HLS 10RS-1370 ORIGINAL
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Regular Session, 2010
HOUSE BILL NO. 1094
BY REPRESENTATIVE ROY
INSURANCE/HEALTH-ACCI D: Provides relative to cancellation of health and accident
coverage by insurers or health maintenance organizations
AN ACT1
To amend and reenact R.S. 22:272(A), (B), and (C), 885(D), 887(A)(1)(a) and (b), (3), (4),2
and (5), (B), (E), and (F), 977, 978(A) and (C), 988(B)(2), (C), (E)(1) and (2), (G),3
(H)(introductory paragraph), (I)(1)(introductory paragraph) and (2)(introductory4
paragraph), (J), (M), and (P), and 1000(A)(introductory paragraph) and (1)(d) and5
(e) and to enact R.S. 22:885(E) and (F), 887(A)(1)(c), and 1000(A)(1)(f) through6
(q), relative to cancellation of health and accident coverage; to provide for7
individual, group, family group, blanket, and association insurance coverage and8
health maintenance organizations with regard to cancellation of policies and9
subscriber agreements; to provide notice requirements; to provide liability for10
benefits incurred and expenses accrued prior and subsequent to notice of cancellation11
and actual cancellation of a policy or subscriber agreement; to prohibit retroactive12
cancellation of a policy or subscriber agreement and to provide for penalties; to13
provide for rules for notice and reestablishment of coverage for nonpayment of14
premiums; to provide for liability for benefits incurred and expenses accrued for15
waiver of a premium due date or failure to collect premium due; to provide for the16
definition of insured; to provide for rights and notice requirements regarding17
conversion of a policy; and to provide for related matters.18
Be it enacted by the Legislature of Louisiana:19
Section 1. R.S. 22:272(A), (B), and (C), 885(D), 887(A)(1)(a) and (b), (3), (4), and20
(5), (B), (E), and (F), 977, 978(A) and (C), 988(B)(2), (C), (E)(1) and (2), (G),21 HLS 10RS-1370 ORIGINAL
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(H)(introductory paragraph), (I)(1)(introductory paragraph) and (2)(introductory paragraph),1
(J), (M), and (P), and 1000(A)(introductory paragraph) and (1)(d) and (e) are hereby2
amended and reenacted and R.S. 22:885(E) and (F), 887(A)(1)(c), and 1000(A)(1)(f)3
through (q) are hereby enacted to read as follows: 4
§272. Notice required for certain prepaid charge rate increases, cancellation or5
nonrenewal of service agreements; other requirements6
A.(1) Every health maintenance organization regulated by this Subpart shall7
notify each master contract group, subscriber, or enrollee in writing at least forty-8
five days before any increase of twenty percent or more in prepaid charges or at least9
sixty thirty days before any cancellation, termination, or nonrenewal of an agreement10
for basic health care services. Such cancellation or termination shall not take effect11
until the expiration of the thirty-day period. Such cancellation or termination shall12
be without prejudice to any claim for benefits accrued or for expenses incurred for13
services rendered up to the date of the cancellation or termination and shall be the14
liability of the health maintenance organization. Benefits and expenses incurred15
shall be as defined and limited by the terms of the policy; however, no subscriber16
agreement provision or term shall waive or abrogate the provisions of this Paragraph.17
In the event of such waiver or abrogation, such provision or term will be considered18
null and void and against public policy. After the effective date of cancellation or19
termination, the health maintenance organization shall only be liable for any20
subsequent claim for benefits accrued or for expenses incurred for services rendered21
subsequent to the cancellation or termination date if the subsequent claim is for an22
illness or condition which was the basis of any claim prior to cancellation or23
termination, including any accrued services or losses that occurred during the period24
of coverage and for which the health maintenance organization had notice. The25
health maintenance organization shall not be liable for subsequent claims after the26
cancellation or termination date if such cancellation or termination was due to27
nonpayment of premium or failure of the subscriber or enrollee to maintain28
eligibility for coverage as provided in the policy. Any pre-authorized, pre-certified,29 HLS 10RS-1370 ORIGINAL
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or other similar action by a health maintenance organization for health care services1
rendered or incurred after the date of notice of cancellation or termination shall be2
the liability of the health maintenance organization.3
(2) The notice required by Paragraph (1) of this Subsection may be waived4
for a basic health care service agreement which covers one hundred or more persons,5
provided a provision for such waiver is made part of the basic health care services6
agreement agreed upon by the insurer and the holder of the master contract. The7
health maintenance organization shall be required to include a provision in the notice8
of cancellation or termination that allows a subscriber or enrollee who meets the9
requirements of R.S. 22:988 to elect a converted subscriber agreement. The notice10
shall set forth the conversion rights available including all requirements, limitations,11
and exceptions, the premium required, and the time of payments of all premiums due12
during the period of conversion. Such notice shall be sent to the last address as13
known to the health maintenance organization or as shown by the health maintenance14
organization's records. Any individual who elects to convert coverage shall provide15
the health organization, within thirty days from the termination or cancellation16
notice, written notice of such election together with the first monthly premium17
contribution. Such conversion coverage shall be, at the option of the individual,18
retroactive to the date of cancellation or termination of the group coverage.19
(3) Subsequent to sending a notice of cancellation or termination, if the20
health maintenance organization elects to extend coverage, waive the premium due21
date, and not collect premium on the premium due date, the health maintenance22
organization shall be liable for coverage until the master contract group, subscriber,23
or enrollee makes a full payment of all outstanding premiums due or until the health24
maintenance organization elects to no longer extend the coverage, waives the25
premium due date, and sends a written notice of cancellation or termination at least26
ten days prior to the expiration of the grace period that is in effect. Any and all27
benefits accrued during the waiver period shall be the liability of the health28
maintenance organization according to the terms of the subscriber agreement.29 HLS 10RS-1370 ORIGINAL
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However, no subscriber agreement provisions or terms shall waive or abrogate the1
provisions of this Paragraph. In the event of such waiver or abrogation, such2
provisions or terms will be considered null and void and against public policy.3
Cancellation or termination shall be on a prospective basis and shall not take effect4
until the expiration of the ten-day period for the grace period that is in effect. For5
the benefit of public policy, a health maintenance organization shall be prohibited6
from retroactively cancelling coverage of any master contract group, subscriber, or7
enrollee. Such act shall constitute a violation of this Section and subject the health8
maintenance organization to the provisions of R.S. 22:1964.9
(4) For purposes of Subsection A of this Section, within thirty days following10
such cancellation or termination, the health maintenance organization shall pay to11
the master contract group, subscriber, or enrollee, or to the person entitled thereto as12
shown by the health maintenance organization's records, any unearned portion of any13
premium paid on the subscriber agreement, as computed on the customary short rate14
or as otherwise specified in the subscriber agreement, and any unearned commission.15
If no premium has been paid on the subscriber agreement, the master contract group,16
subscriber, or enrollee shall be liable to the health maintenance organization for17
premium for the period during which the subscriber agreement was in force.18
B. Nothing in this Section shall be construed to grant to the health19
maintenance organization any additional authorization in relation to cancellation,20
nonrenewal, or other termination of an agreement for basic health care services and21
all provisions of this Subpart which regulate such events shall apply. No basic health22
care services agreement shall be cancelled, nonrenewed, or otherwise terminated23
because the health maintenance organization failed to meet the notice provisions of24
this Section.25
C.(1) The notice provisions of Subsections A and B of this Section shall not26
apply to cancellations due to nonpayment on a timely basis of the prepaid charges.27
The provisions of this Section shall only apply to group health maintenance28
subscriber agreements. If the master contract group, subscriber, or enrollee has not29 HLS 10RS-1370 ORIGINAL
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paid a premium on the premium due date, the health maintenance organization shall1
mail or deliver a ten-day notice of cancellation or termination which shall not take2
effect until the expiration of the ten-day period and such notice shall state that3
extended coverage is in effect until the expiration of the ten-day period. Upon4
expiration of the ten-day period, the master contract group, subscriber, or enrollee5
shall have a thirty-day grace period to make full payment of all outstanding6
premiums due. If premiums are made by the end of the grace period, the subscriber7
agreement will be reinstated with no penalties whatsoever to the master contract8
group, subscriber, or enrollee as of the commencement of the grace period (i.e., day9
eleven), and coverage will remain in effect pursuant to the provisions of the10
subscriber agreement. If premiums are not paid by the end of the grace period, the11
subscriber agreement will lapse as of the date of the commencement of the grace12
period. The health maintenance organization shall be entitled to collect any premium13
paid from the master contract group, subscriber, or enrollee during which the14
subscriber agreement was in effect as set forth in Subparagraph (4) of this15
Subsection.16
(a) In the event of nonpayment of premium by the master contract group,17
subscriber, or enrollee, a written notice of cancellation or termination shall be mailed18
or delivered to the master contract group, subscriber, or enrollee at least ten days19
prior to the effective date of cancellation or termination and such cancellation or20
termination shall not take effect until the expiration of the ten-day period.21
(b) The notice shall state each of the following:22
(i) That coverage under the subscriber agreement or contract will be23
extended until expiration of the ten-day period for group subscriber agreements or24
contracts.25
(ii) That the master contract group, subscriber, or enrollee has a thirty-day26
grace period to pay the prepaid charge by the prepaid charge due date to reinstate the27
policy and if the prepaid charge has not been paid by the end of the grace period, the28 HLS 10RS-1370 ORIGINAL
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subscriber agreement or contract will lapse as of the premium date prior to the1
commencement of the grace period.2
(iii) That no coverage will be in effect during the grace period.3
(iv) That the subscriber or enrollee shall have the right to receive from the4
