Iowa Life & Health Insurance Guaranty Association

Covered Contracts

§508C.3.2. This chapter shall provide coverage to the persons specified in subsection 1 under policies or contracts of direct life insurance, health insurance, or annuities, supplemental contracts, certificates under group policies or contracts, and unallocated annuity contracts issued by member insurers. For purposes of this chapter, health insurance shall include without limitation health maintenance organization subscriber contracts and certificates, long-term care insurance, and disability insurance policies.

Non-Covered Contracts

§508C.3.4. 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 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 and employed in calculating returns or changes in value, averaged over the period of four years prior to the date on which the association becomes obligated with respect to the policy or contract, exceeds a rate of interest determined by subtracting two percentage points from Moody’s corporate bond yield average for the same four-year period or over such lesser period if the policy or contract was issued less than four years before the association became obligated; and on or after the date on which the association becomes obligated with respect to the policy or contract, exceeds the rate of interest determined by subtracting three percentage 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. 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 assumption certificates 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 whether the federal pension benefit guaranty corporation has yet become liable to make any payments with 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 financial guarantee. 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 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, or contract 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 approval requirements. (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, 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 by reference to a portfolio of assets that is owned by the benefit plan or its trustee, which in each 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 in value to be determined by the use of an index or other external reference stated in the covered policy, but which have not been credited to the covered policy, or as to which the covered policy owner’s rights are subject to forfeiture, as of the date the member insurer becomes an impaired or insolvent insurer under this chapter, whichever is earlier. If a covered 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 subject to forfeiture under the covered policy, the interest or change in value determined by using the procedures defined in the covered policy will be credited as if the contractual date of crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, 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 this state. 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 limited to 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. (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. 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 defined in 26 U.S.C. §5891(c)(3)(A).

Non-Resident Coverage

§508C.3.1.b. (2) Yes, Nonresidents are covered 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 maintenance organization was not licensed in the state at the time specified in that state’s guaranty association law. (c) The member insurer that issued the policy or contract is domiciled in this state.

§508C.3.4A 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 life insurance. (ii) Five hundred thousand dollars for health benefit plans; three hundred thousand dollars for health insurance benefits which are disability income protection coverage as defined by the commissioner by rule pursuant to section 514D.4; three hundred thousand dollars for long-term care insurance as defined in section 514G.103; or one hundred thousand dollars for other health insurance benefits including any net cash surrender and net 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 beneficiaries of the payee if the payee is deceased, two hundred fifty thousand dollars in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal 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 section 401, 403(b), or 457 of the United States Internal Revenue Code, not more than two hundred fifty thousand dollars in the aggregate, in present value annuity benefits, including net cash surrender 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 under subparagraph division (a) and this subparagraph division (b), except with respect to benefits for health benefit plans under subparagraph division (a), subparagraph subdivision (ii), in which case the aggregate liability of the association shall not exceed five hundred thousand dollars with respect to any one individual, or more than five million dollars in benefits to one owner of multiple nongroup policies of life insurance regardless of whether the policy or contract owner is an individual, firm, corporation, or other person, and whether the persons insured are officers, managers, employees, or other persons, and regardless of the number of 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 than five 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 under this chapter and are owned by a trust or other entity for the benefit of two or more plan sponsors, the association shall provide coverage if the largest interest in the trust or entity owning the contract is held by a plan sponsor whose principal place of business is in the state but in no event shall the association be obligated to cover more than five million dollars in benefits in the aggregate with respect to all such unallocated contracts.

Discretionary Triggers

§508C.8.1. If a member insurer is an impaired insurer. §508C.8.2. If a member insurer is an insolvent insurer.

Mandatory Triggers

No mandatory provision.

Foreign Triggers

See Discretionary Triggers.

"Impaired Insurer"

§508C.5. 10. “Impaired insurer” means a member insurer which is not an insolvent insurer and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.

"Insolvent Insurer"

§508C.5. 11. “Insolvent insurer” means a member insurer which is placed under an order of liquidation with a finding of insolvency by a court of competent jurisdiction.

