continuation period; or (B) for personscovered under 29 U.S.C. 1161 et seq., notice of the right to a conversionpolicy required by this subsection (d) shall be given at least 30 days prior tothe end of the continuation period provided by 29 U.S.C. 1161 et seq. or fromthe date the employer ceases to provide any similar group health plan to anyemployee. Such notices shall be provided in accordance with rules andregulations adopted by the commissioner of insurance.
(k) (1) No policy issued by an insurer to which this section applies shallcontain a provision which excludes, limits or otherwise restricts coveragebecause medicaid benefits as permitted by title XIX of the social security actof 1965 are or may be available for the same accident or illness.
(2) Violation of this subsection shall be subject to the penalties prescribedby K.S.A. 40-2407 and 40-2411, and amendments thereto.
(l) The commissioner is hereby authorized to adopt such rules and regulationsas may be necessary to carry out the provisions of this section.
40-2209.Group sickness and accident insurance;eligibility for coverage;open enrollment; late enrollment; special enrollment; preexisting conditions;exclusions; renewal or continuation of benefits, exceptions; factors foreligibility; participationrequirements designed for groups through negotiations; provisions required inpolicies; disability income policies with benefits integrated with socialsecurity; continued coverage and converted policies, conditions required;excluding or restricting coverage because medicaid benefits available,prohibited; penalties.(a) (1) Group sickness and accident insurance is declaredto be that form of sickness andaccident insurance covering groups of persons, with or without one or moremembers of theirfamilies or one or more dependents. Except at the option of the employee ormember and exceptemployees or members enrolling in a group policy after the close of an openenrollment opportunity,no individual employee or member of an insured group and no individualdependent or familymember may be excluded from eligibility or coverage under a policy providinghospital, medical orsurgical expense benefits both with respect to policies issued or renewedwithin this state and withrespect to policies issued or renewed outside this state covering personsresiding in this state. Forpurposes of this section, an open enrollment opportunity shall be deemed to bea period no lessfavorable than a period beginning on the employee's or member's date of initial eligibility and ending31 days thereafter.
(2) An eligible employee, member or dependent who requests enrollmentfollowing the open enrollment opportunity or any special enrollment period fordependents as specified in subsection (3) shall be considered a late enrollee.An accident and sickness insurer may exclude a late enrollee, except during anopen enrollment period. However, an eligible employee, member or dependentshall not be considered a late enrollee if:
(A) The individual:
(i) Was covered under another group policy which provided hospital, medicalor surgical expense benefits or was covered under section 607(1) of theemployee retirement income security act of 1974 (ERISA) at the time theindividual was eligible to enroll;
(ii) states in writing, at the time of the open enrollment period, thatcoverage under another group policy which provided hospital, medical orsurgical expense benefits was the reason for declining enrollment, but only ifthe group policyholder or the accident and sickness insurer required such awritten statement and provided the individual with notice of the requirementfor a written statement and the consequences of such written statement;
(iii) has lost coverage under another group policy providing hospital,medical or surgical expense benefits or under section 607(1) of the employeeretirement income security act of 1974 (ERISA) as a result of the terminationof employment, reduction in the number of hours of employment, termination ofemployer contributions toward such coverage, the termination of the otherpolicy's coverage, death of a spouse or divorce or legal separation or wasunder a COBRA continuation provision and the coverage under such provision wasexhausted; and
(iv) requests enrollment within 30 days after the termination of coverageunder the other policy; or
(B) a court has ordered coverage to be provided for a spouse or minor childunder a covered employee's or member's policy.
(3) (A) If an accident and sickness insurer issues a group policy providinghospital, medicalor surgical expenses and makes coverage available to a dependent of an eligibleemployee or member and such dependent becomes a dependent of the employee ormember through marriage, birth, adoption or placement for adoption, then suchgroup policy shall provide for a dependent special enrollment period asdescribed in subsection (3)(B) of this section during which the dependent maybe enrolled under the policy and in the case of the birth or adoption of achild, the spouse of an eligible employee or member may be enrolled ifotherwise eligible for coverage.