health maintenance organization written verification of coverage and prepaid charge5
payment by the employer or master contract group. Such verification shall be mailed6
or delivered to the subscriber or enrollee not later than five days from verification7
by the health maintenance organization.8
(2)(a) Every health maintenance organization issuing a contract for health9
care services shall include in such contract a provision providing the subscriber or10
enrollee a grace period of thirty days from the date the prepaid charge was due. If11
the prepaid charge is paid during the grace period, then coverage shall remain in12
effect pursuant to the provisions of the contract. The provisions of this Section shall13
only apply to individual health maintenance subscriber agreements. If the master14
contract group, subscriber, or enrollee has not paid a premium on the premium due15
date, the health maintenance organization shall mail or deliver a ten-day notice of16
cancellation or termination. The master contract group, subscriber, or enrollee shall17
have a thirty-day grace period to make full payment of all outstanding premiums due.18
If premiums are made by the end of the grace period that commences on the19
premium due date, the subscriber agreement will be reinstated with no penalties20
whatsoever to the master contract group, subscriber, or enrollee as of the premium21
due date and coverage will remain in effect pursuant to the provisions of the22
subscriber agreement. If premiums are not paid during the grace period, the23
subscriber agreement will lapse as of the date of the premium due date prior to the24
commencement of the grace period. The health maintenance organization shall be25
entitled to collect any premium paid from the master contract group, subscriber, or26
enrollee during which the subscriber agreement was in effect as set forth in27
Subparagraph (A)(4) of this Section.28 HLS 10RS-1370 ORIGINAL
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(b) In the event of nonpayment of premium by the master contract group,1
subscriber, or enrollee, a written notice of cancellation or termination shall be mailed2
or delivered to the master contract group, subscriber, or enrollee at least ten days3
prior to the effective date of cancellation or termination and such cancellation or4
termination shall not take effect until the expiration of the ten-day period.5
(c) The notice shall state each of the following:6
(i) That coverage under the subscriber agreement or contract will be7
extended until expiration of the ten-day period for group subscriber agreements or8
contracts.9
(ii) That the master contract group, subscriber, or enrollee has a thirty-day10
grace period to pay the prepaid charge by the prepaid charge due date to reinstate the11
policy and if the prepaid charge has not been paid by the end of the grace period, the12
subscriber agreement or contract will lapse as of the premium date prior to the13
commencement of the grace period.14
(iii) That no coverage will be in effect during the grace period.15
(iv) That the subscriber or enrollee shall have the right to receive from the16
health maintenance organization written verification of coverage and prepaid charge17
payment by the employer or master contract group. Such verification shall be mailed18
or delivered to the subscriber or enrollee not later than five days from verification19
by the health maintenance organization.20
(3) The following provisions of this Subsection shall only apply to group and21
individual health maintenance subscriber agreements:22
(a) Upon receipt of the full premium payment within the reinstatement23
period, the health maintenance organization shall send a notice to the master contract24
group, subscriber, or enrollee that the subscriber agreement or contract has been25
reinstated with no penalties.26
(b) Any pre-authorized, pre-certified, or similar action by the health27
maintenance organization for health care services rendered or incurred after the date28 HLS 10RS-1370 ORIGINAL
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of the notice of cancellation or termination shall be the liability of the health1
maintenance organization.2
(c) Such cancellation or termination shall be without prejudice to any claim3
for benefits accrued or expenses incurred for services rendered up to the date of4
cancellation or termination and shall be the health maintenance organization's5
liability. Benefits and expenses incurred shall be as defined and limited by the terms6
of the subscriber agreement or contract; however, no subscriber agreement or7
contractual provision or term shall waive or abrogate the provisions of this8
Subparagraph. In the event of such waiver or abrogation, such provision or term will9
be considered null and void. After the effective date of cancellation or termination,10
the health maintenance organization shall only be liable for any subsequent claim for11
benefits accrued or for expenses incurred for services rendered subsequent to the12
cancellation or termination date if the subsequent claim is for an illness or condition13
which was the basis of any claim prior to cancellation or termination including any14
accrued services or losses that occurred during the period of coverage and for which15
the health maintenance organization had notice. The health maintenance16
organization shall not be liable for subsequent claims after the cancellation or17
termination date if such cancellation or termination was due to nonpayment of18
premium or failure of the subscriber or enrollee to maintain eligibility for coverage19
as provided in the subscriber agreement.20
(d) The notice set forth in Paragraphs (1) and (2) of this Subsection shall be21
directed to the addressee at his last address as known to the health maintenance22
organization or as shown by the health maintenance organization's records, with23
proper prepaid postage affixed, in a letter depository of the United States Post Office.24
The health maintenance organization shall retain in its records any such item so25
mailed, together with its envelope, which was returned by the post office upon26
failure to find or deliver the mailing to the addressee.27
(e) The health maintenance organization shall be required to include a28
provision in the notice of cancellation or termination that allows a subscriber or29 HLS 10RS-1370 ORIGINAL
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enrollee, who meets the requirements of R.S. 22:988 to elect a converted subscriber1
agreement. The notice shall set forth the conversion rights available including all2
requirements, limitations, and exceptions, the premium required, and the time of3
payments of all premiums due during the period of conversion. Such notice shall be4
sent to the last address as known to the health maintenance organization or as shown5
by the health maintenance organization's records. Any individual who elects to6
convert coverage shall provide the health maintenance organization, within thirty7
days from the termination or cancellation notice, written notice of such election8
together with the first monthly premium contribution. Such conversion coverage9
must be, at the option of the individual, retroactive to the date of cancellation or10
termination of the group coverage.11
(f) Subsequent to sending a notice of cancellation or termination, if the12
health maintenance organization elects to extend coverage, waive the premium due13
date, and not collect premium on the premium due date, the health maintenance14
organization shall be liable for coverage until the master contract group, subscriber,15
or enrollee makes full payment of all outstanding premiums due or until the health16
maintenance organization elects to no longer extend the coverage, waive the17
premium due date, and sends written notice of cancellation or termination at least ten18
days prior to the expiration of the grace period that is in effect. Any and all benefits19
accrued during the waiver period shall be the liability of the health maintenance20
organization according to the terms of the policy or subscriber agreement. However,21
no subscriber agreement or contractual provision or terms shall waive or abrogate22
the provisions of this Subparagraph. In the event of such waiver or abrogation, such23
provisions or terms will be considered null and void and against public policy.24
Cancellation or termination shall be on a prospective basis and shall not take effect25
until the expiration of the ten-day period for the grace period that is in effect. For26
the benefit of public policy, a health maintenance organization shall be prohibited27
from retroactively cancelling coverage of any master contract group, subscriber, or28 HLS 10RS-1370 ORIGINAL
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enrollee. Such act shall constitute a violation of this Section and subject the health1
maintenance organization to the provisions of R.S. 22:1964.2
(g) Every health maintenance organization issuing a contract or subscriber3
agreement for health care services shall include in such contract or subscriber4
agreement a provision providing the subscriber or enrollee a grace period of thirty5
days from the date the prepaid charge was due. If the prepaid charge is paid during6
the grace period, then coverage shall remain in effect pursuant to the provisions of7
the contract or subscriber agreement. However, if a health maintenance organization8
elects to extend coverage after the expiration of the grace period and elects to not9
terminate or cancel the contract or subscriber agreement, any and all benefits accrued10
beyond the expiration of the grace period shall be the liability of the health11
maintenance organization according to the terms of the contract or subscriber12
agreement. However, no contract or subscriber agreement provisions or terms shall13
waive or abrogate the provisions of this Subparagraph. In the event of such waiver14
or abrogation, such provisions or term will be considered null and void and against15
public policy.16
(h) Whenever a health maintenance organization does not receive a prepaid17
charge payment fifteen days prior to the end of the grace period, the health18
maintenance organization shall mail, by first class mail, a notice to the subscriber or19
enrollee. The notice shall state that if the prepaid charge has not been paid by the20
end of the grace period, the contract or subscriber agreement will lapse as provided21
by the provisions of the contract. as of the prepaid charge due date prior to the22
commencement of the grace period. The notice shall also state that the contract or23
subscriber agreement will be reinstated with no penalties whatsoever to the24
subscriber or enrollee if the full payment is received within the period allowed for25
reinstatement.26
* * *27
§885. Cancellation by the insured; surrender28
* * *29 HLS 10RS-1370 ORIGINAL
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D.(1) This Section shall not apply to life insurance policies or to annuity1
contracts, nor to the contracts provided in Subpart C of Part IV of Chapter 4 of this2
Title. The provisions of this Subsection shall only apply to cancellations or3
terminations by the insured or enrollee of health and accident policies and health4
maintenance subscriber agreements for reasons other than nonpayment of premiums.5
Upon written notice of cancellation or termination from the insured or enrollee, the6
insurer or health maintenance organization shall mail or deliver a written notice of7
cancellation or termination at least thirty days prior to the effective date of8
cancellation or termination and such cancellation or termination shall not take effect9
