Maine Life & Health Insurance Guaranty Association

Covered Contracts

§4603.1. This chapter applies to direct nongroup life insurance policies, health insurance policies, annuity contracts and contracts supplemental to life and health insurance policies and annuity contracts and to certificates under direct group life insurance policies, health insurance policies and annuity contracts, except as limited by this chapter. For the purposes of this chapter: A. Health insurance policies include individual and group health maintenance organization enrollment contracts, and health maintenance organizations are considered to be health insurers; B. Annuity contracts and certificates under group annuity contracts include allocated funding agreements, structured settlement annuities and any immediate or deferred annuity contracts; and C. Benefits provided by a long-term care rider to a life insurance policy or annuity contract are considered the same type of benefits as the base life insurance policy or annuity contract to which the rider relates.

Non-Covered Contracts

§4603.2. This chapter does not apply to: A. That portion of a policy or contract not guaranteed by an insurer; B. Any policies or contracts, or any part of these policies or contracts, under which the risk is borne by the policyholder; C. Any contract of reinsurance, other than reinsurance for which assumption certificates have been issued; D. Any policy or contract issued by assessment mutuals and nonprofit hospital and medical service plans; E. With the exception of a policy or contract or portion of a policy or contract, including a rider, that provides long-term care or any other health insurance benefits, any portion of a policy or contract to the extent that the rate of interest on which it is based, or similar factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value: (1) Averaged over a period of 4 years before the date on which the member insurer becomes an impaired insurer or becomes an insolvent insurer under this chapter, whichever is earlier, exceeds a rate of interest determined by subtracting 2 percentage points from Moody’s Corporate Bond Yield Average averaged over the same 4-year period or for a lesser period if the policy or contract was issued less than 4 years before the member insurer becomes an impaired insurer or becomes an insolvent insurer, whichever is earlier; and (2) On or after the date on which the member insurer becomes an impaired insurer or becomes an insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting 3 percentage points from Moody’s Corporate Bond Yield Average as most recently available; F. Any 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 its 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: (1) A multiple employer welfare arrangement as defined in 29 United States Code, Section 1144; (2) A minimum premium group insurance plan; (3) A stop loss group insurance plan; or (4) An administrative-services-only contract; G. Any portion of a policy or contract to the extent that it provides for: (1) Dividends or experience rating credits; (2) Voting rights; or (3) Payment of any fees or allowances to any person, including the policy or contract owner, in connection with the service to or administration of the policy or contract; H. Any policy or contract issued in this State by a member insurer at a time when it was not licensed or did not have a certificate of authority to issue the policy or contract in this State; I. Any portion of a policy or contract to the extent that the assessments required by section 4609 with respect to the policy or contract are preempted by federal or state law; J. Any obligation that does not arise under the express written terms of the policy or contract issued by the insurer to the contract owner, policy owner, enrollee or certificate holder, including without limitation: (1) Claims based on marketing materials; (2) Claims based on side letters, riders or other documents that were issued by the insurer without meeting applicable form filing or approval requirements; (3) Misrepresentations of or regarding policy or contract benefits; (4) Extra-contractual claims; or (5) Claims for penalties or consequential or incidental damages; K. Any contractual agreement that establishes the 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, neither of which is an affiliate of the member insurer; L. Any unallocated annuity contract, except any annuity, whether allocated or unallocated, issued to a governmental retirement benefit plan established under the United States Internal Revenue Code, 26 United States Code, Section 401, 403(b) or 457; M. Any portion of a policy or contract 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 policy or contract, but that have not been credited to the policy or contract, or as to which the policy or contract owner’s rights are subject to forfeiture, as of the date the member insurer becomes an impaired insurer or becomes an insolvent insurer under this chapter, whichever is earlier. If a policy’s or contract’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 this paragraph, the interest or change in value determined by using the procedures defined in the policy or contract 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 will not be subject to forfeiture; and N. Any policy or contract providing hospital, medical, prescription drug or other health care benefits pursuant to 42 United States Code, Chapter 7, Subchapter XVIII, Part C or D (2018), also known as Medicare Part C or D, or pursuant to 42 United States Code, Chapter 7, Subchapter XIX (2018), also known as Medicaid, or any regulations issued pursuant thereto.

Non-Resident Coverage

§4603.1-A.B. Yes. The statute covers non residents, if all the following conditions are met: (a) The insurer that issued the policy or contract is domiciled in this State; (b) The insurer never held a license or certificate of authority in the state in which the person resides; (c) The state in which the person resides has an association similar to the Maine Life and Health Insurance Guaranty Association; and (d) The person is not eligible for coverage by the association in that state

§4603.3.The benefits that the association may become obligated to cover may not exceed the least of: A. The contractual obligations for which the member insurer is liable or would have been liable if it were not an impaired or insolvent insurer; B. With respect to one life, regardless of the number of policies or contracts: (1) Three hundred thousand dollars in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance; (2) The following limits for health insurance benefits: (a) Three hundred thousand dollars for coverages not defined as disability income insurance, long-term care insurance or health plans as defined in section 4301-A, subsection 7, including any net cash surrender and net cash withdrawal values; (b) Three hundred thousand dollars for disability income and long-term care insurance; or (c) Five hundred thousand dollars for health plans as defined in section 4301-A, subsection 7; or (3) Two hundred fifty thousand dollars in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; C. With respect to each payee of a structured settlement annuity, or beneficiary or beneficiaries of the payee if deceased, $ 250,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values; and D. With respect to each individual participating in a governmental retirement benefit plan established under the United States Internal Revenue Code, 26 United States Code, Section 401, 403(b) or 457, or the beneficiaries of each individual if deceased, the financial interest of such participant allocated to an annuity contract by either the member insurer that issued the annuity or the plan, but not to exceed in the aggregate $ 250,000 in present value of annuity benefits, including net cash surrender and net cash withdrawal values under all such annuities issued by the same member insurer. 4. Maximum Obligation in Benefits. Notwithstanding subsection 3, the association is not in any event obligated to cover more than: A. An aggregate of $300,000 in benefits with respect to any one life under subsection 3, paragraph B except with respect to benefits for health plans under subsection 3, paragraph B, subparagraph (2), in which case the aggregate liability of the association may not exceed $500,000 with respect to any one individual; or B. Five million dollars in benefits, regardless of the number of policies and contracts held by the owner, with respect to one owner of multiple nongroup policies of life insurance, whether the policy owner is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees or other persons.