(B) A dependent special enrollment period under this subsection shall be aperiod of not less than 30 days and shall begin on the later of (i) the datesuch dependent coverage is made available,or (ii) the date of the marriage, birth or adoption or placement for adoption.
(C) If an eligible employee or member seeks to enroll a dependent during thefirst 30 days of such a dependent special enrollment period, the coverage ofthe dependent shall become effective: (i) in the case of marriage, not laterthan the first day of the first month beginning after the date thecompleted request for enrollment is received; (ii) in the case of the birth ofa dependent, as of the date of such birth; or (iii) in the case of adependent's adoption or placement for adoption, the date of such adoption orplacement for adoption.
(4) (A) No group policy providing hospital, medical or surgical expensebenefits issued or renewed within this state or issued or renewed outside thisstate covering residents within this state shall limit or exclude benefits forspecific conditions existing at or prior to the effective date of coveragethereunder. Such policy may impose a preexisting conditions exclusion, not toexceed 90 days following the date of enrollment for benefits for conditionswhether mental or physical, regardless of the cause of the condition for whichmedical advice, diagnosis, care or treatment was recommended or received in the90 days prior to the effective date of enrollment. Any preexisting conditionsexclusion shall run concurrently with any waiting period.
(B) Such policy may impose a waiting period after full-time employment startsbefore an employee is first eligible to enroll in any applicable group policy.
(C) A health maintenance organization which offers such policy which does notimpose any preexisting conditions exclusion may impose an affiliation periodfor such coverage, provided that: (i) such application period is applieduniformly without regard to any health status related factors and (ii) suchaffiliation period does not exceed two months. The affiliation period shall runconcurrently with any waiting period under the plan.
(D) A health maintenance organization may use alternative methods from thosedescribed in this subsection to address adverse selection if approved by thecommissioner.
(E) For the purposes of this section, the term "preexisting conditionsexclusion" shall mean, with respect to coverage, a limitation or exclusion ofbenefits relating to a condition based on the fact that the condition waspresent before the date of enrollment for such coverage whether or not anymedical advice, diagnosis, care or treatment was recommended or received beforesuch date.
(F) For the purposes of this section, the term "date of enrollment" means thedate the individual is enrolled under the group policy or, if earlier, thefirst day of the waiting period for such enrollment.
(G) For the purposes of this section, the term "waiting period" means withrespect to a group policy the period which must pass before the individual iseligible to be covered for benefits under the terms of the policy.
(5) Genetic information shall not be treated as a preexisting condition inthe absence of adiagnosis of the condition related to such information.
(6) A group policy providing hospital, medical or surgical expense benefitsmay not impose any preexisting condition exclusion relating to pregnancy as apreexisting condition.
(7) A group policy providing hospital, medical or surgical expense benefitsmay not impose any preexisting condition waiting period in the case of a childwho is adopted or placed for adoption before attaining 18 years of age and who,as of the last day of a 30-day period beginning on the date of the adoption orplacement for adoption, is covered by a policy specified in subsection (a).This subsection shall not apply to coverage before the date of such adoption orplacement for adoption.
(8) Such policy shall waive such a preexisting conditions exclusion to theextent the employee or member or individual dependent or family member wascovered by (A) a group or individual sickness and accident policy, (B) coverageunder section 607(1) of the employees retirement income security act of 1974(ERISA), (C) a group specified in K.S.A. 40-2222 andamendments thereto, (D) part A or part B of title XVIII of the social securityact, (E) title XIX of the social security act, other than coverage consistingsolely of benefits under section 1928, (F) a state children's health insuranceprogram established pursuant to title XXI of the social security act, (G)chapter 55 of title 10 United States code, (H) a medical care program of theIndian health service or of a tribal organization, (I) the Kansas uninsurablehealth plan act pursuant to K.S.A. 40-2217 et seq. and amendments thereto or asimilar health benefits risk pool of another state, (J) a health plan offeredunder chapter 89 of title 5, United States code, (K) a health benefit planunder section 5(e) of the peace corps act (22 U.S.C. 2504(e)), or (L) a groupsubject to K.S.A. 12-2616 et seq. and amendments thereto which providedhospital, medical and surgical expense benefits within 63 days prior to theeffective date of coverage with no gap in coverage. A group policy shall creditthe periods of prior coverage specified in subsection (a)(7) without regard tothe specific benefits covered during the period of prior coverage. Any periodthat the employee or member is in a waiting period for any coverage under agroup health plan or is in an affiliation period shall not be taken intoaccount in determining the continuous period under this subsection.