until the expiration of the thirty-day period. Such cancellation or termination shall10
be without prejudice to any claim for benefits accrued or expenses incurred for11
services rendered up to the date of cancellation or termination and shall be the12
insurer's or health maintenance organization's liability. Benefits and expenses13
incurred shall be as defined and limited by the terms of the policy or subscriber14
agreement; however, no policy or subscriber agreement provision or term shall waive15
or abrogate the provisions of this Paragraph. In the event of such waiver or16
abrogation, such provision or term will be considered null and void and against17
public policy. After the effective date of cancellation or termination, the insurer or18
health maintenance organization shall only be liable for any subsequent claim for19
benefits accrued or for expenses incurred for services rendered subsequent to the20
cancellation or termination date if the subsequent claim is for an illness or condition21
which was the basis of any claim prior to cancellation or termination including any22
accrued services or losses that occurred during the period of coverage and for which23
the insurer or health maintenance organization had notice. The insurer or health24
maintenance organization shall not be liable for subsequent claims after the25
cancellation or termination date if such cancellation or termination was due to26
nonpayment of premium or failure of the insured or enrollee to maintain eligibility27
for coverage as provided in the policy or subscriber agreement.28 HLS 10RS-1370 ORIGINAL
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(2) The insurer or health maintenance organization shall be required to1
include a provision in the notice of cancellation or termination that allows an insured2
or enrollee who meets the requirements of R.S. 22:988 to elect a converted policy or3
converted subscriber agreement. The notice shall set forth the conversion rights4
available including all requirements, limitations, and exceptions, the premium5
required, and the time of payments of all premiums due during the period of6
conversion. Such notice shall be sent to the last address as known to the insurer or7
health maintenance organization or as shown by the insurer's or health maintenance8
organization's records. Any individual who elects to convert coverage shall provide9
the insurer or health maintenance organization, within thirty days from the10
cancellation or termination notice, written notice or such election together with the11
first monthly premium contribution. Such conversion coverage shall be, at the option12
of the individual, retroactive to the date of cancellation or termination of the group13
coverage.14
(3) Subsequent to sending a notice of cancellation or termination, if the15
insurer or health maintenance organization elects to extend coverage, waive the16
premium due date, and not collect premium on the premium due date, the insurer or17
health maintenance organization shall be liable for coverage until the insured or18
enrollee makes full payment of all outstanding premium due or until the insurer or19
health maintenance organization elects to no longer extend the coverage, waive the20
premium due date, and sends a written notice of cancellation or termination at least21
ten days prior to the expiration of the grace period that is in effect. Any and all22
benefits accrued during the waiver period shall be the liability of the insurer or health23
maintenance organization according to the terms of the policy or subscriber24
agreement. However, no policy or subscriber agreement provisions or terms shall25
waive or abrogate the provisions of this Paragraph. In the event of such waiver or26
abrogation, such provisions or term will be considered null and void and against27
public policy. Cancellation or termination shall be on a prospective basis and shall28
not take effect until the expiration or the ten-day period for the grace period that is29 HLS 10RS-1370 ORIGINAL
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in effect. For the benefit of public policy, an insurer or health maintenance1
organization shall be prohibited from retroactively cancelling coverage of any2
insured or enrollee. Such act shall constitute a violation of this Subsection and3
subject the insurer of health maintenance organization to the provisions of R.S.4
22:1964.5
(4) Within thirty days following cancellation or termination, the insurer or6
health maintenance organization shall pay to the insured, enrollee, or person entitled7
thereto as shown by the insurer's or health maintenance organization's records, any8
unearned portion of any premium paid on the policy or subscriber agreement, as9
computed on the customary short rate or as otherwise specified in the policy or10
subscriber agreement, and any unearned commission. If no premium has been paid11
on the policy or subscriber agreement, the insured or enrollee shall be liable to the12
insurer or health maintenance organization for premium for the period during which13
the policy or subscriber agreement was in force.14
E. This Section shall not apply to life insurance policies or to annuity15
contracts or to the contracts provided for in Subpart C of Part IV of this Chapter.16
F. As used in this Section, "insured" shall be deemed to include, for the17
purposes of insurance hereunder, a policyholder, certificate holder, enrollee,18
member, master contract group, or subscriber who is enrolled in or insured by a19
health insurance issuer or health maintenance organization for health insurance20
coverage.21
* * *22
§887. Cancellation by insurer; changes to homeowner's insurance policies23
A. Cancellation by the insurer of any policy which by its terms is cancelable24
at the option of the insurer, or of any binder based on such policy, may be effected25
as to any interest only upon compliance with either of the following:26
(1)(a) Written notice of such cancellation must be actually delivered or27
mailed to the insured or to his representative in charge of the subject of the insurance28
not less than thirty days prior to the effective date of the cancellation except when29 HLS 10RS-1370 ORIGINAL
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termination of coverage is for nonpayment of premium. The provisions of this1
Subparagraph do not apply to health and accident insurance policies or health2
maintenance subscriber agreements.3
(b)(i) Upon the written request of the named insured, the insurer shall4
provide to the insured in writing the reasons for cancellation of the policy. There5
shall be no liability on the part of and no cause of action of any nature shall arise6
against any insurer or its agents, employees, or representatives for any action taken7
by them to provide the reasons for cancellation as required by this Subparagraph.8
The provisions of this Subparagraph shall only apply to cancellations or terminations9
by the insurer or health maintenance organization of health and accident policies and10
health maintenance subscriber agreements for reasons other than nonpayment of11
premium. The insurer or health maintenance organization shall mail or deliver a12
written notice of cancellation or termination at least thirty days prior to the effective13
date of cancellation or termination and such cancellation or termination shall not take14
effect until the expiration of the thirty-day period. Such cancellation or termination15
shall be without prejudice to any claim for benefits accrued or expenses incurred for16
services rendered up to the date of cancellation or termination and shall be the17
insurer's or health maintenance organization's liability. Benefits and expenses18
incurred shall be as defined and limited by the terms of the policy or subscriber19
agreement; however, no policy or subscriber agreement provision or term shall waive20
or abrogate the provisions of this Subparagraph. In the event of such waiver or21
abrogation, such provision or term will be considered null and void and against22
public policy. After the effective date of cancellation or termination, the insurer or23
health maintenance organization shall only by liable for any subsequent claim for24
benefits accrued or for expenses incurred for services rendered subsequent to the25
cancellation or termination date if the subsequent claim is for an illness or condition26
which was the basis of any claim prior to cancellation or termination including any27
accrued services or losses that occurred during the period of coverage and for which28
the insurer or health maintenance organization had notice. The insurer or health29 HLS 10RS-1370 ORIGINAL
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maintenance organization shall not be liable for subsequent claims after the1
cancellation or termination date if such cancellation or termination was due to2
nonpayment of premium or failure of the insured or enrollee to maintain eligibility3
for coverage as provided in the policy or subscriber agreement.4
(ii) The insurer or health maintenance organization shall be required to5
include a provision in the notice of cancellation or termination that allows an insured6
or enrollee who meets the requirements of R.S. 22:988 to elect a converted policy or7
converted subscriber agreement. The notice shall set forth the conversion rights8
available including all requirements, limitations, and exceptions, the premium9
required, and the time of payments of all premiums due during the period of10
conversion. Such notice shall be sent to the last address as known to the insurer or11
health maintenance organization or as shown by the insurer's or health maintenance12
organization's records. Any individual who elects to convert coverage shall provide13
the insurer or health maintenance organization within thirty days from the14
cancellation or termination notice, written notice of such election together with the15
first monthly premium contribution. Such conversion coverage shall be. at the16
option of the individual, retroactive to the date of cancellation or termination of the17
group coverage.18
(iii) Subsequent to sending a notice of cancellation or termination, if the19
insurer or health maintenance organization elects to extend coverage, waive the20
premium due date, and not collect premium on the premium due date, the insurer or21
health maintenance organization shall be liable for coverage until the insured or22
enrollee makes full payment of all outstanding premiums due or until the insurer or23
health maintenance organization elects to no longer extend the coverage, waive the24
premium due date, and sends a written notice of cancellation or termination at least25
ten days prior to the expiration of the grace period that is in effect. Any and all26
benefits accrued during the waiver period shall be the liability of the insurer or health27
maintenance organization according to the terms of the policy or subscriber28
agreement. However, no policy or subscriber agreement provisions or terms shall29 HLS 10RS-1370 ORIGINAL
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waive or abrogate the provisions of this Item. In the event of such waiver or1
abrogation, such provisions or term will be considered null and void and against2
public policy. Cancellation or termination shall be on a prospective basis and shall3
not take effect until the expiration of the ten-day period for the grace period that is4
in effect. For the benefit of public policy, an insurer or health maintenance5
organization shall be prohibited from retroactively cancelling coverage of any6
insured or enrollee. Such an act shall constitute a violation of this Section and7
subject the insurer or health maintenance organization to the provisions of R.S.8
