508C.3 Scope. 1. This chapter shall provide coverage under the policies and contracts specified in subsection 2 to all of the following: a. Persons, regardless of where they reside, except for nonresident certificate holders under group policies or contracts, who are the beneficiaries, assignees, or payees, includinghealth care providers rendering services covered under health insurance policies, contracts,or certificates, of the persons covered under paragraph 'b'. b. Persons who are owners of or certificate holders or enrollees under the policies or contracts specified in subsection 2, other than unallocated annuity contracts and structuredsettlement annuities, or are enrollees, insureds, or annuitants under the policies or contracts,and who are either of the following: (1) Residents of this state.(2) Nonresidents of this state if all of the following conditions are met:(a) The state in which the person resides has an association similar to the association created in this chapter. (b) The person is not eligible for coverage by an association described in subparagraph division (a) in any other state due to the fact that the insurer or the health maintenanceorganization was not (b) The person is not eligible for coverage by an association described in subparagraph division (a) in any other state due to the fact that the insurer or the health maintenanceorganization was not licensed in the state at the time specified in that state’s guarantyassociation law. (c) The member insurer that issued the policy or contract is domiciled in this state.c. Persons who are the owners of unallocated annuity contracts if the contracts are issued to or in connection with a specific benefit plan whose plan sponsor has its principal place ofbusiness in this state. d. (1) A payee, or the beneficiary of a payee if the payee is deceased, of a structured settlement annuity, if the payee or beneficiary of the structured settlement annuity is eitherof the following: (a) The payee or beneficiary of the structured settlement annuity is a resident of this state regardless of where the owner of the structured settlement annuity resides. (b) The payee or beneficiary of the structured settlement annuity is not a resident of this state and either of the following conditions is met: (i) The owner of the structured settlement annuity is a resident of this state.(ii) The owner of the settlement annuity is not a resident of this state and either of the following conditions is met: (i) The owner of the structured settlement annuity is a resident of this state.(ii) The owner of the structured settlement annuity is not a resident of this state and both of the following are applicable: (A) The insurer that issued the structured settlement annuity is domiciled in this state.(B) The state in which the owner of the structured settlement annuity resides has an association similar to the association created by this chapter. (2) Subparagraph (1), subparagraph division (b) shall not be applicable if either the payee or beneficiary of the payee if the payee is deceased, or the owner of the structured settlementannuity is eligible for coverage by the association of the state in which the payee, beneficiary,or owner resides. e. A person who is a resident of this state and, only in special circumstances, to a nonresident. In order to avoid duplicate coverage, if a person who would otherwise receivecoverage under this chapter is provided coverage under the laws of any other state, thatperson shall not be provided coverage under this chapter. cate coverage, if a person who would otherwise receivecoverage under this chapter is provided coverage under the laws of any other state, thatperson shall not be provided coverage under this chapter. In determining the application ofthe provisions of this paragraph in a situation where a person could be provided coverageby the association of more than one state, whether as an owner, payee, enrollee, beneficiary,or assignee, this chapter shall be construed in conjunction with other state laws to result incoverage by the association of only one state. 2. This chapter shall provide coverage to the persons specified in subsection 1 under policies or contracts of direct life insurance, health insurance, or annuities, supplementalcontracts, certificates under group policies or contracts, and unallocated annuity contractsissued by member insurers. For purposes of this chapter, health insurance shall includewithout limitation health maintenance organization subscriber contracts and certificates,long-term care insurance, and disability insurance policies. 3. Coverage under this chapter shall not be provided to any of the following: Sat Dec 23 00:41:04 2023 Iowa Code 2024, Section 508C.3 ates,long-term care insurance, and disability insurance policies. 