Louisiana Revised Statutes 22:2083 – Coverages and limitations
Terms Used In Louisiana Revised Statutes 22:2083
- Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
- Association: means the Louisiana Life and Health Insurance Guaranty Association created by Louisiana Revised Statutes 22:2084
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Contract: A legal written agreement that becomes binding when signed.
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Insolvent insurer: means a member insurer which is placed under an order by a court of competent jurisdiction with a finding of insolvency. See Louisiana Revised Statutes 22:2084
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- Member insurer: means any insurer or health maintenance organization licensed or which holds a certificate of authority to transact in this state any kind of insurance or health maintenance organization business for which coverage is provided by Louisiana Revised Statutes 22:2084
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Person: means any individual, corporation, partnership, association, or voluntary organization. See Louisiana Revised Statutes 22:2084
- Resident: means a person who resides in this state on the date of entry of a court order that determines a member insurer to be an impaired insurer or a court order that determines a member insurer to be an insolvent insurer and to whom a contractual obligation is owed. See Louisiana Revised Statutes 22:2084
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
- Structured settlement annuity: means an annuity purchased in order to fund periodic payments for a plaintiff or other claimant in payment for or with respect to personal injury suffered by the plaintiff or other claimant. See Louisiana Revised Statutes 22:2084
- Unallocated annuity contract: means any annuity contract or group annuity certificate which is not issued to and owned by an individual except to the extent of any annuity benefits guaranteed to an individual by an insurer under such contract or certificate. See Louisiana Revised Statutes 22:2084
A. This Part shall provide coverage for the policies and contracts specified in Subsection B of this Section:
(1) To any person who, regardless of residence, except for a nonresident certificate holder under a group policy or contract, is the beneficiary, assignee, or payee, including healthcare providers rendering services covered under health insurance policies or certificates, of a person covered under Paragraph (2) of this Subsection.
(2) To any person who is the owner of or certificate holder or enrollee under such a policy or contract, other than a structured settlement annuity, and who is either:
(a) A resident.
(b) Not a resident, but only if all of the following conditions are satisfied:
(i) The member insurer which issued such policy or contract is domiciled in this state.
(ii) The member insurer has never held a license or certificate of authority in the state in which such person resides.
(iii) The state has an association similar to the association created by this Part.
(iv) The person is not eligible for coverage by such association.
(3) For structured settlement annuities specified in Subsection B of this Section, Paragraphs (1) and (2) of this Subsection shall not apply, and this Part shall, except as provided in Paragraphs (4) and (5) of this Subsection, provide coverage to a person who is a payee under a structured settlement annuity, or a beneficiary of a payee if the payee is deceased, if the payee is one of the following:
(a) A resident, regardless of where the contract owner resides.
(b) Not a resident, but only under both of the following conditions:
(i) The contract owner of the structured settlement annuity either is a resident or is not a resident and meets both of the following conditions in the case where the contract owner is not a resident:
(aa) The insurer that issued the structured settlement annuity is domiciled in this state.
(bb) The state in which the contract owner resides has an association similar to the association created by this Part.
(ii) Neither the payee, or the beneficiary, nor the contract owner is eligible for coverage by the association of the state in which the payee or contract owner resides.
(4) This Part shall not provide coverage to:
(a) A person who is a payee or beneficiary of a contract owner resident of this state, if the payee or beneficiary is afforded any coverage by the association of another state.
(b) A person who acquires rights to receive payments through a “structured settlement factoring transaction” as defined in 26 U.S.C. § 5891(c)(3)(A), regardless of when the transaction occurred.
(5) This Part is intended to provide coverage to a person who is a resident of this state and, in special circumstances, to a nonresident. In order to avoid duplicate coverage, if a person who would otherwise receive coverage under this Part is provided coverage under the laws of any other state, the person shall not be provided coverage under this Part. In determining the application of the provisions of this Paragraph in situations where a person could be covered by the association of more than one state, whether as an owner, payee, enrollee, beneficiary or assignee, this Part shall be construed in conjunction with other state laws to result in coverage by only one association.
B.(1) This Part shall provide coverage to the persons specified in Subsection A of this Section for policies or contracts of direct, non-group life insurance, health insurance including, for purposes of this Part, health maintenance organization subscriber contracts and certificates, or annuities, for certificates under direct group policies and contracts for supplemental contracts to any of these, and for unallocated annuity contracts, in each case issued by member insurers, except as limited by this Part.
(2) Except as otherwise provided in Paragraph (3) of this Subsection, this Part shall not provide coverage for any of the following:
(a) Any portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy or contract holder.
(b) Any policy or contract of reinsurance, unless assumption certificates have been issued.
(c) Any portion of a policy or contract to the extent that the rate of interest on which it is based, or the interest rate, crediting rate, or similar factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value:
(i) Averaged over the period of four years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this Part, whichever is earlier, exceeds the rate of interest determined by subtracting two percentage points from Moody’s Corporate Bond Yield Average averaged for that same four-year period or for such lesser period if the policy or contract was issued less than four years before the member insurer becomes an impaired or insolvent insurer under this Part, whichever is earlier.