22:1964.9
(iv) For purposes of Subparagraph (1)(b) in this Subsection, within thirty10
days following such cancellation or termination, the insurer or health maintenance11
organization shall pay to the insured, enrollee, or to the person entitled thereto as12
shown by the insurer's records, any unearned portion or any premium paid on the13
policy or subscriber agreement as computed on the customary short rate or as14
otherwise specified in the policy or subscriber agreement, and any unearned15
commission. If no premium has been paid on the policy or subscriber agreement, the16
insured or enrollee shall be liable to the insurer or health maintenance organization17
for premium for the period during which the policy or subscriber agreement was in18
force.19
(c) Upon the written request of the named insured, the insurer shall provide20
to the insured in writing the reasons for cancellation of the policy. There shall be no21
liability on the part of and no cause of action of any nature shall arise against any22
insurer or its agents, employees, or representatives for any action taken by them to23
provide the reasons for cancellation as required by this Subparagraph.24
* * *25
(3) Where written notice of cancellation or nonrenewal is required and the26
insurer elects to mail the notice, the running of the time period between the date of27
mailing and the effective date of termination of coverage shall commence upon the28 HLS 10RS-1370 ORIGINAL
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date of mailing. The provisions of this Paragraph do not apply to health and accident1
insurance policies or health maintenance subscriber agreements.2
(4) When the policy is a homeowner's insurance policy, like notice shall be3
provided of any cancellation, or if, at the personal request of the insured, any such4
person is removed from the policy or substituted with another as provided in5
Subsection A of this Section. The provisions of this Paragraph do not apply to health6
and accident insurance policies or health maintenance subscriber agreements.7
(5)(a) Any policy may be cancelled by the company at any time during the8
policy period for failure to pay any premium when due whether such premium is9
payable directly to the company or its agent or indirectly under a premium finance10
plan or extension of credit, by mailing or delivering to the insured written notice11
stating when, not less than ten days thereafter, such cancellation shall be effective.12
Nothing in this Code Title shall mandate a separate notice of lapse for nonpayment13
of premium of a policy defined as provided by R.S. 22:1460(G). The provisions of14
this Subparagraph do not apply to health and accident insurance policies or health15
maintenance subscriber agreements.16
(b) The following provisions of this Subparagraph shall only apply to group17
policies or health maintenance subscriber agreements:18
(i) Any policy or subscriber agreement may be cancelled or terminated by the19
insurer or health maintenance organization at any time during the policy or20
subscriber agreement period for failure to pay any premium when due whether such21
premium is payable directly to the insurer or health maintenance organization or its22
agent or indirectly under a premium finance plan or extension or credit.23
(ii) If the insured or enrollee has not paid a premium on the premium due24
date, the insurer or health maintenance organization shall mail or deliver a ten-day25
notice of cancellation or termination which shall not take effect until the expiration26
of the ten-day period and such notice shall state that extended coverage is in effect27
until the expiration of the ten-day period. Upon expiration of the ten-day period, the28
insured or enrollee shall have a thirty-day grace period to make full payment of all29 HLS 10RS-1370 ORIGINAL
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outstanding premiums due. If premiums are made by the end of the grace period, the1
policy or subscriber agreement will be reinstated with no penalties whatsoever to the2
insured or enrollee as of the commencement of the grace period (i.e., day eleven),3
and coverage will remain in effect pursuant to the provisions of the policy or4
subscriber agreement. If premiums are not paid by the end of the grace period, the5
policy or subscriber agreement will lapse as of the date of the commencement of the6
grace period. The insurer or health maintenance organization shall be entitled to7
collect any premium paid from the insured or enrollee during which the policy or8
subscriber agreement was in effect as set forth in Item (1)(b)(iii) of this Subsection.9
(iii) In the event of nonpayment of premium by the insured or enrollee, a10
written notice of cancellation or termination shall be mailed or delivered to the11
insured or enrollee at least ten days prior to the effective date of cancellation or12
termination and such cancellation or termination shall not take effect until the13
expiration of the ten-day period. The notice shall state each of the following:14
(aa) That coverage under the policy or subscriber agreement or contracts will15
be extended until expiration of the ten-day period for group subscriber agreements16
or contracts.17
(bb) That the insured or enrollee has a thirty-day grace period to pay the18
prepaid charge by the prepaid charge due date to reinstate the policy or subscriber19
agreement or contract and if the prepaid charge has not been paid by the end of the20
grace period, the subscriber agreement or contract will lapse as of the premium due21
date prior to the commencement of the grace period.22
(cc) That no coverage will be in effect during the grace period.23
(dd) That the insured or enrollee shall have the right to receive from the24
insurer or health maintenance organization written verification of coverage and25
prepaid charge payment by the employer or insured. Such verification shall be26
mailed or delivered to the insured or enrollee not later than five days from27
verification by the insurer or health maintenance organization.28 HLS 10RS-1370 ORIGINAL
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(c) The following provisions of this Subparagraph shall only apply to1
individual policies or health maintenance subscriber agreements:2
(i) If the insured or enrollee has not paid a premium on the premium due3
date, the insurer health maintenance organization shall mail or deliver a ten-day4
notice of cancellation or termination. The insured or enrollee shall have a thirty-day5
grace period to make full payment of all outstanding premiums due. If premiums are6
made by the end of the grace period, the policy or subscriber agreement will be7
reinstated with no penalties whatsoever to the insured or enrollee as of the premium8
due date and coverage will remain in effect pursuant to the provisions of the policy9
or subscriber agreement. If premiums are not paid during the grace period, the10
policy or subscriber agreement will lapse as of the date of the premium due date11
prior to the commencement of the grace period. The insurer or health maintenance12
organization shall be entitled to collect any premium paid from the insured or13
enrollee during which the policy or subscriber agreement was in effect as set forth14
in Item (1) (b)(iii) of this Subsection.15
(ii) In the event of nonpayment of premium by the insured or enrollee, a16
written notice of cancellation or termination shall be mailed or delivered to the17
insured or enrollee at least ten days prior to the effective date of cancellation or18
termination. The notice shall state each of the following:19
(aa) That coverage under the policy or subscriber agreement or contract will20
cancel or terminate if no premium has been received by the premium due date.21
(bb) That the insured or enrollee has a thirty-day grace period to pay the22
premium or prepaid charge by the premium due date or prepaid charge due date to23
reinstate the policy and if the premium or prepaid charge has not been paid by the24
end of the grace period, the policy or subscriber agreement or contract will lapse as25
of the premium date or prepaid charge date prior to the commencement of the grace26
period.27
(cc) That no coverage will be in effect during the grace period.28 HLS 10RS-1370 ORIGINAL
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(dd) That the insured or enrollee shall have the right to receive from the1
insurer or health maintenance organization written verification or coverage and2
premium or prepaid charge payment by the employer or insured. Such verification3
shall be mailed or delivered to the insured or enrollee not later than five days from4
verification by the insurer or health maintenance organization.5
(d) The following provisions of this Paragraph shall only apply to group and6
individual policies or health maintenance subscriber agreements:7
(i) Upon receipt of the full premium payment within the reinstatement8
period, the insurer or health maintenance organization shall send a notice to the9
insured or enrollee that the policy or subscriber agreement has been reinstated with10
no penalties.11
(ii) Any pre-authorized, pre-certified, or similar action by the insurer or12
health maintenance organization for health care services rendered or incurred after13
the date of the notice of cancellation or termination shall be the liability of the14
insurer or health maintenance organization.15
(iii) Such cancellation or termination shall be without prejudice to any claim16
for benefits accrued or expenses incurred for services rendered up to the date of17
cancellation or termination and shall be in the insurer's or health maintenance18
organization's liability. Benefits and expenses incurred shall be as defined and19
limited by the terms of the policy or subscriber agreement; however, no policy or20
subscriber agreement provision or term shall waive or abrogate the provisions of this21
Subparagraph. In the event of such waiver or abrogation, such provision or term22
will be considered null and void and against public policy. After the effective date23
of cancellation or termination, the insurer or health maintenance organization shall24
only be liable for any subsequent claim for benefits accrued or for expenses incurred25
for services rendered subsequent to the cancellation or termination date if the26
subsequent claim is for an illness or condition which was the basis of any claim prior27
to cancellation or termination including any accrued services or losses that occurred28
during the period of coverage and for which the insurer or health maintenance29 HLS 10RS-1370 ORIGINAL
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organization had notice. The insurer or health maintenance organization shall not1
be liable for subsequent claims after the cancellation or termination date if such2
cancellation or termination was due to nonpayment of premium or failure of the3
insured or enrollee to maintain eligibility for coverage as provided in the policy.4
(iv) The notice set forth in Paragraph (5) of this Subsection shall be directed5
to the addressee at his last address as known to the insurer or health maintenance6
organization or as shown by the insurer's or health maintenance organization's7
records with proper prepaid postage affixed, in a letter depository of the United8
States Post Office. The insurer or health maintenance organization shall retain in its9
records any such item so mailed, together with its envelope, which was returned by10
the post office upon failure to find or deliver the mailing to the addressee.11
(v) The provisions of this Subparagraph shall only apply to cancellations or12
terminations by the insurer or health maintenance organization or health and accident13