(b) (1) An accident and sickness insurer which offers group policiesproviding hospital, medical or surgical expense benefits shall provide acertification as described in subsection (b)(2): (A) At the time an eligibleemployee, member or dependent ceases to be covered under such policy orotherwise becomes covered under a COBRA continuation provision; (B) in the caseof an eligible employee, member or dependent being covered under a COBRAcontinuation provision, at the time such eligible employee, member or dependentceases to be covered under a COBRA continuation provision; and (C) on therequest on behalf of such eligible employee, member or dependent made not laterthan 24 months after the date of the cessation of the coverage described insubsection (b)(1) (A) or (b)(1) (B), whichever is later.
(2) The certification described in this subsection is a written certificationof (A) the period of coverage under a policy specified in subsection (a) andany coverage under such COBRA continuation provision, and (B) any waitingperiod imposed with respect to the eligible employee, member or dependent forany coverage under such policy.
(c) Any group policy may impose participation requirements, define full-timeemployees or members and otherwise be designed for the group as a whole throughnegotiations between the group sponsor and the insurer to the extent suchdesign is not contrary to or inconsistent with this act.
(d) (1) An accident and sickness insurer offering a group policy providinghospital, medical or surgical expense benefits must renew or continue in forcesuch coverage at the option of the policyholder or certificateholder except asprovided in paragraph (2) below.
(2) An accident and sickness insurer may nonrenew or discontinue coverageunder a group policy providing hospital, medical or surgical expense benefitsbased only on one or more of the following circumstances:
(A) If the policyholder or certificateholder has failed to pay any premium orcontributions in accordance with the terms of the group policy providinghospital, medical or surgical expense benefits or the accident and sicknessinsurer has not received timely premium payments;
(B) if the policyholder or certificateholder has performed an act or practicethat constitutes fraud or made an intentional misrepresentation of materialfact under the terms of such coverage;
(C) if the policyholder or certificateholder has failed to comply with amaterial planprovision relating to employer contribution or group participation rules;
(D) if the accident and sickness insurer is ceasing to offer coverage in suchgroup market in accordance with subsections (d)(3) or (d)(4);
(E) in the case of accident and sickness insurer that offers coverage under apolicy providing hospital, medical or surgical expense benefits through anenrollment area, there is no longer any eligible employee, member or dependentin connection with such policy who lives, resides or works in the medicalservice enrollment area of the accident and sickness insurer or in the area forwhich the accident and sickness insurer is authorized to do business; or
(F) in the case of a group policy providing hospital, medical or surgicalexpense benefits which is offered through an association or trust pursuant tosubsections (f)(3) or (f)(5), the membership of the employer in suchassociation or trust ceases but only if such coverage is terminated uniformlywithout regard to any health status related factor relating to any eligibleemployee, member or dependent.
(3) In any case in which an accident and sickness insurer which offers agroup policy providing hospital, medical or surgical expense benefits decidesto discontinue offering such type of group policy, such coverage may bediscontinued only if:
(A) The accident and sickness insurer notifies all policyholders andcertificateholders and all eligible employees or members of suchdiscontinuation at least 90 days prior to the date of the discontinuation ofsuch coverage;
(B) the accident and sickness insurer offers to each policyholder who isprovided such group policy providing hospital, medical or surgical expensebenefits which is being discontinued the option to purchase any other grouppolicy providing hospital, medical or surgical expense benefits currently beingoffered by such accident and sickness insurer; and
(C) in exercising the option to discontinue coverage and in offering theoption of coverage under subparagraph (B), the accident and sickness insureracts uniformly without regard to the claims experience of those policyholdersor certificateholders or any health status related factors relating to anyeligible employee, member or dependent covered by such group policy or newemployees or members who may become eligible for such coverage.
