(a) Every certificate of group insurance issued or delivered in California shall provide for continuation or conversion coverage for the certificate holder if the group coverage terminates for any reason except the following reasons:
(1) The termination of group coverage resulted from the insured’s failure to make any required payment of premium or contribution when due.
(2) The terminating coverage is replaced not later than 31 days after termination by new group coverage effective on the day following the termination and the replacement coverage meets both of the following criteria:
(A) The replacement coverage provides benefits identical to, or benefits determined by the commissioner to be substantially equivalent to or in excess of, those provided by the terminating coverage.
(B) The premium for the replacement coverage is calculated on the insured’s age at the time of issue of the group certificate for the coverage which is being replaced. If the coverage being replaced has itself replaced previous group coverage, the premium for the newest replacement coverage is calculated on the insured’s age at the time the previous group certificate was issued.
(b) “Continuation coverage” means the maintenance of coverage under an existing group policy when that coverage would be or has been terminated and which is subject only to continued timely payment of the premium.
Any insured individual whose eligibility for group coverage is based on his or her relationship to another person, shall be entitled to continuation coverage under the group policy if the qualifying relationship terminates by dissolution of marriage or death.
(c) “Conversion coverage” means an individual policy of long-term care insurance, issued by the insurer of the terminating group coverage, without considering insurability, containing benefits which are identical, or which have been determined by the commissioner to be at least substantially equivalent, to the group coverage which would be or has been terminated for any reason.
In determining whether benefits are substantially equivalent, the commissioner shall consider, if applicable, the relative advantages of managed care plans which use restricted provider networks, considering items such as service availability, benefit levels, and administrative complexity.
The premium for the converted policy shall be calculated on the insured’s age at the time the group certificate was issued. If the terminating group coverage replaced previous group coverage, the premium for the converted policy shall be calculated on the insured’s age at the time the previous group certificate was issued.
Before issuing conversion coverage, the insurer may require, if adequate notice is provided to certificate holders in the certificate, that:
(1) The individual must have been continuously insured under the group policy, or any group policy which it replaced, for at least six months immediately prior to termination in order to be entitled to conversion coverage.
(2) The insured must submit written application for a conversion policy within a reasonable period after termination of the group coverage, and the premium paid as directed by the insurer, in order that the conversion policy be issued effective on the day following termination of group coverage.
(3) The conversion policy contains a provision for a reduction of benefits if the insured has existing long-term care insurance, payable on an expense-incurred basis, which, together with the conversion policy, would result in payment of more than 100 percent of incurred expenses. This provision shall not be included in the conversion policy unless the reduction in benefits is reflected in a premium decrease or refund.
(4) The conversion policy contains a provision limiting the payment for a single claim, spell of illness, or benefit period occurring at the time of conversion, to the amount that would have been payable had the group coverage remained in effect.
(Added by Stats. 1992, Ch. 1132, Sec. 35. Effective January 1, 1993.)