policies and health maintenance subscriber agreements. The insurer or health14
maintenance organization shall be required to include a provision in the notice of15
cancellation or termination that allows an insured or enrollee who meets the16
requirements of R.S. 22:988 to elect a converted policy or converted subscriber17
agreement. The notice shall set forth the conversion rights available including all18
requirements, limitations, and exceptions, the premium required, and the time of19
payments of all premiums due during the period of conversion. Such notice shall be20
sent to the last address as known to the insurer or health maintenance organization21
or as shown by the insurer's or health maintenance organization's records. Any22
individual who elects to convert coverage shall provide the insurer or health23
maintenance organization, within thirty days from the cancellation or termination24
notice, written notice of such election together with the first monthly premium25
contribution. Such conversion coverage shall be, at the option of the individual,26
retroactive to the date of cancellation or termination or the group coverage.27
(vi) Subsequent to sending notice or cancellation or termination, if the28
insurer or health maintenance organization elects to extend coverage, waives the29 HLS 10RS-1370 ORIGINAL
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premium due date, and not collect premium on the premium due date, the insurer or1
health maintenance organization shall be liable for coverage until the insured or2
enrollee makes full payment of all outstanding premiums due or until the insurer or3
health maintenance organization elects to no longer extend the coverage, waive the4
premium due date, and sends a written notice of cancellation or termination at least5
ten days prior to the expiration of the grace period that is in effect. Any and all6
benefits accrued during the waiver period shall be the liability of the insurer or health7
maintenance organization according to the terms of the policy. However, no policy8
or subscriber agreement provisions or terms shall waive or abrogate the provisions9
of this Subparagraph. In the event of such waiver or abrogation, such provisions or10
terms will be considered null and void and against public policy. Cancellation or11
termination shall be on a prospective basis and shall not take effect until the12
expiration of the ten-day period for the grace period that is in effect. For the benefit13
of public policy, an insurer or health maintenance organization shall be prohibited14
from retroactively cancelling coverage of any insured or enrollee. Such an act shall15
constitute a violation of this Section and subject the insurer or health maintenance16
organization to the provisions of R.S. 22:1964.17
B. The mailing of any such notice shall be effected by depositing it in a18
sealed envelope, directed to the addressee at his last address as known to the insurer19
or as shown by the insurer's records, with proper prepaid postage affixed, in a letter20
depository of the United States Post Office. The insurer shall retain in its records21
any such item so mailed, together with its envelope, which was returned by the Post22
Office post office upon failure to find, or deliver the mailing to the addressee. The23
provisions of this Subsection do not apply to health and accident insurance policies24
or health maintenance subscriber agreements.25
* * *26
E. This Section shall not apply to temporary life insurance binders nor to27
contracts of life or health and accident insurance which do not contain a provision28 HLS 10RS-1370 ORIGINAL
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for cancellation prior to the date to which premiums have been paid, nor to the1
contracts provided in Subpart C of Part IV of this Chapter. 4 of this Title. 2
F. No insurer shall cancel or refuse to renew any policy of group or family3
group health and accident insurance except for nonpayment of premium or failure4
to meet the requirements for being a group or family group insurance policy until5
sixty days after the insurer has mailed written notice of such cancellation or6
nonrenewal by certified mail to the policyholder. written notice of such cancellation7
or nonrenewal is delivered or mailed, by certified mail, to the insured or to his8
representative in charge of the subject of insurance no less than thirty days prior to9
the effective date of cancellation or nonrenewal. The notice shall also include the10
reason the policy is being cancelled.11
* * *12
§977. Cancellation by insurer and grace period; individual health and accident13
policies14
A. Every insurer , or health maintenance organization, including a trust15
subject to the provisions of R.S. 22:401 et seq., issuing a policy or subscriber16
agreement of individual, group, family group, blanket, or association health and17
accident insurance shall include in such policy or subscriber agreement a provision18
providing the policyholder , insured, subscriber, enrollee, master contract group,19
certificate holder, or member a grace period of thirty days from the date the premium20
was due. Whenever an insurer or health maintenance organization does not receive21
a premium payment fifteen days prior to the end of the grace period, the insurer or22
health maintenance organization shall mail, by first class mail, a notice to the23
policyholder, insured, subscriber, enrollee, master contract group, certificate holder,24
or member. The notice shall state that if the premium has not been paid by the end25
of the grace period, the policy or subscriber agreement will lapse as of the premium26
due date prior to the commencement of the grace period. The notice shall also state27
that the policy or subscriber agreement will be reinstated with no penalties28
whatsoever to the insured, policyholder, subscriber, enrollee, master contract group,29 HLS 10RS-1370 ORIGINAL
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certificate holder, or member if the full premium payment is received within the1
period allowed for reinstatement. If the premium is paid during the grace period, then2
coverage shall remain in effect pursuant to the provisions of the policy. or subscriber3
agreement. However, if an insurer or health maintenance organization elects to4
extend coverage after the expiration of the grace period and elects to not terminate5
or cancel the policy or subscriber agreement, any and all benefits accrued beyond the6
expiration of the grace period shall be the liability of the insurer or the health7
maintenance organization according to the terms of the policy. However, no policy8
or subscriber agreement provisions or terms shall waive or abrogate the provisions9
of this Section. In the event of such waiver or abrogation, such provision or term10
will be considered null and void and against public policy. Nothing in this Title11
shall mandate a separate lapse notice for nonpayment of premiums on a policy issued12
by an insurance company whose products are marketed on the home service13
distribution method and which issues a majority of these policies on a monthly or14
weekly basis.15
B. Whenever an insurer which issues an individual accident and health16
policy does not receive a premium payment fifteen days prior to the end of the grace17
period, the insurer shall mail, by first class mail, a notice to the policyholder. The18
notice shall state that if the premium has not been paid by the end of the grace19
period, the policy will lapse as provided by the provisions of the policy. The notice20
shall also state that the policy will be reinstated with no penalties whatsoever to the21
insured if the full premium payment is received within the period allowed for22
reinstatement. Nothing in this Code shall mandate a separate lapse notice for23
nonpayment of premiums on a policy issued by an insurance company whose24
products are marketed on the home service distribution method and which issues a25
majority of these policies on a monthly or weekly basis.26 HLS 10RS-1370 ORIGINAL
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§978. Group, family group, blanket, and association health and accident insurance;1
notice required for certain premium increase, cancellation, or nonrenewal2
A.(1) Notwithstanding the provisions of R.S. 22:887(A) through (D), every3
insurer, including any trust subject to the provisions of R.S. 22:401 et seq., whether4
domestic or foreign, issuing a policy of group, family group, blanket, or association5
health and accident insurance under the provisions of this Subpart to any group6
composed of one or more members shall notify the policyholder in writing at least7
forty-five days before any increase of twenty percent or more in the policy rates or8
at least sixty thirty days before any cancellation or nonrenewal of such policy. Such9
cancellation or nonrenewal shall comply with the provisions of R.S. 22:887(F).10
(2) The notice required by Paragraph (1) of this Subsection may be waived11
for a policy of group, family group, blanket, or association health and accident12
insurance which covers one hundred or more persons, provided a provision for such13
waiver is made part of the policy agreed upon by the insurer and the policyholder.14
* * *15
C. The notice provisions of this Section shall not apply to cancellations due16
to nonpayment of premiums. Such cancellation shall comply with the provisions of17
R.S. 22:887(A)(5)(b)(i) and (ii), (C), (D), (F), and (H).18
* * *19
§988. Policies, group health and accident; conversion20
* * *21
B.22
* * *23
(2) An employee or member shall be denied a converted policy if24
termination of the prior insurance under the group policy occurred because of fraud25
or discontinuance of the prior group policy by replacement of similar group coverage26
within thirty-one thirty days after discontinuance.27
C. The written application for the converted policy shall be completed, and28
the first premium shall be paid to the insurer not later than thirty-one days after29 HLS 10RS-1370 ORIGINAL
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notice to the insured of the termination of the prior group coverage. The insurer or1
health maintenance organization shall be required to include a provision in the notice2
of termination or cancellation that allows an insured or enrollee who meets the3
requirements of Paragraph (B)(1) of this Section to elect a converted policy. The4
notice shall set forth the conversion rights available including all requirements,5
limitations, and exceptions, the premium required, and the time of payments of all6
premiums due during the period of conversion. Such notice shall be sent to the last7
address as known to the insurer or health maintenance organization or as shown by8
the insurer's or health maintenance organization's records. Any individual who elects9
to convert coverage shall provide the insurer or health maintenance organization,10
within thirty days of the termination or cancellation notice, written notice of such11
election together with the first monthly premium contribution. Such conversion12
coverage shall be, at the option of the individual, retroactive to the date of13
cancellation or termination of the group coverage.14
* * *15
E.(1) The premium for the converted policy shall be determined in16
accordance with premium rates applicable to the age, class of risk, and type and17
amount of insurance coverage provided in the converted policy of the person to be18
covered. However, the premium for the converted policy may not exceed the19
premium charged by the Louisiana Health Plan at the time of conversion, adjusted20
for differences between benefit levels for the converted policy and the policy or21