3. Coverage under this chapter shall not be provided to any of the following: Sat Dec 23 00:41:04 2023 Iowa Code 2024, Section 508C.3 (32, 0) §508C.3, IOWA LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION 2 a. A person who is a payee, or a beneficiary of a payee if the payee is deceased, of a contract owner who is a resident of this state, if the payee or the beneficiary of the payee isprovided any coverage by the association of another state. b. A person who is covered pursuant to subsection 1, paragraph 'c', if that person is provided any coverage by the association of another state. c. 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 thetransaction occurred. 4. This chapter does not apply to any of the following:a. Except for a portion of a policy or contract, including a rider, that provides coverage for long-term care or any health insurance benefits, any portion of a policy or contract tothe extent that the rate of interest on which it is based or the interest rate, crediting rate, orsimilar factor long-term care or any health insurance benefits, any portion of a policy or contract tothe extent that the rate of interest on which it is based or the interest rate, crediting rate, orsimilar factor determined by use of an index or other external reference stated in the policy orcontract and employed in calculating returns or changes in value, averaged over the periodof four years prior to the date on which the association becomes obligated with respect tothe policy or contract, exceeds a rate of interest determined by subtracting two percentagepoints from Moody’s corporate bond yield average for the same four-year period or over suchlesser period if the policy or contract was issued less than four years before the associationbecame obligated; and on or after the date on which the association becomes obligated withrespect to the policy or contract, exceeds the rate of interest determined by subtracting threepercentage points from Moody’s corporate bond yield average as most recently available. b. That portion or part of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy or contract holder. c. d yield average as most recently available. b. That portion or part of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy or contract holder. c. A policy or contract or part of a policy or contract assumed by the impaired or insolvent insurer under a contract of reinsurance, other than reinsurance for which assumptioncertificates have been issued. d. An unallocated annuity contract issued to or in connection with an employee benefit plan protected under the federal pension benefit guaranty corporation, regardless of whetherthe federal pension benefit guaranty corporation has yet become liable to make any paymentswith respect to the benefit plan. e. A portion of an unallocated annuity contract which is not issued to or in connection with a specific employee, union, or association of natural persons, or any portion of a financialguarantee. f. A policy or contract issued by a company which is licensed under chapter 509A, 512A, 512B, 514, 518, 518A, or 520, or under section 514B.33. g. Except for a policy issued pursuant to section 515.48, subsection 5, paragraph 'a', a policy or contract issued by a company which is licensed 2B, 514, 518, 518A, or 520, or under section 514B.33. g. Except for a policy issued pursuant to section 515.48, subsection 5, paragraph 'a', a policy or contract issued by a company which is licensed under chapter 515. h. A charitable gift annuity under chapter 508F.i. An annuity contract issued to a government lottery.j. A funding agreement under section 508.31A.k. An obligation that does not arise under the express written terms of a covered policy or contract issued by the member insurer to the enrollee, certificate holder, policy owner, orcontract owner including without limitation all of the following: (1) A claim based on marketing materials.(2) A claim based on side letters, riders, or other documents that were issued by the member insurer without meeting applicable policy or contract form filing or approvalrequirements. (3) A claim based on misrepresentation of or misrepresentation regarding policy or contract benefits. (4) An extra-contractual claim.