Missouri Revised Statutes

Chapter 376
Life, Health and Accident Insurance
Section 376.397

August 28, 2014


Converted policy to be offered on termination of group health coverage, when--exceptions--terms and conditions.

376.397. 1. A group policy delivered or issued for delivery in this state which insures employees or members for hospital, surgical or major medical insurance on an expense incurred or service basis, other than for specific diseases or for accidental injuries only, shall provide that an employee or member whose insurance under the group policy has been terminated shall be entitled to have a converted policy issued to him by the insurer under whose group policy he was insured, without evidence of insurability, subject to the following terms and conditions:

(1) A converted policy need not be made available to an employee or member if termination of his insurance under the group policy occurred:

(a) Because he failed to make timely payment of any required contribution; or

(b) For any other reason, and he had not been continuously covered under the group policy, and for similar benefits under any group policy which it replaced, during the entire three months' period ending with such termination; or

(c) Because the group policy terminated or an employer's participation terminated, and the insurance is replaced by similar coverage under another group policy within thirty-one days of the date of termination;

(2) Written application and the first premium payment for the converted policy shall be made to the insurer not later than thirty-one days after such termination;

(3) The premium for the converted policy shall be determined in accordance with the insurer's table of premium rates applicable to the age and class of risk of each person to be covered under that policy and to the type and amount of insurance provided;

(4) The converted policy shall cover the employee or member and his dependents who were covered by the group policy on the date of termination of insurance. At the option of the insurer, a separate converted policy may be issued to cover any dependent;

(5) The insurer shall not be required to issue a converted policy covering any person if such person is or could be covered by Medicare. Furthermore, the insurer shall not be required to issue a converted policy covering any person if:

(a) Such person is or could be covered for similar benefits by another individual policy; such person is or could be covered for similar benefits under any arrangement of coverage for individuals in a group, whether insured or uninsured; or similar benefits are provided for or available to such person, by reason of any state or federal law; and

(b) The benefits under sources of the kind referred to in paragraph (a) above for such person, or benefits provided or available under sources of the kind referred to in paragraph (a) above for such person, together with the converted policy's benefits would result in overinsurance according to the insurer's standards for overinsurance;

(6) A converted policy may provide that the insurer may at any time request information of any person covered thereunder as to whether he is covered for the similar benefits described in paragraph (a) of subdivision (5) above or is or could be covered for the similar benefits described in paragraph (a) of subdivision (5) above. The converted policy may provide that as of any premium due date the insurer may refuse to renew the policy or the coverage of any insured person for the following reasons only:

(a) Either those similar benefits for which such person is or could be covered, together with the converted policy's benefits, would result in overinsurance according to the insurer's standards for overinsurance, or the policyholder of the converted policy fails to provide the requested information;

(b) Fraud or material misrepresentation in applying for any benefits under the converted policy;

(c) Eligibility of the insured person for coverage under Medicare or under any other state or federal law providing for benefits similar to those provided by the converted policy;

(d) Other reasons approved by the director of the department of insurance, financial institutions and professional registration;

(7) An insurer shall not be required to issue a converted policy providing benefits in excess of the hospital, surgical or major medical insurance under the group policy from which conversion is made;

(8) The converted policy shall not exclude, as a preexisting condition, any condition covered by the group policy; provided, however, that the converted policy may provide for a reduction of its hospital, surgical or medical benefits by the amount of any such benefits payable under the group policy after the individual's insurance terminates thereunder. The converted policy may also provide that during the first policy year the benefits payable under the converted policy, together with the benefits payable under the group policy, shall not exceed those that would have been payable had the individual's insurance under the group policy remained in force and effect;

(9) Subject to the provisions and conditions of sections 376.395 to 376.404, if the group insurance policy from which conversion is made insures the employee or member for basic hospital or surgical expense insurance, the employee or member shall be entitled to obtain a converted policy providing, at his option, coverage on an expense incurred basis under any of the following plans:

(a) Plan A, which shall include:

a. Hospital room and board daily expense benefits in a maximum dollar amount approximating the average semiprivate rate charged in the largest major metropolitan area of this state, for a maximum duration of seventy days;

b. Miscellaneous hospital expense benefits up to a maximum amount of ten times the hospital room and board daily expense benefits; and

c. Surgical expense benefits according to a surgical procedures schedule consistent with those customarily offered by the insurer under group or individual health insurance policies and providing a maximum benefit of eight hundred dollars;

(b) Plan B, which shall be the same as plan A, except that the maximum hospital room and board daily expense benefit is seventy-five percent of the corresponding maximum under subparagraph a of plan A, and the surgical schedule maximum is six hundred dollars;

(c) Plan C, which shall be the same as plan A, except that the maximum hospital room and board daily expense benefit is fifty percent of the corresponding maximum under subparagraph a of plan A, and the surgical schedule maximum is four hundred dollars.