(ii) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this Part, whichever is earlier, exceeds the rate of interest determined by subtracting three percentage points from Moody’s Corporate Bond Yield Average as most recently available.
(d) Any plan or program of an employer, association, or similar entity to provide life, health, or annuity benefits to its employees or members to the extent that such plan or program is self-funded or uninsured, including but not limited to benefits payable to an employer, association, or similar entity under:
(i) A Multiple Employer Welfare Arrangement as defined in 29 U.S.C. § 1002(40) (the Employee Retirement Income Security Act of 1974) as amended.
(ii) A minimum premium group insurance plan.
(iii) A stop-loss group insurance plan.
(iv) An administrative services only contract.
(e) Any portion of a policy or contract to the extent that it provides dividends, premium refunds, or experience rating credits, or provides that any fees or allowances be paid to any person, including the policy or contract holder, in connection with the service to or administration of such policy or contract.
(f) Any policy or contract issued in this state by a member insurer at a time when it was not licensed or did not have a certificate of authority to issue such policy or contract in this state.
(g) Any unallocated annuity contract except unallocated annuity contracts and defined contribution government plans qualified under Section 403(b) of the United States Internal Revenue Code (26 U.S.C. § 403(b)).
(h) An obligation that does not arise under the express written terms of the policy or contract issued by the member insurer to the enrollee, certificate holder, contract owner, or policy owner, including, without limitations, any of the following:
(i) Claims based upon marketing materials.
(ii) Claims based on side letters, riders, or other documents that were issued by the member insurer without meeting applicable policy or contract form filing or approval requirements.
(iii) Misrepresentations of or regarding policy or contract benefits.
(iv) Extra-contractual claims.
(v) A claim for penalties or consequential or incidental damages.
(i) A policy or contract providing any hospital, medical, prescription drug, or other healthcare benefits pursuant to Part A, Part B, Part C, or Part D of Subchapter XVIII, Chapter 7 of Title 42 of the United States Code, commonly referred to as “Medicare Part A coverage”, “Medicare Part B coverage”, “Medicare Part C coverage”, and “Medicare Part D coverage”, or Subchapter XIX of Chapter 7 of Title 42 of the United States Code, commonly referred to as “Medicaid”, and any regulations issued pursuant to those parts or subchapters.
(j) A portion of a policy or contract to the extent it provides for interest or other changes in value to be determined by the use of an index or other external reference stated in the policy or contract, but which have not been credited to the policy or contract, or as to which the policy or contract owner’s rights are subject to forfeiture, as of the date the member insurer becomes an impaired or insolvent insurer under this Part, whichever is earlier. If a policy’s or contract’s interest or changes in value are credited less frequently than annually, then for purposes of determining the values that have been credited and are not subject to forfeiture under this Paragraph, the interest or change in value determined by using the procedures defined in the policy or contract shall be credited as if the contractual date of crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and shall not be subject to forfeiture.
(k) Structured settlement annuity benefits to which a payee or beneficiary has transferred his rights in a “structured settlement factoring transaction” as defined in 26 U.S.C. § 5891(c)(3)(A), regardless of when the transaction occurred.
(3) The exclusion from coverage provided for in Subparagraph (2)(c) of this Subsection shall not apply to any portion of a policy or contract, including a rider, that provides long-term care or any other health insurance benefits.
C. The benefits for which the association shall become liable shall in no event exceed the lesser of the following:
(1) The contractual obligations for which the member insurer is liable or would have been liable if it were not an impaired or insolvent insurer.
(2) With respect to any one life, regardless of the number of policies or contracts:
(a) Three hundred thousand dollars in life insurance death benefits, but not more than one hundred thousand dollars in net cash surrender and net cash withdrawal values for life insurance.
(b) Five hundred thousand dollars in health insurance benefits.
(c) Two hundred fifty thousand dollars in the present value of annuity benefits, including net cash surrender and net cash withdrawal values.
D. However, in no event shall the association be liable to expend more than five hundred thousand dollars in the aggregate with respect to any one individual under Subsection C of this Section.
E. The liability of the association and benefits paid by the association under any valid act of assignment of benefits pursuant to Subsection C of this Section for any claim under a health policy shall be an amount payable under Title XVIII of the Social Security Act, 42 U.S.C. § 301 et seq. The board of directors of the association shall establish reasonable amounts for any services or supplies covered under a health policy or contract for which an amount has not been determined under the federal Medicare program. A health care provider, defined in La. Rev. Stat. 40:1231.1, shall not bill any person covered by a health policy or contract for which the association has become liable for the amount of any bill in excess of the amount paid by the association.
F. For purposes of this Part, benefits provided by a long-term care rider to a life insurance policy or annuity contract shall be considered the same type of benefits as the base life insurance policy or annuity contract to which it relates.
Acts 1991, No. 998, §1, eff. Sept. 30, 1991; Redesignated from La. Rev. Stat. 22:1395.3 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009; Acts 2009, No. 258, §1; Acts 2012, No. 271, §1; Acts 2014, No. 374, §1; Acts 2017, No. 13, §1, eff. July 1, 2017; Acts 2018, No. 97, §1.
NOTE: Former La. Rev. Stat. 22:2083 redesignated as La. Rev. Stat. 22:495 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009.