§ 58-65-60. Subscribers' contracts; required and prohibited provisions.
§ 58‑65‑60. Subscribers' contracts; required and prohibited provisions.
(a) Every contract madeby a corporation subject to the provisions of this Article and Article 66 ofthis Chapter shall be for a period not to exceed 12 months, and no contractshall be made providing for the inception of benefits at a date later than oneyear from the date of the contract. Any such contract may provide that it shallbe automatically renewed for a similar period unless there shall have been onemonth's prior written notice of termination by either the subscriber or thecorporation.
(b) Contracts may beissued that entitle one or more persons to benefits under those contracts.Persons entitled to benefits under those contracts, other than the certificateholder, may only be the certificate holder's spouse, lawful or legally adoptedchild of the certificate holder or the certificate holder's spouse, or anyother person who resides in the same household with the certificate holder andis dependent upon the certificate holder.
(c) Every contractentered into by any such corporation with any subscriber thereof shall be inwriting and a certificate stating the terms and conditions thereof shall befurnished to the subscriber to be kept by him. No such certificate form, otherthan to group subscribers of groups of 10 or more certificate holders or thoseissued pursuant to a master group contract covering 10 or more certificateholders shall be made, issued or delivered in this State unless it contains thefollowing provisions, provided, however, groups between five and 10 certificateholders complying with and maintaining eligibility status under regulationsapproved by the Commissioner of Insurance for group enrollment may be cancelledif such participation falls below the minimum participation of five certificateholders; or if the group takes other group hospital, medical or surgicalcoverage:
(1) A statement of theamount payable to the corporation by the subscriber and the times at which andmanner in which such amount is to be paid; this provision may be inserted inthe application rather than in the certificate. Application need not beattached to certificate.
(2) A statement of thenature of the benefits to be furnished and the period during which they will befurnished.
(3) A statement of theterms and conditions, if any, upon which the contract may be cancelled orotherwise terminated at the option of either party. The statement shall be inthe following language:
a. "Renewability":Any contract subject to the provisions of this subdivision is renewable at theoption of the subscriber unless sufficient notice in writing of nonrenewal ismailed to the subscriber by the corporation addressed to the last addressrecorded with the corporation.
b. "Sufficientnotice" shall be as follows:
1. During the firstyear of any such contract, or during the first year following any lapse andreinstatement, or reenrollment, a period of 30 days.
2. During the secondand subsequent years of continuous coverage, a number of full calendar monthsmost nearly equivalent to one fourth the number of months of continuouscoverage from the first anniversary of the date of issue or reinstatement orreenrollment, whichever date is more recent, to the date of mailing of suchnotice.
3. No period of requirednotice shall exceed two years, and no renewal hereunder shall renew any suchcontract for any period beyond the required period of notice except by writtenagreement of the subscriber and corporation.
Thecontract may be modified, terminated or cancelled by the corporation at anytime at its option, upon:
a. Nonpayment by thesubscriber of fees or dues as required.
b. Failure or refusalby the subscriber to comply with rate or benefit changes approved by theCommissioner under G.S. 58‑65‑45.
c. Failure or refusalby the subscriber after 30 days' written notice to subscriber to transfer intohospital, medical, or dental service plan serving the area to which thesubscriber has changed residence and is eligible for or to which corporation isrequired to transfer by interplan agreement of transfer.
(4) A statement that thecontract includes the endorsement thereon and attached papers, if any, andtogether with the applications contains the entire contract.
(5) A statement that ifthe subscriber defaults in making any payment, under the contract, thesubsequent acceptance of a payment by the corporation at its home office shallreinstate the contract, but with respect to sickness and injury, only to coversuch sickness as may be first manifested more than 10 days after the date ofsuch acceptance.
(d) In every suchcontract made, issued or delivered in this State:
(1) All printed portionsshall be plainly printed;
(2) The exceptions fromthe contract shall appear with the same prominence as the benefits to whichthey apply; and
(3) If the contractcontains any provision purporting to make any portion of the articles,constitution or bylaws of the corporation a part of the contract, such portionshall be set forth in full.
(e) A servicecorporation may issue a master group contract with the approval of theCommissioner if the contract and the individual certificates issued to membersof the group comply in substance to the other provisions of this Article andArticle 66 of this Chapter. The contract may provide for the adjustment of therate of the premium or benefits conferred as provided in the contract, and inaccordance with an adjustment schedule filed with and approved by theCommissioner. If the contract is issued, altered or modified, the subscribers'contracts issued under that contract are altered or modified accordingly, alllaws and clauses in subscribers' contracts to the contrary notwithstanding.Nothing in this Article and Article 66 of this Chapter shall be construed toprohibit or prevent the same. Forms of such contract shall at all times befurnished upon request of subscribers thereto.
(e1) Employees shall beadded to the master group coverage no later than 90 days after their first dayof employment. Employment shall be considered continuous and not be consideredbroken except for unexcused absences from work for reasons other than illnessor injury. The term "employee" is defined as a nonseasonal person whoworks on a full‑time basis, with a normal work week of 30 or more hoursand who is otherwise eligible for coverage, but does not include a person whoworks on a part‑time, temporary, or substitute basis.
(e2) Whenever an employermaster group contract replaces another group contract, whether this contractwas issued by a corporation under Articles 1 through 67 of this Chapter, theliability of the succeeding corporation for insuring persons covered under theprevious group contract is (i) each person is eligible for coverage inaccordance with the succeeding corporation's plan of benefits with respect toclasses eligible and activity at work and nonconfinement rules must be coveredby the succeeding corporation's plan of benefits; and (ii) each person notcovered under the succeeding corporation's plan of benefits in accordance with(i) above must nevertheless be covered by the succeeding corporation if thatperson was validly covered, including benefit extension, under the prior planon the date of discontinuance and if the person is a member of the class ofpersons eligible for coverage under the succeeding corporation's plan.
(e3) 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.
(f) Anyhospitalization contract renewed in the name of the subscriber during the graceperiod shall be construed to be a continuation of the contract first issued. (1941, c. 338, s. 7; 1947, c.820, ss. 3, 4; 1955, c. 679, ss. 1‑3; 1957, c. 1085, s. 1; 1961, c. 1149;1989, c. 775, s. 4; 1991, c. 720, ss. 38, 88; 1991 (Reg. Sess., 1992), c. 837,s. 4; 1993, c. 408, s. 4; c. 409, s. 24; 1995, c. 507, s. 23A.1(e); 1997‑259,s. 17; 2001‑417, s. 12; 2005‑223, s. 2(a).)