"Member Insurer"

§508C.5. 12. “Member insurer” means an insurer or health maintenance organization which is licensed or which holds a certificate of authority to transact in this state any kind of insurance or health maintenance business for which coverage is provided under section 508C.3, and including an insurer or health maintenance organization whose license or certificate of authority in this state has been suspended, revoked, not renewed, or voluntarily withdrawn but does not include any of the following: a. An entity which is a licensed company specified in section 508C.3, subsection 4, paragraph “f” or “g”. b. A mandatory state pooling plan. c. A mutual assessment company or other person which operates on an assessment basis. d. An insurance exchange. e. An entity which issues a charitable gift annuity under chapter 508F. f. An entity whose only business in this state is operating as a managed care organization. For purposes of this paragraph, “managed care organization” means an entity that is under contract with the Iowa department of human services to provide services to Medicaid recipients and that also meets the definition of “health maintenance organization” in section 514B.1. g. An entity similar to any of the entities enumerated in this subsection.

§508C.6.1. For purposes of administration and assessment, the association shall maintain all of the following accounts: a. A health account. b. A life insurance account. c. An annuity account, which shall include annuity contracts owned by a governmental retirement plan, or the plan’s trustee, established under section 401, 403(b), or 457 of the United States Internal Revenue Code, but shall otherwise exclude unallocated annuities. d. An unallocated annuity contract account, which shall exclude contracts owned by a governmental retirement benefit plan, or the plan’s trustee, established under section 401, 403(b), or 457 of the United States Internal Revenue Code.

Assessment Limits

§508C.9.5.a. (1) Subject to the provisions of subparagraph (2) of this paragraph “a”, the total of all assessments authorized by the association with respect to a member insurer for each of the accounts established pursuant to section 508C.6, and designated as the health account, the life insurance account, the annuity account, and the unallocated annuity contract account, shall not in any one calendar year exceed two percent of that member insurer’s average annual premiums received in this state on the policies and contracts covered by the account during the three calendar years preceding the year in which the member insurer becomes impaired or insolvent.

Assessment Classes

§508C.9.2. There are two classes of assessments as follows: a. Class A assessments shall be authorized and called for the purpose of meeting administrative and legal costs and other expenses. Class A assessments may be authorized and called whether or not related to a particular impaired or insolvent insurer. b. Class B assessments shall be authorized and called to the extent necessary to carry out the powers and duties of the association under section 508C.8 with regard to an impaired or an insolvent insurer.

§508C.3.4.a. 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 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 and employed in calculating returns or changes in value, averaged over the period of four years prior to the date on which the association becomes obligated with respect to the policy or contract, exceeds a rate of interest determined by subtracting two percentage points from Moody’s corporate bond yield average for the same four-year period or over such lesser period if the policy or contract was issued less than four years before the association became obligated; and on or after the date on which the association becomes obligated with respect to the policy or contract, exceeds the rate of interest determined by subtracting three percentage points from Moody’s corporate bond yield average as most recently available.

§508C.19. Yes. Up to 20% of assessment amount may be offset for each of the 5 years following payment.

§ 508C.5 17. “Premium” means amounts or consideration, by whatever name called, received on covered policies or contracts less returned premiums, considerations, and deposits and less dividends and experience credits. “Premium” does not include amounts for consideration received for policies or contracts or for the portions of policies or contracts for which coverage is not provided under section 508C.3, subsection 4, except that assessable premium shall not be reduced on account of the provisions of section 508C.3, subsection 4, paragraph “a”, relating to interest limitations and section 508C.3, subsection 4A, paragraph “a”, subparagraph (2), subparagraph division (a), relating to limitations with respect to one individual, one participant, and one policy or contract owner. “Premium” shall not include any of the following: a. Premiums in excess of five million dollars on an unallocated annuity contract not issued under a governmental retirement plan, or its trustee, established under section 401, 403(b), or 457 of the United States Internal Revenue Code. b. With respect to multiple nongroup policies of life insurance owned by one owner, whether the policy or contract owner is an individual, firm, corporation, or other person, and whether the persons insured are officers, managers, employees, or other persons, premiums in excess of five million dollars with respect to those polices or contracts, regardless of the number of policies or contracts held by the owner.

§508C.18 “Prohibited advertisements” A person, including a member insurer, agent, or affiliate of a member insurer, shall not make, publish, disseminate, circulate, or place before the public, or cause directly or indirectly, to be made, published, disseminated, circulated, or placed before the public in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over a radio station or television station, or in any other way, an advertisement, announcement, or statement, written or oral, which uses the existence of the insurance guaranty association of this state for the purpose of sales, solicitation, or inducement to purchase any form of insurance or other coverage covered by this chapter. However, this section does not apply to the association or any other entity which does not sell or solicit insurance or coverage by a health maintenance organization.