(4) If the accident and sickness insurer elects to discontinue offering grouppolicies providing hospital, medical or surgical expense benefits or groupcoverage to a small employer pursuant to K.S.A. 40-2209f and amendmentsthereto, such coverage may be discontinued only if:
(A) The accident and sickness insurer provides notice to the insurancecommissioner, to all policyholders or certificateholders and to all eligibleemployees and members covered by such group policy providing hospital, medicalor surgical expense benefits at least 180 days prior to the date ofthe discontinuation of such coverage;
(B) all group policies providing hospital, medical or surgical expensebenefits offered by such accident and sickness insurer are discontinued andcoverage under such policies are not renewed; and
(C) the accident and sickness insurer may not provide for the issuance of anygroup policies providing hospital, medical or surgical expense benefits in thediscontinued market during a five year period beginning on the date of thediscontinuation of the last such group policy which is nonrenewed.
(e) An accident and sickness insurer offering a group policy providinghospital, medical or surgical expense benefits may not establish rules foreligibility (including continued eligibility) of any employee, member ordependent to enroll under the terms of the group policy based on any of thefollowing factors in relation to the eligible employee, member or dependent:(A) Health status, (B) medical condition, including both physical and mentalillness, (C) claims experience, (D) receipt of health care, (E) medicalhistory, (F) genetic information, (G) evidence of insurability, includingconditions arising out of acts of domestic violence, or (H) disability. Thissubsection shall not be construed to require a policy providing hospital,medical or surgical expense benefits to provide particular benefits other thanthose provided under the terms of such group policy or to prevent a grouppolicy providing hospital, medical or surgical expense benefits fromestablishing limitations or restrictions on the amount, level, extent or natureof the benefits or coverage for similarly situated individuals enrolled underthe group policy.
(f) Group accident and health insurance may be offered to a group underthe following basis:
(1) Under a policy issued to an employer or trustees of a fund established byan employer, who is the policyholder, insuring at least two employees of suchemployer, for the benefit of persons other than the employer. The term"employees" shall include the officers, managers, employees and retiredemployees of the employer, the partners, if the employer is a partnership, theproprietor, if the employer is an individual proprietorship, the officers,managers and employees and retired employees of subsidiary or affiliatedcorporations of a corporation employer, and the individual proprietors,partners, employees and retired employees of individuals and firms, thebusiness of which and of the insured employer is under common control throughstock ownership contract, or otherwise. The policy may provide that the term"employees" may include the trustees or their employees, or both, if theirduties are principally connected with such trusteeship. A policy issued toinsure the employees of a public body may provide that the term "employees"shall include elected or appointed officials.
(2) Under a policy issued to a labor union which shall have a constitutionand bylaws insuring at least 25 members of such union.
(3) Under a policy issued to the trustees of a fund established by two ormore employers or business associations or by one or more labor unions or byone or more employers and one or more labor unions, which trustees shall be thepolicyholder, to insure employees of the employers or members of the union ormembers of the association for the benefit of persons other than the employersor the unions or the associations. The term "employees" shall include theofficers, managers, employees and retired employees of the employer and theindividual proprietor or partners if the employer is an individual proprietoror partnership. The policy may provide that the term "employees" shall includethe trustees or their employees, or both, if their duties are principallyconnected with such trusteeship.
(4) A policy issued to a creditor, who shall be deemed the policyholder, toinsure debtors of the creditor, subject to the following requirements: (a) Thedebtors eligible for insurance under the policy shall be all of the debtors ofthe creditor whose indebtedness is repayable in installments, or all of anyclass or classes determined by conditions pertaining to the indebtedness or tothe purchase giving rise to the indebtedness. (b) The premium for the policyshall be paid by the policyholder, either from the creditor's funds or fromcharges collected from the insured debtors, or from both.