Discretionary Triggers

§4608.1. If a member insurer is an impaired insurer. Amended effective 9/17/05.

Mandatory Triggers

§4608.3-A. If a member insurer is an insolvent insurer. (Amended effective 9/17/05)

Foreign Triggers

No separate provision under Act. (Amended effective 9/17/2005)

"Impaired Insurer"

§4605-A.10. Impaired insurer. "Impaired insurer" means a member insurer that, after the effective date of this section, is not an insolvent insurer and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. Amended effective 9/17/05.

"Insolvent Insurer"

§4605-A.11. Insolvent insurer. "Insolvent insurer" means a member insurer that, after the effective date of this section, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency. Amended effective 9/17/05.

"Member Insurer"

§4605-A.12. "Member insurer” means an insurer or health maintenance organization that is licensed or that holds a certificate of authority to transact in this State any kind of insurance, annuity or health maintenance organization business for which coverage is provided under section 4603 and includes an insurer or health maintenance organization whose license or certificate of authority in this State may have been suspended, revoked, not renewed or voluntarily withdrawn, but does not include: A. A hospital or medical service organization, whether profit or nonprofit; . C. A fraternal benefit society; D. A mandatory state pooling plan; E. A mutual assessment company or other person that operates on an assessment basis; F. An insurance exchange; G. An organization that has a certificate or license limited to the issuance of charitable gift annuities under this Title; or H. An entity similar to any of those listed in this subsection.

§4606.1. For purposes of administration and assessment, the association shall maintain 3 accounts: A. The health insurance account; B. The life insurance account; and C. The annuity account, which must include annuity contracts owned by a governmental retirement plan or its trustee established under Section 401, Section 403(b) or Section 457 of the United States Internal Revenue Code.

Assessment Limits

§4609. 4. The association may abate or defer, in whole or in part, the assessment of a member insurer if, in the opinion of the board of directors, payment of the assessment would endanger the ability of the member insurer to fulfill its contractual obligations. Once the conditions that caused a deferral have been removed or rectified, the member insurer shall pay all assessments that were deferred pursuant to a repayment plan approved by the association. The total of all assessments upon a member insurer for each account may not in any one calendar year exceed 2% of the insurer’s premiums in this State on the policies covered by the account.

Assessment Classes

§4609.2-A. There are 2 classes of assessments, as set out in this subsection. A. Class A assessments are authorized and called for the purpose of meeting administrative costs and other general expenses. Class A assessments may be authorized and called whether or not related to a particular impaired or insolvent insurer. B. Class B assessments are authorized and called to the extent necessary to carry out the powers and duties of the association under section 4608 with regard to an impaired or an insolvent insurer.

§4603.2.E. Guaranty Association excludes from coverage: Any portion of a policy or contract to the extent that the rate of interest on which it is based, or similar factor determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value: (1) Averaged over a period of 4 years before the date on which the member insurer becomes an impaired insurer or becomes an insolvent insurer under this chapter, whichever is earlier, exceeds a rate of interest determined by subtracting 2 percentage points from Moody's Corporate Bond Yield Average averaged over the same 4-year period or for a lesser period if the policy or contract was issued less than 4 years before the member insurer becomes an impaired insurer or becomes an insolvent insurer, whichever is earlier; and (2) On or after the date on which the member insurer becomes an impaired insurer or becomes an insolvent insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by subtracting 3 percentage points from Moody's Corporate Bond Yield Average as most recently available.

§4621 Yes. to the extent of 20% of the amount of the assessment for each of the 5 calendar years following the year in which the assessment was paid. Amended effective for assessments paid on or after January 1, 2005.

§ 4605-A 16. “Premiums” means amounts or considerations by whatever name called received on covered policies or contracts less returned premiums, considerations and deposits and less dividends and experience credits. “Premiums” does not include amounts or considerations received for policies or contracts or for the portions of policies or contracts for which coverage is not provided under section 4603, except that assessable premiums may not be reduced on account of the provisions of section 4603 relating to interest limitations and relating to limitations with respect to one individual, one participant and one contract owner. “Premiums” does not include: A. Premiums on an unallocated annuity contract; or B. With respect to multiple nongroup policies of life insurance owned by one owner, whether the policy 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 $ 5,000,000 with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

§4620. Prohibited advertisement of association in insurance sales. A person, including a member insurer or an agent or affiliate of a member insurer, may 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 any newspaper, magazine or publication or in the form of a notice, circular, pamphlet, letter or poster or over any radio station or television station or in any other way any advertisement, announcement or statement, written or oral, that uses the existence of the association for the purpose of sales, solicitation or inducement to purchases of any form of insurance covered by this chapter. This section does not apply to the Maine Life and Health Insurance Guaranty Association or any other entity that does not sell or solicit insurance or health maintenance organization coverage.