§ 58-51-80. Group accident and health insurance defined.
§ 58‑51‑80. Groupaccident and health insurance defined.
(a) Any policy orcontract of insurance against death or injury resulting from accident or fromaccidental means which covers more than one person except blanket accidentpolicies as defined in G.S. 58‑51‑75, shall be deemed a groupaccident insurance policy. Any policy or contract which insures againstdisablement, disease or sickness of the insured (excluding disablement whichresults from accident or from accidental means) and which covers more than oneperson, except blanket health insurance policies as defined in G.S. 58‑51‑75,shall be deemed a group health insurance policy or contract. Any policy orcontract of insurance which combines the coverage of group accident insuranceand of group health insurance shall be deemed a group accident and healthinsurance policy. No policy or contract of group accident, group health orgroup accident and health insurance, and no certificates thereunder, shall bedelivered or issued for delivery in this State unless it conforms to therequirements of subsection (b).
(b) No policy orcontract of group accident, group health or group accident and health insuranceshall be delivered or issued for delivery in this State unless the group ofpersons thereby insured conforms to the requirements of the followingsubdivisions:
(1) Under a policyissued to an employer, principal, or to the trustee of a fund established by anemployer or two or more employers in the same industry or kind of business, orby a principal or two or more principals in the same industry or kind ofbusiness, which employer, principal, or trustee shall be deemed thepolicyholder, covering, except as hereinafter provided, only employees, oragents, of any class or classes thereof determined by conditions pertaining toemployment, or agency, for amounts of insurance based upon some plan which willpreclude individual selection. The premium may be paid by the employer, by theemployer and the employees jointly, or by the employee; and where the relationshipof principal and agent exists, the premium may be paid by the principal, by theprincipal and agents, jointly, or by the agents. If the premium is paid by theemployer and the employees jointly, or by the principal and agents jointly, orby the employees, or by the agents, the group shall be structured on anactuarially sound basis.
(1a) Under a policy issuedto an association or to a trust or to the trustee or trustees of a fundestablished, created, or maintained for the benefit of members of one or moreassociations. The association or associations shall have at the outset aminimum of 500 persons and shall have been organized and maintained in goodfaith for purposes other than that of obtaining insurance; shall have been inactive existence for at least five years; and shall have a constitution andbylaws that provide that (i) the association or associations hold regularmeetings not less than annually to further purposes of the members; (ii) exceptfor credit unions, the association or associations collect dues or solicitcontributions from members; and (iii) the members, other than associatemembers, have voting privileges and representation on the governing board andcommittees. The policy is subject to the following requirements:
a. The policy mayinsure members of the association or associations, employees of the associationor associations, or employees of members, or one or more of the preceding orall of any class or classes for the benefit of persons other than theemployee's employer.
b. The premium for thepolicy shall be paid from funds contributed by the association or associations,or by employer members, or by both, or from funds contributed by the coveredpersons or from both the covered persons and the association, associations, or employermembers. The premium rates for each association policy shall be developed, andapplied to the certificates thereunder, on an actuarially sound basis.
c. Repealed by SessionLaws 1997‑259, s. 8.
(1b) Under a policy issuedto a creditor as defined in G.S. 58‑57‑5 who shall be deemed thepolicyholder, to insure debtors as defined in G.S. 58‑57‑5 of thecreditor to provide indemnity for payments becoming due on a specific loan orother credit transaction as defined in G.S. 58‑51‑100, with orwithout insurance against death by accident, subject to the followingrequirements:
a. The debtors eligiblefor insurance under the policy shall be all of the debtors of the creditorwhose indebtedness is repayable in installments, or all of any class or classesthereof determined by conditions pertaining to the indebtedness or to thepurchase giving rise to the indebtedness. The policy may provide that the term"debtors" shall include the debtors of one or more subsidiarycorporations, and the debtors of one or more affiliated corporations,proprietors or partnerships if the business of the policyholder and of suchaffiliated corporations, proprietors or partnerships is under common controlthrough stock ownership, contract or otherwise.
b. The premium for thepolicy shall be paid from the creditor's funds, from charges collected from theinsured debtors, or from both. A policy on which part or all of the premium isto be derived from the collection from the insured debtors or identifiablecharges not required of uninsured debtors shall not include, in the class orclasses of debtors eligible for insurance, debtors under obligationsoutstanding at its date of issue without evidence of individual insurabilityunless the group is structured on an actuarially sound basis. A policy on whichno part of the premium is to be derived from the collection of suchidentifiable charges must insure all eligible debtors, or all except any as towhom evidence of individual insurability is not satisfactory to the insurer.
c. The policy may beissued only if the group of eligible debtors is then receiving new entrants atthe rate of at least 100 persons yearly, or may reasonably be expected toreceive at least 100 new entrants during the first policy year, and only if thepolicy reserves to the insurer the right to require evidence of individualinsurability if less than seventy‑five percent (75%) of the new entrantsbecome insured.
d. Premiums for thiscoverage shall be actuarially equivalent to the rates authorized under Article57 of Chapter 58 of the General Statutes for credit accident and healthinsurance.