(5) A policy issued to an association which has been organized and ismaintained for the purposes other than that of obtaining insurance, insuring atleast 25 members, employees, or employees of members of the association for thebenefit of persons other than the association or its officers. The term"employees" shall include retired employees. The premiums for the policiesshall be paid by the policyholder, either wholly from association funds, orfunds contributed by the members of such association or by employees of suchmembers or any combination thereof.
(6) Under a policy issued to any other type of group which the commissionerof insurance may find is properly subject to the issuance of a group sicknessand accident policy or contract.
(g) Each such policy shall contain in substance: (1) A provision that a copyof the application, if any, of the policyholder shall be attached to the policywhen issued, that all statements made by the policyholder or by the personsinsured shall be deemed representations and not warranties, and that nostatement made by any person insured shall be used in any contest unless a copyof the instrument containing the statement is or has been furnished to suchperson or the insured's beneficiary.
(2) A provision setting forth the conditions under which an individual'scoverage terminates under the policy, including the age, if any, to which anindividual's coverage under the policy shall be limited, or, the age, if any,at which any additional limitations or restrictions are placed upon anindividual's coverage under the policy.
(3) Provisions setting forth the notice of claim, proofs of loss and claimforms, physical examination and autopsy, time of payment of claims, to whombenefits are payable, payment of claims, change of beneficiary, and legalaction requirements. Such provisions shall not be less favorable to theindividual insured or the insured's beneficiary than those corresponding policyprovisions required to be contained in individual accident and sicknesspolicies.
(4) A provision that the insurer will furnish to the policyholder, for thedelivery to each employee or member of the insured group, an individualcertificate approved by the commissioner of insurance setting forth in summaryform a statement of the essential features of the insurance coverage of suchemployee or member, the procedure to be followed in making claim under thepolicy and to whom benefits are payable. Such certificate shall also contain asummary of those provisions required under paragraphs (2) and (3) of thissubsection (g) in addition to the other essential features of the insurancecoverage. If dependents are included in the coverage, only one certificate needbe issued for each family unit.
(h) No group disability income policy which integrates benefits with socialsecurity benefits, shall provide that the amount of any disability benefitactually being paid to the disabled person shall be reduced by changes in thelevel of social security benefits resulting either from changes in the socialsecurity law or due to cost of living adjustments which become effective afterthe first day for which disability benefits become payable.
(i) A group policy of insurance delivered or issued for delivery or renewedwhich provides hospital, surgical or major medical expense insurance, or anycombination of these coverages, on an expense incurred basis, shall providethat an employee or member or such employee's or member's covered dependentswhose insurance under the group policy has been terminated for any reason,including discontinuance of the group policy in its entirety or with respect toan insured class, and who has been continuously insured under the group policyor under any group policy providing similar benefits which it replaces for atleast three months immediately prior to termination, shall be entitled to havesuch coverage nonetheless continued under the group policy for a period of 18months and have issued to the employee or member or such employee's or member'scovered dependents by the insurer, at the end of such eighteen-month period ofcontinuation, a policy of health insurance which conforms to the applicablerequirements specified in this subsection. This requirement shall not apply toa group policy which provides benefits for specific diseases or for accidentalinjuries only or a group policy issued to an employer subject to thecontinuation and conversion obligations set forth at title I, subtitle B, part6 of the employee retirement income security act of 1974 or at title XXII ofthe public health service act, as each act was in effect on January 1, 1987 tothe extent federal law provides the employee or member or such employee's ormember's covered dependents with equal or greater continuation or conversionrights; or an employee or member or such employee's or member's covereddependents shall not be entitled to have such coverage continued or a convertedpolicy issued to the employee or member or such employee's or member's covereddependents if termination of the insurance under the group policy occurredbecause:
(1) The employee or member or such employee's or member's covered dependentsfailed to pay any required contribution after receiving reasonable notice ofsuch required contribution from the insurer in accordance with rules andregulations adopted by the commissioner of insurance; (2) any discontinuedgroup coverage was replaced by similar group coverage within 31 days; (3) theemployee or member is or could be covered by medicare (title XVIII of theUnited States social security act as added by the social security amendmentsof 1965 or as later amended or superseded); (4) the employee or member is orcould be covered to the same extent by any other insured or lawful self-insuredarrangement which provides expense incurred hospital, surgical or medicalcoverage and benefits for individuals in a group under which the person was notcovered prior to such termination; or (5) coverage for the employee or member,or any covered dependent thereof, was terminated for cause as permitted by thegroup policy or certificate of coverage approved by the commissioner. In theevent the group policy is terminated and not replaced the insurer may issue anindividual policy or certificate in lieu of a conversion policy or thecontinuation of group coverage required herein if the individual policy orcertificate provides substantially similar coverage for the same or lesspremium as the group policy. In any event, the employee or member shall havethe option to be issued a conversion policy which meets the requirements setforth in this subsection in lieu of the right to continue group coverage.