subscriber agreement offered by the Louisiana Health Plan.22
(2) The actual or expected experience under converted policies may be23
combined with the experience under group policies for the purposes of the24
determination of premium and loss experience by the insurer or health maintenance25
organization and the establishment of adequate premium rate levels for group26
coverage.27
* * *28 HLS 10RS-1370 ORIGINAL
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G. The converted policy shall provide insurance coverage for the employee1
or member and the dependents of the employee or member who were covered by the2
group policy for at least three months prior to the date of termination of insurance.3
At the option of the insurer, or health maintenance organization, a separate converted4
policy may be issued to cover any dependent.5
H. The insurer or health maintenance organization shall not be required to6
issue, maintain, or renew a converted policy for an employee or member if any of the7
following apply to the employee or member:8
* * *9
I.(1) A converted policy may include a provision under which the insurer or10
health maintenance organization may request information, in advance of any11
premium due date, of any person covered thereunder as to whether:12
* * *13
(2) The converted policy may provide that the insurer or health maintenance14
organization may refuse to renew the policy of any person only for one of the15
following reasons:16
* * *17
J. An insurer or health maintenance organization under this Section shall not18
be required to issue a converted policy that provides benefits in excess of those19
provided under the preceding group policy.20
* * *21
M. An insurer or health maintenance organization may, at its option, also22
offer alternative plans for group health and accident conversion in addition to the23
converted policy required by this Section.24
* * *25
P. Any insurer of health and accident insurance or health maintenance26
organization may elect to provide group health and accident insurance coverage27
instead of issuing an individual converted policy.28
* * *29 HLS 10RS-1370 ORIGINAL
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§1000. Group, family group, blanket, and association health and accident insurance1
A. Any insurer authorized to write health and accident insurance in this state2
shall have power to issue policies described in this Section. as follows:3
(1) Group health and accident insurance is any policy of health and accident4
insurance, or similar coverage issued by a health maintenance organization, covering5
more than one person, except family group, and blanket policies hereinafter6
specifically provided for, which shall conform to the following requirements:7
* * *8
(d) Except as may otherwise be provided in the policy or contract of group9
health and accident insurance or by R.S. 22:1012, the policyholder and the insurer10
or health maintenance organization may agree to modify, amend, or cancel the group11
policy, and such agreement shall be binding upon the employee , or member insured,12
or enrollee under the group policy, provided that or subscriber agreement if the13
modification, amendment, or cancellation shall be without prejudice to any claim for14
benefits accrued or for expenses incurred for services rendered prior to such15
modification, amendment, or up to the date of cancellation. and shall be the insurer's16
or health maintenance organization's liability. Benefits and expenses incurred shall17
be as defined and limited by the terms of the policy; or subscriber agreement;18
however, upon cancellation by the insurer, no policy or subscriber agreement19
provision or term shall waiver or abrogate the provisions of this Subparagraph. In20
the event of such waiver or abrogation, such provision or term will be considered21
null and void and against public policy. After the effective date of cancellation, the22
insurer or health maintenance organization shall only be liable for any subsequent23
claim for benefits accrued, or for expenses incurred for services rendered, subsequent24
to the cancellation date if the subsequent claim is for an illness or condition which25
was the basis of any claim prior to cancellation including any accrued services or26
losses that occurred during the period of coverage and for which the insurer or health27
maintenance organization had notice. Any cancellation pursuant to this Paragraph28
shall also comply with the provisions of R.S. 22:887(F). Any pre-authorized, pre-29 HLS 10RS-1370 ORIGINAL
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certified, or similar action by an insurer or health maintenance organization for1
health care services rendered or incurred after the date of notice of the cancellation2
shall be the liability of the insurer or health maintenance organization.3
(e) Except as may otherwise be provided in the policy or contract of group4
health and accident insurance, the insurer shall not be liable for benefits accrued, or5
for expenses incurred for services rendered, subsequent to the termination date where6
the policy of insurance terminates for failure of the group policyholder to pay7
premiums or where the employee's or member's coverage terminated for failure of8
the employee or member to maintain eligibility as provided in the policy or contract9
of group health and accident insurance. Upon mutual agreement by the policyholder10
and insurer or health maintenance organization to cancel a group policy or subscriber11
agreement, a written notice of cancellation by the insurer or health maintenance12
organization shall be mailed or delivered at least thirty days prior to the effective13
date of cancellation to the policyholder, employee, member insured, or enrollee, and14
such cancellation shall not take effect until the expiration of the thirty-day period.15
(f) The insurer or health maintenance organization shall be required to16
include a provision in the notice of cancellation or termination that allows an17
employee, member insured, or enrollee who meets the requirements of R.S. 22:98818
to elect a converted policy or converted subscriber agreement. The notice shall set19
forth the conversion rights available including all requirements, limitations, and20
exceptions, the premium required, and the time of payments of all premiums due21
during the period of conversion. Such notice shall be sent to the last address as22
known to the insurer or health maintenance organization or as shown by the insurer's23
or health maintenance organization's records. Any individual who elects to convert24
coverage shall provide the insurer or health maintenance organization within thirty25
days from the cancellation or termination notice, written notice of such election26
together with the first monthly premium contribution. Such conversion coverage27
shall be, at the option of the individual, retroactive to the date of cancellation or28
termination or the group coverage.29 HLS 10RS-1370 ORIGINAL
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(g) Subsequent to sending a notice of cancellation or termination, if the1
insurer or health maintenance organization elects to extend coverage, waive the2
premium due date, and not collect premium on the premium due date, the insurer or3
health maintenance organization shall be liable for coverage until the policyholder,4
employee, member insured, or enrollee makes full payment of all outstanding5
premiums due or until the insurer or health maintenance organization elects to no6
longer extend the coverage, waive the premium due date, and sends a written notice7
of cancellation or termination at least ten days prior to the expiration of the grace8
period that is in effect. Any and all benefits accrued during the waiver period shall9
be the liability of the insurer and benefits for expenses incurred on account of10
hospitalization or medical or surgical aid may be made by the insurer to the hospital11
or other person or persons furnishing such aid. Payment so made shall discharge the12
insurer's obligations with respect to the amount of insurance paid.13
(h) For purposes of Subparagraphs (d) and (e) of this Paragraph, within thirty14
days following such cancellation or termination, the insurer or health maintenance15
organization shall pay to the policyholder, employee, member insured, or enrollee,16
or the person entitled thereto, as shown by the insurer's or health maintenance17
organization's records, any unearned portion of any premium paid on the policy or18
subscriber agreement as computed on the customary short rate or as otherwise19
specified in the policy or subscriber agreement, and any unearned commission. If no20
premium has been paid on the policy or subscriber agreement, the policyholder,21
employee, member insured, or enrollee shall be liable to the insurer or health22
maintenance organization for premium for the period during which the policy or23
subscriber agreement was in force.24
(i) If the policyholder, employee, member insured, or enrollee has not paid25
a premium on the premium due date, the insurer or health maintenance organization26
shall mail or deliver a ten-day notice of cancellation or termination which shall not27
take effect until the expiration of the ten-day period and such notice shall state that28
extended coverage is in effect until the expiration of the ten-day period. Upon29 HLS 10RS-1370 ORIGINAL
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are additions.
expiration of the ten-day period, the policyholder, employee, member insured or1
enrollee shall have a thirty-day grace period to make full payment of all outstanding2
premiums due. If premiums are made by the end of the grace period, the policy or3
subscriber agreement will be reinstated with no penalties whatsoever to the4
policyholder, employee, member insured, or enrollee as of the commencement of the5
grace period (i.e., day eleven), and coverage will remain in effect pursuant to the6
provisions of the policy or subscriber agreement. If premiums are not paid by the7
end of the grace period, the policy or subscriber agreement will lapse as of the date8
of the commencement of the grace period. The insurer or health maintenance9
organization shall be entitled to collect any premium paid from the policyholder,10
employee, member insured, or enrollee during which the policy or subscriber11
agreement was in effect as set forth in Subparagraph (h) of this Subsection.12
(j) In the event of nonpayment of premium by the policyholder, employee,13
member insured, or enrollee, a written notice of cancellation or termination shall be14
mailed or deliver to the policyholder, employee, member insured, or enrollee at least15
ten days prior to the effective date of cancellation or termination and such16
cancellation or termination shall not take effect until the expiration of the ten day17
period. The notice shall state each of the following:18
(i) That coverage under the policy or subscriber agreement or contract will19
be extended until expiration of the ten-day period of group subscriber agreements or20
contracts.21
(ii) That the policyholder, employee, member insured, or enrollee has a22
thirty-day grace period to pay the premium or prepaid charge by the premium or23
prepaid charge due date to reinstate the policy or subscriber agreement or contract24
and if the premium or prepaid charge has not been paid by the end of the grace25
period, the policy or subscriber agreement or contract will lapse as of the premium26
due date or prepaid charge date prior to the commencement of the grace period;27
(iii) That no coverage will be in effect during the grace period.28 HLS 10RS-1370 ORIGINAL
HB NO. 1094
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are additions.