The maximum dollar amount for plan A's maximum hospital room and board daily expense benefit shall be determined by the director of the department of insurance, financial institutions and professional registration and may be redetermined by him from time to time as to converted policies issued subsequent to such redetermination. Such redetermination shall not be made more often than once every three years. Such plan A maximum, and the corresponding maximums in plans B and C, shall be rounded to the nearest ten dollar multiple; provided that, rounding may be to the next higher or lower multiple of ten dollars if otherwise exactly midway between two multiples;

(10) Subject to the provisions and conditions of sections 376.395 to 376.404, if the group policy from which conversion is made insures the employee or member for major medical expense insurance, the employee or member shall be entitled to obtain a converted policy providing catastrophic or major medical coverage under a plan meeting the following requirements:

(a) A maximum benefit at least equal to, at the option of the insurer, either:

a. A maximum payment per covered person for all covered medical expenses incurred during that person's lifetime, equal to the smaller of the maximum benefit provided under the group policy or two hundred fifty thousand dollars;

b. A maximum payment for each unrelated injury or sickness, equal to the smaller of the maximum benefit provided under the group policy or two hundred fifty thousand dollars;

(b) Payment of benefits at the rate of eighty percent of covered medical expenses which are in excess of the deductible, until twenty percent of such expenses in a benefit period reaches one thousand dollars, after which benefits will be paid at the rate of one hundred percent during the remainder of such benefit period. Payment of benefits for outpatient treatment of mental illness, if provided in the converted policy, may be at a lesser rate, but not less than fifty percent;

(c) A deductible for each benefit period which, at the option of the insurer, shall be the sum of the benefits deductible plus one hundred dollars, or the corresponding deductible in the group policy. The term "benefits deductible", as used herein, means the value of any benefits provided on an expense incurred basis which are provided with respect to covered medical expenses by any other group or individual hospital, surgical or medical insurance policy or medical practice or other prepayment plan, or any other plan or program, whether insured or uninsured, or by reason of any state or federal law and if, pursuant to subdivision (11) herein, the converted policy provides both basic hospital or surgical coverage and major medical coverage, the value of such basic benefits. If the maximum benefit is determined under subparagraph b of paragraph (a) of this subdivision, the insurer may require that the deductible be satisfied during a period of not less than three months if the deductible is one hundred dollars or less, and not less than six months if the deductible exceeds one hundred dollars;

(d) The benefit period shall be each calendar year when the maximum benefit is determined under subparagraph a of paragraph (a) of this subdivision or twenty-four months when the maximum benefit is determined under subparagraph b of paragraph (a) of this subdivision;

(e) The term "covered medical expenses", as used in this subdivision, shall include at least, in the case of hospital room and board charges, the lesser of the dollar amount set out in plan A under subdivision (9) and the average semiprivate room and board rate for the hospital in which the individual is confined, and at least twice such amount for charges in an intensive care unit. Any surgical procedures schedule shall be consistent with those customarily offered by the insurer under group or individual health insurance policies and must provide at least a one thousand two hundred dollar maximum benefit;

(11) At the option of the insurer, benefit plans set forth in subdivisions (9) and (10) of this section may be provided under one policy or, in lieu of the benefit plans set forth in subdivisions (9) and (10) of this section, the insurer may provide a policy for comprehensive medical expense benefits without first dollar coverage. Such policy shall conform to the requirements of subdivision (10) of this section; provided, however, that an insurer electing to provide such a policy shall make available a low deductible option, not to exceed one hundred dollars, a high deductible option between five hundred dollars and one thousand dollars, and a third deductible option midway between the high and low deductible options. Alternatively, such a policy may provide for deductible options equal to the greater of the benefits deductible and the amount specified in the preceding sentence.

2. (1) The insurer may, at its option, offer alternative plans for converted policies from group policies in addition to those required by sections 376.395 to 376.404. Furthermore, if any insurer customarily offers individual policies on a service basis, that insurer may, in lieu of converted policies on an expense incurred basis, make available converted policies on a service basis which, in the opinion of the director of the department of insurance, financial institutions and professional registration, satisfy the intent of sections 376.395 to 376.404.

(2) Nothing in sections 376.395 to 376.404 shall preclude a health service corporation from limiting its conversion offerings to one of the plans offered by the insurer that is consistent with group policies customarily offered by the health service corporation. The employee or member under the group insurance policy from which conversion is made shall be entitled to obtain one such converted policy.

3. Notification of the conversion privilege shall be included in each certificate of coverage.

4. All converted policies shall become effective on the day immediately following the date of termination of insurance under a group policy.

(L. 1981 S.B. 58 ยง 2)

Effective 1-1-83


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