(j) The continued coverage and the issuance of a converted policy shall besubject to the following conditions:
(1) Written application for the converted policy shall be made and the firstpremium paid to the insurer not later than 31 days after termination ofcoverage under the group policy or not later than 31 days after notice isreceived pursuant to paragraph (20) of this subsection.
(2) The converted policy shall be issued without evidence of insurability.
(3) The employer shall give the employee andsuch employee's covereddependents reasonable notice of the right to continuation of coverage. Theterminated employee or member shall pay to the insurancecarrier the premium for theeighteen-month continuation of coverage and such premium shall be the same asthat applicable to members or employees remaining in the group. Failure to paysuch premium shall terminate coverage under the group policy at the end of theperiod for which the premium has been paid. The premium rate charged forconverted policies issued subsequent to the period of continued coverage shallbe such that can be expected to produce an anticipated loss ratio of not lessthan 80% based upon conversion, morbidity and reasonable assumptions forexpected trends in medical care costs. In the event the group policy isterminated and is not replaced, converted policies may be issued atself-sustaining rates that are not unreasonable in relation to the coverageprovided based on conversion, morbidity and reasonable assumptions for expectedtrends in medical care costs. The frequency of premium payment shall be thefrequency customarily required by the insurer for the policy form and planselected, provided that the insurer shall not require premium payments lessfrequently than quarterly.
(4) The effective date of the converted policy shall be the day following thetermination of insurance under the group policy.
(5) The converted policy shall cover the employee or member and theemployee's or member's dependents who were covered by the group policy on thedate of termination of insurance. At the option of the insurer, a separateconverted policy may be issued to cover any dependent.
(6) The insurer shall not be required to issue a converted policy coveringany person if such person is or could be covered by medicare (title XVIII ofthe United States social security act as added by the social securityamendments of 1965 or as later amended or superseded). Furthermore, the insurershall not be required to issue a converted policy covering any person if:
(A) (i) Such person is covered for similar benefits by another hospital,surgical, medical or major medical expense insurance policy or hospital ormedical service subscriber contract or medical practice or other prepaymentplan or by any other plan or program, or
(ii) such person is eligible for similar benefits (whether or not coveredtherefor) under any arrangement of coverage for individuals in a group, whetheron an insured or uninsured basis, or
(iii) similar benefits are provided for or available to such person, pursuantto or in accordance with the requirements of any state or federal law, and
(B) the benefits provided under the sources referred to in clause (A) (i)above for such person or benefits provided or available under the sourcesreferred to in clauses (A) (ii) and (A) (iii) above for such person, togetherwith the benefits provided by the converted policy, would result inover-insurance according to the insurer's standards. The insurer's standardsmust bear some reasonable relationship to actual health care costs in the areain which the insured lives at the time of conversion and must be filed with thecommissioner of insurance prior to their use in denying coverage.