(iv) That the policyholder, employee, member insured, or enrollee shall have1
the right to receive from the insurer or health maintenance organization written2
verification of coverage and premium or prepaid charge payment by the employer.3
Such verification shall be mailed or delivered to the insured or enrollee not later than4
five days from verification by the insurer or health maintenance organization.5
(k) Upon receipt of the full premium payment within the reinstatement6
period, the insurer or health maintenance organization shall send a notice to the7
policyholder, employee, member insured, or enrollee that the policy or subscriber8
agreement has been reinstated with no penalties.9
(l) Any pre-authorized, pre-certified, or similar action by the insurer or10
health maintenance organization for health care services rendered or incurred after11
the date of the notice of cancellation or termination shall be the liability of the12
insurer or health maintenance organization.13
(m) Such cancellation or termination shall be without prejudice to any claim14
for benefits accrued or expenses incurred for services rendered up to the date of15
cancellation or termination and shall be the insurer's or health maintenance16
organization's liability. Benefits and expenses incurred shall be as defined and17
limited by the terms of the policy or subscriber agreement; however, no policy or18
subscriber agreement provision or term shall waive or abrogate the provisions of this19
Subparagraph. In the event of such waiver or abrogation, such provision or term will20
be considered null and void and against public policy. After the effective date of21
cancellation or termination, the insurer or health maintenance organization shall only22
be liable for any subsequent claim for benefits accrued or for expenses incurred for23
services rendered subsequent to the cancellation or termination date if the subsequent24
claim is for an illness or condition which was the basis of any claim prior to25
cancellation or termination including any accrued services or losses that occurred26
during the period of coverage and for which the insurer or health maintenance27
organization had notice. The insurer or health maintenance organization shall not28
be liable for subsequent claims after the cancellation or termination date if such29 HLS 10RS-1370 ORIGINAL
HB NO. 1094
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are additions.
cancellation or termination was due to nonpayment or premium or failure of the1
employee, member insured, or enrollee to maintain eligibility for coverage as2
provided in the policy.3
(n) The notice set forth in Subparagraphs (e) and (i) of this Paragraph shall4
be directed to the addressee at his last address as known to the insurer or health5
maintenance organization or as shown by the insurer's or health maintenance6
organization's records with proper prepaid postage affixed, in a letter depository of7
the United Post Office. Such cancellation or termination shall not take effect until8
the expiration of the ten-day period. The insurer or health maintenance organization9
shall retain in its records any such item so mailed, together with its envelope, which10
was returned by the post office upon failure to find or deliver the mailing to the11
addressee.12
(o) The insurer or health maintenance organization shall be required to13
include a provision in the notice of cancellation or termination that allows an14
employee, member insured, or enrollee who meets the requirements of R.S. 22:98815
to elect to convert policy or converted subscriber agreement. The notice shall set16
forth the conversion rights available including all requirements, limitations, and17
exceptions, the premium required, and the time of payments of all premiums due18
during the period of conversion. Such notice shall be sent to the last address as19
known to the insurer or health maintenance organization or as shown by the insurer's20
or health maintenance organization's records. Any individual who elects to convert21
coverage shall provide the insurer or health maintenance organization, within thirty22
days from the cancellation or termination notice, written notice of such election23
together with the first monthly premium contribution. Such conversion coverage24
shall be, at the option of the individual, retroactive to the date of cancellation or25
termination of the group coverage.26
(p) Subsequent to sending a notice of cancellation or termination, if the27
insurer or health maintenance organization elects to extend coverage, waives the28
premium due date, and not collect premium on the premium due date, the insurer or29 HLS 10RS-1370 ORIGINAL
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are additions.
health maintenance organization shall be liable for coverage until the policyholder,1
employee, member insured, or enrollee makes full payment of all outstanding2
premiums due or until the insurer or health maintenance organization elects to no3
longer extend the coverage, waive the premium due date, and sends a written notice4
of cancellation or termination at least ten days prior to the expiration of the grace5
period that is in effect. Any and all benefits accrued during the waiver period shall6
be the liability of the insurer or health maintenance organization according to the7
terms of the policy or subscriber agreement. However, no policy or subscriber8
agreement provisions or terms shall waive or abrogate the provisions of this9
Subparagraph. In the event of such waiver or abrogation, such provisions or term10
will be considered null and void and against public policy. Cancellation or11
termination shall be on a prospective basis and shall not take effect until the12
expiration of the ten-day period for the grace period that is in effect. For the benefit13
of public policy, an insurer or health maintenance organization shall be prohibited14
from retroactively cancelling coverage of any policyholder, employee, member15
insured, or enrollee. Such act shall constitute a violation of this Section and subject16
the insurer or health maintenance organization to the provisions of R.S.22:1964.17
(q) The insurer or health maintenance organization shall not be liable for18
benefits accrued or for expenses incurred for services rendered subsequent to the19
termination date where the policy of insurance or subscriber agreement terminates20
for failure of the group policyholder to pay premiums or where the employee's or21
member's coverage terminated for failure of the employee or member to maintain22
eligibility as provided in the policy or contract or group health and accident23
insurance. However, subsequent to the termination date, the insurer or health24
maintenance organization shall be liable for any benefits accrued or for expenses25
incurred for services rendered during the period of coverage and for any pre-26
authorized, pre-certified, or similar action by the insurer or health maintenance27
organization for health care services.28
* * *29 HLS 10RS-1370 ORIGINAL
HB NO. 1094
Page 35 of 40
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are additions.
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Roy HB No. 1094
Abstract: Generally establishes and standardizes rules for cancellation of any type of
policy or agreement to provide health and accident coverage by any type of insurer
or health maintenance organization. Also provides penalties for any such
cancellation which is retroactive.
Proposed law provides relative to cancellation of health and accident coverage by various
types of insurers and by health maintenance organizations (HMOs), as follows:
(1)Present law requires every HMO to notify each master contract group in writing at
least 60 days before cancellation or nonrenewal of an agreement to provide health
care services.
Proposed law requires such notice at least 30 days before cancellation, termination,
or nonrenewal of an agreement to provide health care services and additionally
requires that notice be given to each subscriber and enrollee.
(2)Proposed law provides the following rules for termination or cancellation of a health
maintenance agreement for group and individual subscriber agreements:
(a)The agreement will not terminate until the expiration of the 30-day notice
period.
(b)Termination/cancellation will be without prejudice to any claims for benefits
accrued or expenses rendered up to the date of termination/cancellation.
(c)Waiver of termination/cancellation rights is not allowed and is against public
policy.
(d)After the effective date of termination/cancellation, the HMO will be liable
for claims for benefits accrued or for expenses incurred prior to
termination/cancellation.
(e)The HMO will not be liable if termination/cancellation is due to nonpayment
of premiums.
(f)Any pre-authorized, pre-certified, or other similar action by an HMO for
health care services will be the liability of the HMO.
Present law provides for a subscriber/enrollee’s right to elect a converted subscriber
agreement.
Proposed law additionally gives the subscriber/enrollee 30 days to elect to convert
his policy if the first monthly premium is paid.
Proposed law provides that the HMO shall remain liable for coverage under a
subscriber agreement if it elects to extend coverage, waive the premium due date,
and not collect premium on the premium due date. Also requires the HMO to
provide written notice 10 days in advance of termination/cancellation for
nonpayment of premiums.
Proposed law provides that the notice shall inform the master contract group,
subscriber, or enrollee that:
(a)Coverage will be extended for the 10-day period. HLS 10RS-1370 ORIGINAL
HB NO. 1094
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are additions.
(b)A 30-day grace period is allowed to pay the premiums owed and reinstate the
policy or the subscriber agreement will lapse as of the premium date prior to
the commencement of the grace period.
(c)No coverage will be in effect during the 30-day grace period.
(d)It has the right to receive written verification of coverage from the HMO.
Proposed law further requires the HMO to provide an additional 30-day grace period
during which time the HMO shall have no liability for claims made.
Proposed law prohibits the retroactive cancellation of coverage of any master group,
subscriber, or enrollee.
Proposed law requires the return of unearned premiums to the master contract group,
subscriber or enrollee. Also requires the payment of premiums owed by the master
contract group, subscriber, or enrollee for the period during which the subscriber
agreement was in force.
Proposed law provides that upon receipt of the full premium within the reinstatement
period, the HMO shall send notice to the master contract group, subscriber, or
enrollee that the agreement or contract has been reinstated with no penalties.
(3)Present law provides that a health insurance policy may be cancelled by the insured
by providing a health and accident insurer with a 30-day written notice of
cancellation.
Proposed law additionally requires notice at least 30 days before cancellation or
termination of the agreement to provide health care services.
(4)Proposed law would provide the following rules for termination or cancellation of
a health and accident policy maintenance agreement for group and individual
policies or subscriber agreements by the insured:
(a)The agreement will not terminate until the expiration of the 30-day notice
period.
(b)Termination/cancellation will be without prejudice to any claims for benefits
accrued or expenses rendered up to the date of termination/cancellation.
(c)Waiver of termination/cancellation rights is not allowed and is against public
policy.
(d)After the effective date of termination/cancellation, the insurer and HMO
will be liable for claims for benefits accrued or for expenses incurred prior
to termination/cancellation.
(e)The insurer and HMO shall not be liable if termination/cancellation is due to
nonpayment of premiums.
(f)Any pre-authorized, pre-certified, or other similar action by an insurer or
HMO for health care services shall be the liability of the insurer or HMO.
Present law provides for an insured/enrollee’s right to elect a converted subscriber
agreement.
Proposed law additionally allows the insured/enrollee 30 days to elect to convert its
policy/agreement if the first monthly premium is paid.