(5) A claim for penalties, consequential damages, or incidental damages.l. A contractual agreement that establishes a member insurer’s obligations to provide a book value accounting guaranty for defined contribution benefit s, consequential damages, or incidental damages.l. A contractual agreement that establishes a member insurer’s obligations to provide a book value accounting guaranty for defined contribution benefit plan participants byreference to a portfolio of assets that is owned by the benefit plan or its trustee, which ineach case is not an affiliate of the member insurer. m. A portion of a covered policy to the extent it provides for interest or other changes Sat Dec 23 00:41:04 2023 Iowa Code 2024, Section 508C.3 (32, 0) in value to be determined by the use of an index or other external reference stated in thecovered policy, but which have not been credited to the covered policy, or as to which thecovered policy owner’s rights are subject to forfeiture, as of the date the member insurerbecomes an impaired or insolvent insurer under this chapter, whichever is earlier. If acovered policy’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 subjectto forfeiture under the covered policy, the interest or change in value determined by usingthe procedures defined in the covered policy will be g the values that have been credited and are not subjectto forfeiture under the covered policy, the interest or change in value determined by usingthe procedures defined in the covered policy will be credited as if the contractual date ofcrediting interest or changing values was the date of impairment or insolvency, whichever isearlier, and the crediting interest or changing value shall not be subject to forfeiture. n. A policy or contract issued in this state by a member insurer at a time the insurer was not licensed or did not have a certificate of authority to issue the policy or contract in thisstate. o. A portion of a policy or contract issued to a plan or program of an employer, association, or other person to provide life, health, or annuity benefits to employees, members, or others,to the extent that the plan or program is self-funded or uninsured, including but not limitedto benefits payable by an employer, association, or other person under any of the following: (1) A multiple employer welfare arrangement as defined in section 3 of the federal Employee Retirement Income Security Act of 1974, 29 U.S.C. §1002, paragraph 40. r person under any of the following: (1) A multiple employer welfare arrangement as defined in section 3 of the federal Employee Retirement Income Security Act of 1974, 29 U.S.C. §1002, paragraph 40. (2) A minimum premium group insurance plan.(3) A stop-loss group insurance plan.(4) An administrative services-only contract.p. A portion of a policy or contract to the extent that it provides for any of the following:(1) Dividends or experience rating credits.(2) Voting rights.(3) Payment of any fees or allowances to any person, including the policy or contract owner, in connection with service to or administration of the policy or contract. q. A portion of a policy or contract to the extent that the assessments authorized by section 508C.9 with respect to the policy or contract are preempted by federal or state law. r. A policy or contract providing any hospital, medical, prescription drug, or other health care benefits pursuant to any of the following: (1) 42 U.S.C. ch. 7, subch. XVIII, Part C or Part D, commonly known as Medicare Part C and D, or any regulations issued pursuant thereto. (2) 42 U.S.C. ch. 7, subch. pursuant to any of the following: (1) 42 U.S.C. ch. 7, subch. XVIII, Part C or Part D, commonly known as Medicare Part C and D, or any regulations issued pursuant thereto. (2) 42 U.S.C. ch. 7, subch. XIX, commonly known as Medicaid, or any regulations issued pursuant thereto. s. Structured settlement annuity benefits to which a payee or beneficiary has transferred the payee’s or beneficiary’s rights in a structured settlement factoring transaction as definedin 26 U.S.C. §5891(c)(3)(A). 5. a. The benefits that the association may become obligated to cover shall in no event exceed the lesser of either of the following: (1) The contractual obligations for which the member insurer is liable or would have been liable if the member insurer were not an impaired or insolvent insurer. (2) Any of the following:(a) With respect to one life, regardless of the number of policies or contracts:(i) 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 lifeinsurance. (ii) Five hundred thousand dollars for health benefit plans; three hundred thousand dollars for health insurance ousand dollars in net cash surrender and net cash withdrawal values for lifeinsurance. (ii) Five hundred thousand dollars for health benefit plans; three hundred thousand dollars for health insurance benefits which are disability income protection coverage asdefined by the commissioner by rule pursuant to section 514D.4; three hundred thousanddollars for long-term care insurance as defined in section 514G.103; or one hundredthousand dollars for other health insurance benefits including any net cash surrender andnet cash withdrawal values. (iii) Two hundred fifty thousand dollars in the present value of annuity benefits, including net cash surrender and net cash withdrawal values. (iv) With respect to each payee of a structured settlement annuity, or the beneficiary or Sat Dec 23 00:41:04 2023 Iowa Code 2024, Section 508C.3 (32, 0) §508C.3, IOWA LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION 4 beneficiaries of the payee if the payee is deceased, two hundred fifty thousand dollars inpresent value annuity benefits, in the aggregate, including net cash surrender and net cashwithdrawal values. beneficiaries of the payee if the payee is deceased, two hundred fifty thousand dollars inpresent value annuity benefits, in the aggregate, including net cash surrender and net cashwithdrawal values. (b) (i) With respect to each individual participating in a retirement benefit plan established under section 401, 403(b), or 457 of the United States Internal Revenue Code,or each unallocated annuity contract account, excluding a plan established under section401, 403(b), or 457 of the United States Internal Revenue Code, not more than two hundredfifty thousand dollars in the aggregate, in present value annuity benefits, including net cashsurrender and net cash withdrawal values for the beneficiaries of the deceased individual. (ii) However, the association shall not in any event be obligated to cover more than an aggregate of three hundred fifty thousand dollars in benefits with respect to any one life undersubparagraph division (a) and this subparagraph division (b), except with respect to benefitsfor health benefit plans under subparagraph division (a), subparagraph subdivision (ii), inwhich case the aggregate liability of the association shall not exceed five hundred with respect to benefitsfor health benefit plans under subparagraph division (a), subparagraph subdivision (ii), inwhich case the aggregate liability of the association shall not exceed five hundred thousanddollars with respect to any one individual, or more than five million dollars in benefits toone owner of multiple nongroup policies of life insurance regardless of whether the policy orcontract owner is an individual, firm, corporation, or other person, and whether the personsinsured are officers, managers, employees, or other persons, and regardless of the numberof policies and contracts held by the owner. (c) With respect to a plan sponsor whose plan owns, directly or in trust, one or more unallocated annuity contracts not included under subparagraph division (b), not more thanfive million dollars in benefits, regardless of the number of contracts held by the plan sponsor.However, where one or more such unallocated annuity contracts are covered contracts underthis chapter and are owned by a trust or other entity for the benefit of two or more plansponsors, the association shall provide coverage if the largest interest in the trust or entityowning the contract is held by a are owned by a trust or other entity for the benefit of two or more plansponsors, the association shall provide coverage if the largest interest in the trust or entityowning the contract is held by a plan sponsor whose principal place of business is in the statebut in no event shall the association be obligated to cover more than five million dollars inbenefits in the aggregate with respect to all such unallocated contracts. b. The limitations on the association’s obligation to cover benefits that are set forth under this subsection do not take into account the association’s subrogation and assignment rightsor the extent to which such benefits could be provided out of the assets of the impaired orinsolvent insurer attributable to covered policies. The cost of the association’s obligationsunder this chapter may be met by the use of assets attributable to covered policies orreimbursed to the association pursuant to the association’s subrogation and assignmentrights. c. For purposes of this chapter, 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 thebase life insurance policy or annuity s of this chapter, 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 thebase life insurance policy or annuity contract to which the long-term rider relates. 6. In performing its obligations to provide coverage under this chapter, the association shall not be required to guarantee, assume, reinsure, reissue, or perform, or cause to beguaranteed, assumed, reinsured, reissued, or performed, the contractual obligations of aninsolvent or impaired insurer under a covered policy or contract that do not materially affectthe economic values or economic benefits of the covered policy or contract. 87 Acts, ch 223, §3; 88 Acts, ch 1135, §1 – 3; 89 Acts, ch 83, §67; 92 Acts, ch 1162, §6, 7; 98 Acts, ch 1057, §6; 2000 Acts, ch 1023, §13; 2008 Acts, ch 1123, §14; 2010 Acts, ch 1063, §1 – 7;2010 Acts, ch 1193, §60; 2014 Acts, ch 1092, §111 – 114; 2019 Acts, ch 12, §3 – 6, 35, 36; 2020Acts, ch 1063, §274 Referred to in §508C.2, 508C.5, 508C.82019 amendments apply beginning March 29, 2019; 2019 Acts, ch 12, §35, 36 Sat Dec 23 00:41:04 2023 Iowa Code 2024, Section 508C.3 (32, 0)
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