(7) A converted policy may include a provision whereby the insurer mayrequest information in advance of any premium due date of such policy of anyperson covered as to whether:
(A) Such person is covered for similar benefits by another hospital,surgical, medical or major medical expense insurance policy or hospital ormedical service subscriber contract or medical practice or other prepaymentplan or by any other plan or program;
(B) such person is covered for similar benefits under any arrangement ofcoverage forindividuals in a group, whether on an insured or uninsured basis; or
(C) similar benefits are provided for or available to such person,pursuant to or in accordancewith the requirements of any state or federal law.
(8) The converted policy may provide that the insurer may refuse to renew thepolicy and the coverage of any person insured for the following reasons only:
(A) Either the benefits provided under the sources referred to in clauses(A)(i) and (A)(ii) of paragraph (6) for such person or benefits provided oravailable under the sources referred to in clause (A)(iii) of paragraph (6)forsuch person, together with the benefits provided by the converted policy, wouldresult in over-insurance according to the insurer's standards on file with thecommissioner of insurance, or the converted policyholder fails to provide therequested information;
(B) fraud or material misrepresentation in applying for any benefits underthe convertedpolicy; or
(C) other reasons approved by the commissioner of insurance.
(9) An insurer shall not be required to issue a converted policy whichprovides coverage and benefits in excess of those provided under the grouppolicy from which conversion is made.
(10) If the converted policy provides that any hospital, surgical or medicalbenefits payable may be reduced by the amount of any such benefits payableunder the group policy after the termination of the individual's insurance orthe converted policy includes provisions so that during the first policy yearthe benefits payable under the converted policy, together with the benefitspayable under the group policy, shall not exceed those that would have beenpayable had the individual's insurance under the group policy remained in forceand effect, the converted policy shall provide credit for deductibles,copayments and other conditions satisfied under the group policy.
(11) Subject to the provisions and conditions of this act, if the groupinsurance policy from which conversion is made insures the employee or memberfor major medical expense insurance,the employee or member shall be entitled to obtain a converted policy providingcatastrophic or major medical coverage under a plan meeting the followingrequirements:
(A) A maximum benefit at least equal to either, at the option of the insurer,paragraphs (i) or (ii) below:
(i) The smaller of the following amounts:
The maximum benefit provided under the group policy or a maximum payment of$250,000 per covered person for all covered medical expenses incurred duringthe covered person's lifetime.
(ii) The smaller of the following amounts:
The maximum benefit provided under the group policy or a maximum payment of$250,000for each unrelated injury or sickness.
(B) Payment of benefits at the rate of 80% of covered medical expenses whichare in excess of the deductible, until 20% of such expenses in a benefit periodreaches $1,000, after which benefits will be paid at the rate of 100% duringthe remainder of such benefit period. Payment of benefits for outpatienttreatment of mental illness, if provided in the converted policy, may be at alesser rate but not less than 50%.
(C) A deductible for each benefit period which, at the option of the insurer,shall be (i) the sum of the benefits deductible and $100, or (ii) thecorresponding deductible in the group policy. The term "benefits deductible,"as used herein, means the value of any benefits provided on an expense incurredbasis which are provided with respect to covered medical expenses by any otherhospital, surgical, or medical insurance policy or hospital or medical servicesubscriber contract or medical practice or other prepayment plan, or any otherplan or program whether on an insured or uninsured basis, or in accordance withthe requirements of any state or federal law and, if pursuant to the conditionsof paragraph (13), the converted policy provides both basic hospital orsurgical coverage and major medical coverage, the value of such basic benefits.
If the maximum benefit is determined by clause (A)(ii) of this paragraph, theinsurer may require that the deductible be satisfied during a period of notless than three months if the deductible is $100 or less, and not less than sixmonths if the deductible exceeds $100.
(D) The benefit period shall be each calendar year when the maximum benefitis determined by clause (A)(i) of this paragraph or 24 months when the maximumbenefit is determined by clause (A)(ii) of this paragraph.