Proposed law provides that the insurer or HMO shall remain liable for coverage
under a policy or subscriber agreement if it elects to extend coverage, waive the
premium due date, and not collect premium on the premium due date. Further
requires the insurer or HMO to provide written notice 10 days in advance of
termination/cancellation for nonpayment of premiums. HLS 10RS-1370 ORIGINAL
HB NO. 1094
Page 37 of 40
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are additions.
Proposed law provides that the notice shall inform the insured or enrollee that:
(a)Coverage will be extended for the 10 day period.
(b)A 30-day grace period is allowed to pay the premiums owed and reinstate the
policy or the subscriber agreement will lapse as of the premium date prior to
the commencement of the grace period.
(c)No coverage will be in effect during the 30-day grace period.
(d)It has the right to receive written verification of coverage from the insurer or
HMO.
Proposed law further requires the insurer or HMO to give an additional 30-day grace
period during which time the insurer or HMO shall have no liability for claims made.
Proposed law prohibits the retroactive cancellation of coverage of any insured or
enrollee.
Proposed law requires the return of unearned premiums to the insured or enrollee.
Also requires the payment of premiums owed by the insured or enrollee for the
period during which the policy or subscriber agreement was in force.
Proposed law provides that “insured” shall include a policyholder, certificate holder,
enrollee, member, master contract group, or subscriber who is enrolled in or insured
by a health insurance issuer or HMO for health insurance coverage.
Present law provides for the cancellation of a health and accident policy and health
maintenance subscriber agreements by the insurer not less than 30 days prior to the
effective date of cancellation except for nonpayment of premiums.
Proposed law additionally requires notice at least 30 days before cancellation or
termination the agreement to provide health care services.
(5)Proposed law provides the following rules for termination or cancellation of a health
and accident policy maintenance agreement for group and individual policies or
subscriber agreements by the insurer:
(a)The agreement will not terminate until the expiration of the 30-day notice
period.
(b)Termination/cancellation will be without prejudice to any claims for benefits
accrued or expenses rendered up to the date of termination/cancellation.
(c)Waiver of termination/cancellation rights is not allowed and is against public
policy.
(d)After the effective date of termination/cancellation, the insurer and HMO
will be liable for claims for benefits accrued or for expenses incurred prior
to termination/cancellation.
(e)The insurer and HMO shall not be liable if termination/cancellation is due to
nonpayment of premiums.
(f)Any pre-authorized, pre-certified, or other similar action by an insurer or
HMO for health care services shall be the liability of the insurer or HMO.
Present law provides for a insured/enrollee’s right to elect a converted subscriber
agreement.
Proposed law additionally gives the insured/enrollee 30 days to elect to convert its
policy/agreement provided the first monthly premium is paid.
Proposed law provides that the insurer or HMO shall remain liable for coverage
under a policy or subscriber agreement if it elects to extend coverage, waive the
premium due date, and not collect premium on the premium due date. Further HLS 10RS-1370 ORIGINAL
HB NO. 1094
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are additions.
requires the insurer or HMO to provide written notice 10 days in advance of
termination/cancellation for nonpayment of premiums.
Proposed law provides that the notice shall inform the insured or enrollee that:
(a)Coverage will be extended for the 10-day period.
(b)A 30-day grace period is allowed to pay the premiums owed and reinstate the
policy or the subscriber agreement will lapse as of the premium date prior to
the commencement of the grace period.
(c)No coverage will be in effect during the 30-day grace period.
(d)It has the right to receive written verification of coverage from the insurer or
HMO.
Proposed law further requires the insurer or HMO to give an additional 30-day grace
period during which time the insurer or HMO shall have no liability for claims made.
Proposed law prohibits the retroactive cancellation of coverage of any insured or
enrollee.
Proposed law requires the return of unearned premiums to the insured or enrollee.
Also requires the payment of premiums owed by the insured or enrollee for the
period during which the policy or subscriber agreement was in force.
Present law requires every insurer issuing a policy of individual, group, family
group, blanket or association health and accident insurance to provide its insureds
with a 30-day grace period from the date the premium is due. Further provides that
if the premium is paid during the 30-day grace period, coverage shall remain in
effect pursuant to the provisions of the policy.
Proposed law extends this requirement to HMOs and the subscriber agreements
issued to insureds, subscribers, enrollees, master contract groups, certificate holders,
or members.
Proposed law would require the insurer or HMO to provide notice of cancellation if
payment has not been received 15 days prior to the end of the grace period. The
notice shall be sent by first class mail and shall notify the insured, subscriber,
enrollee, master contract group, certificate holder, or member that the policy or
agreement will lapse as of the premium due date and that reinstatement with no
penalty is allowed if full payment of premium is made.
Present law provides that a group health and accident insurance insurer and
policyholder may agree to amend, modify, or cancel the group policy and that the
agreement shall be binding on the employee or member insured. Also provides that
the modification, amendment, or cancellation shall be without prejudice to any claim
for benefits accrued or for expenses incurred for services rendered prior to the
modification, amendment, or cancellation. Further provides that the insurer shall
only be liable for claims for benefits accrued or for expenses incurred for services
rendered subsequent to the cancellation date if the insurer knew of the claim or if the
services were the basis of a previous claim.
Proposed law extends these requirements to HMOs.
Proposed law prohibits the waiver of termination/cancellation rights and provides
that such a waiver is against public policy.
Proposed law provides that any pre-authorized, pre-certified, or other similar action
by an insurer or HMO for health care services shall be the liability of the insurer or
HMO. HLS 10RS-1370 ORIGINAL
HB NO. 1094
Page 39 of 40
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
Proposed law requires that written notice of cancellation be given by the insurer or
HMO to the policyholder, employee, member insured, or enrollee and provides that
such cancellation shall not take effect until the expiration of the 30-day period.
Present law provides for the employee, member insured, or enrollee's right to elect
a converted subscriber agreement.
Proposed law additionally gives the employee, member insured, or enrollee 30 days
to elect to convert its policy/agreement provided the first monthly premium is paid.
Proposed law provides that the insurer or HMO shall remain liable for coverage
under a group, family group, blanket, and association policy or HMO subscriber
agreement if it elects to extend coverage, waive the premium due date and not collect
premium on the premium due date. Also requires the insurer or HMO to provide
written notice 10 days in advance of termination/cancellation for nonpayment of
premiums.
Proposed law provides that the notice shall inform the policyholder, employee,
member insured, or enrollee that:
(a)Coverage will be extended for the 10-day period.
(b)A 30-day grace period is allowed to pay the premiums owed and reinstate the
policy or the subscriber agreement will lapse as of the premium date prior to
the commencement of the grace period.
(c)No coverage will be in effect during the 30-day grace period.
(d)It has the right to receive written verification of coverage from the insurer or
HMO.
Proposed law further requires the insurer or HMO to give an additional 30-day grace
period during which time the insurer or HMO shall have no liability for claims made.
Proposed law prohibits the retroactive cancellation of coverage of any insured or
enrollee.
Proposed law requires the return of unearned premiums to the insured or enrollee.
Also requires the payment of premiums owed by the policyholder, employee,
member insured, or enrollee for the period during which the policy or subscriber
agreement was in force.
(6)Proposed law provides the following rules for termination or cancellation of a group,
family group, blanket, and association health and accident policies or subscriber
agreements:
(a)The agreement will not terminate until the expiration of the 30-day notice
period.
(b)Termination/cancellation will be without prejudice to any claims for benefits
accrued or expenses rendered up to the date of termination/cancellation.
(c)Waiver of termination/cancellation rights is not allowed and is against public
policy.
(d)After the effective date of termination/cancellation, the insurer and HMO
will be liable for claims for benefits accrued or for expenses incurred prior
to termination/cancellation.
(e)The insurer and HMO shall not be liable if termination/cancellation is due to
nonpayment of premiums.
(f)Any pre-authorized, pre-certified, or other similar action by an insurer or
HMO for health care services shall be the liability of the insurer or HMO. HLS 10RS-1370 ORIGINAL
HB NO. 1094
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are additions.
(7)Proposed law makes retroactive cancellation by any type of insurer or HMO subject
to present law relative to unfair or deceptive insurance acts, thus subjecting them to
certain penalties prescribed by such present law. Specifically authorizes the
commissioner of insurance to issue cease and desist orders, suspend or revoke of a
license of the person if he knew or reasonably should have known he was in
violation, or levy a fine of not more than $1,000 for each and every act or violation,
but not to exceed an aggregate penalty of $100,000 unless the person knew or
reasonably should have known he was in violation, in which case the fine shall be
not more than $25,000 for each and every act or violation, but not to exceed an
aggregate penalty of $250,000 in any six-month period.
(Amends R.S. 22:272(A), (B), and (C), 885(D), 887(A)(1)(a) and (b), (3), (4), and (5), (B),
(E), and (F), 977, 978(A) and (C), 988(B)(2), (C), (E)(1) and (2), (G), (H)(intro. para.),
(I)(1)(intro. para), and (2)(intro. para.), (J), (M), and (P), and 1000(A)(intro. para.) and(1)(d)
and (e); Adds R.S. 22:885(E) and (F), 887(A)(1)(c), and 1000(A)(1)(f)-(q))