(2), (3) Repealed bySession Laws 1997‑259, s. 8.
(c) The term"employees" as used in this section shall be deemed to include, forthe purposes of insurance hereunder, employees of a single employer, theofficers, managers, and employees of the employer and of subsidiary oraffiliated corporations of a corporation employer, and the individualproprietors, partners, and employees of individuals and firms of which thebusiness is controlled by the insured employer through stock ownership,contract or otherwise. With the exception of disability income insurance,employees shall be added to the group coverage no later than 90 days aftertheir first day of employment. Employment shall be considered continuous andnot be considered broken except for unexcused absences from work for reasonsother than illness or injury. The term "employee" is defined as anonseasonal person who works on a full‑time basis, with a normal workweek of 30 or more hours and who is otherwise eligible for coverage, but doesnot include a person who works on a part‑time, temporary, or substitutebasis. The term "employer" as used herein may be deemed to includethe State of North Carolina, any county, municipality or corporation, or theproper officers, as such, of any unincorporated municipality or any departmentor subdivision of the State, county, such corporation, or municipalitydetermined by conditions pertaining to the employment. When determiningemployee eligibility for a large employer, as defined in G.S. 58‑68‑25(10),an individual proprietor, owner, or operator shall be defined as an"employee" for the purpose of obtaining coverage under the employeegroup health plan and shall not be held to a minimum workweek requirement asimposed on other eligible employees.
(d) The term"agents" as used in this section shall be deemed to include, for thepurposes of insurance hereunder, agents of a single principal who are undercontract to devote all, or substantially all, of their time in renderingpersonal services for such principal, for a commission or other fixed orascertainable compensation.
(e) The benefitspayable under any policy or contract of group accident, group health and groupaccident and health insurance shall be payable to the employees, or agents, orto some beneficiary or beneficiaries designated by the employee or agent, otherthan the employer or principal, but if there is no designated beneficiary as toall or any part of the insurance at the death of the employee or agent, thenthe amount of insurance payable for which there is no designated beneficiaryshall be payable to the estate of the employee or agent, except that theinsurer may in such case, at its option, pay such insurance to any one or moreof the following surviving relatives of the employee or agent: wife, husband,mother, father, child, or children, brothers or sisters; and except thatpayment of benefits for expenses incurred on account of hospitalization ormedical or surgical aid, as provided in subsection (f), may be made by theinsurer to the hospital or other person or persons furnishing such aid. Paymentso made shall discharge the insurer's obligation with respect to the amount ofinsurance so paid.
(f) Any policy orcontract of group accident, group health or group accident and health insurancemay include provisions for the payment by the insurer of benefits to theemployee or agent of the insured group, on account of hospitalization ormedical or surgical aid for himself, his spouse, his child or children, orother persons chiefly dependent upon him for support and maintenance.
(g) Any policy orcontract of group accident, group health or group accident and health insurancemay provide for readjustment of the rate of premium based on the experiencethereunder at the end of the first year, or at any time during any subsequentyear based upon at least 12 months of experience: Provided that any suchreadjustment after the first year shall not be made any more frequently thanonce every six months. Any rate adjustment must be preceded by a 45‑daynotice to the contract holder before the effective date of any rate increase orany policy benefit revision. A notice of nonrenewal shall be given to thecontract holder 45 days prior to termination. Any refund under any plan forreadjustment of the rate of premium based on the experience under grouppolicies and any dividend paid under the policies may be used to reduce theemployer's or principal's contribution to group insurance for the employees ofthe employer, or the agents of the principal, and the excess over thecontribution by the employer, or principal, shall be applied by the employer,or principal, for the sole benefit of the employees or agents.
(h) Nothing containedin this section applies to any contract issued by any corporation defined inArticle 65 of this Chapter. (1945, c. 385; 1947, c. 721; 1951, c. 282; 1953, c.1095, ss. 6, 7; 1987, c. 752, s. 19; 1989, c. 485, s. 41; c. 775, ss. 1, 2;1991, c. 644, s. 11; c. 720, s. 88; 1991 (Reg. Sess., 1992), c. 837, s. 4;1993, c. 408, ss. 3, 3.1; c. 409, s. 14; 1995, c. 507, ss. 23A.1(c), 23A.1(d);1997‑259, ss. 8, 9; 2000‑132, s. 1; 2003‑221, s. 12; 2005‑223,ss. 1(a), 2(c).)