(E) The term "covered medical expenses," as used above, shall include atleast, in the case of hospital room and board charges 80% of the averagesemiprivate room and board rate for the hospital in which the individual isconfined and twice such amount for charges in an intensive care unit. Anysurgical schedule shall be consistent with those customarily offered by theinsurer under group or individual health insurance policies and must provide atleast a $1,200 maximum benefit.
(12) The conversion privilege required by this act shall, if the groupinsurance policy insures the employee or member for basic hospital or surgicalexpense insurance as well as major medical expense insurance, make availablethe plans of benefits set forth in paragraph (11). At the option of theinsurer,such plans of benefits may be provided under one policy.
The insurer may also, in lieu of the plans of benefits set forth in paragraph(11), provide a policy of comprehensive medical expense benefits without firstdollar coverage. The policy shall conform to the requirements of paragraph(11). An insurer electing to provide such a policy shall make available a lowdeductible option, not to exceed $100, a high deductible option between $500and $1,000, and a third deductible option midway between the high andlow deductible options.
(13) The insurer, at its option, may also offer alternative plans for grouphealth conversion in addition to those required by this act.
(14) In the event coverage would be continued under the group policy on anemployee following the employee's retirement prior to the time the employee isor could be covered by medicare, the employee may elect, in lieu of suchcontinuation of group insurance, to have the same conversion rights as wouldapply had such person's insurance terminated at retirement by reason oftermination of employment or membership.
(15) The converted policy may provide for reduction of coverage on any personupon such person's eligibility for coverage under medicare (title XVIII of theUnited States social security act as added by the social security amendments of1965 or as later amended or superseded) or under any other state or federal lawproviding for benefits similar to those provided by the converted policy.
(16) Subject to the conditions set forth above, the continuation andconversion privileges shall also be available:
(A) To the surviving spouse, if any, at the death of the employee or member,with respect to the spouse and such children whose coverage under the grouppolicy terminates by reason of such death, otherwise to each surviving childwhose coverage under the group policy terminates by reason of such death, or,if the group policy provides for continuation of dependents' coverage followingthe employee's or member's death, at the end of such continuation;
(B) to the spouse of the employee or member upon termination of coverage ofthe spouse, while the employee or member remains insured under the grouppolicy, by reason of ceasing to be a qualified family member under the grouppolicy, with respect to the spouse and such children whose coverage under thegroup policy terminates at the same time; or
(C) to a child solely with respect to such child upon termination of suchcoverage by reason of ceasing to be a qualified family member under the grouppolicy, if a conversion privilege is not otherwise provided above with respectto such termination.
(17) The insurer may elect to provide group insurance coverage which complieswith this act in lieu of the issuance of a converted individual policy.
(18) A notification of the conversion privilege shall be included in eachcertificate of coverage.
(19) A converted policy which is delivered outside this state must be on aform which could be delivered in such other jurisdiction as a converted policyhad the group policy been issued in that jurisdiction.
(20) The insurer shall give the employee or member and such employee's ormember's covered dependents: (A) Reasonable notice of the right to convert atleast once during the eighteen-month continuation period; or (B) for personscovered under 29 U.S.C. 1161 et seq., notice of the right to a conversionpolicy required by this subsection (d) shall be given at least 30 days prior tothe end of the continuation period provided by 29 U.S.C. 1161 et seq. or fromthe date the employer ceases to provide any similar group health plan to anyemployee. Such notices shall be provided in accordance with rules andregulations adopted by the commissioner of insurance.
(k) (1) No policy issued by an insurer to which this section applies shallcontain a provision which excludes, limits or otherwise restricts coveragebecause medicaid benefits as permitted by title XIX of the social security actof 1965 are or may be available for the same accident or illness.
(2) Violation of this subsection shall be subject to the penalties prescribedby K.S.A. 40-2407 and 40-2411, and amendments thereto.
(l) The commissioner is hereby authorized to adopt such rules and regulationsas may be necessary to carry out the provisions of this section.
