Massachusetts Life & Health Insurance Guaranty Association

Current as of August 22, 2023
Contact Information
Massachusetts Life & Health Insurance Guaranty Association
PO Box 3171
Springfield, MA 01101-3171
(p) 413.744.8483 (f) 413.744.6338
Association Web site: http://www.malifega.org
State Insurance Department: http://www.state.ma.us/doi/

Law Summaries Report

Coverages

Covered Contracts

§146B(4)(B)(1) This section shall provide coverage to the persons specified in paragraph (A) of this subsection for direct, nongroup life, health, annuity, and supplemental policies or contracts, and for certificates under direct group life and health insurance policies or annuity or supplemental contracts issued by member insurers, except as otherwise limited in this section.

Non-Covered Contracts

§146B(4)(B)(2) This section shall not provide coverage under: (a) any portion of a policy or contract not guaranteed by the insurer, or under which the risk is borne by the policy or contract holder; (b) any policy or contract of reinsurance, other than reinsurance for which assumption certificates have been issued; (c) any annuity contract or group annuity certificate that is not issued to and owned by an individual, except to the extent of any annuity benefits guaranteed to an individual by the insurer under any such contract or certificate; (d) 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 employed in calculating returns or changes in value (i) averaged over the period of four years prior to the date on which the association becomes obligated with respect to such policy or contract, exceeds the rate of interest determined by subtracting two percentage points from the published monthly average as averaged for the same four year period, and (ii) on and after the date on which the association becomes obligated with respect to such policy or contract, exceeds the rate of interest determined by subtracting three percentage points from the published monthly average as most recently available on the date on which the association becomes obligated with respect to such policy or contract; (e) any plan or program of an employer, association or similar entity to provide life, health, or annuity benefits to its employees or members to the extent that such plan or program is self-funded or uninsured, including but not limited to benefits payable by an employer, association or similar entity under (i) a Multiple Employer Welfare Arrangement as defined in Section 514 of the Employee Retirement Income Security Act of 1974, as amended; (ii) a minimum premium group insurance plan; (iii) a stop-loss group insurance plan; or (iv) an administrative services only contract; (f) any portion of a policy or contract to the extent that it provides dividends or experience rating credits, or provides that any fees or allowances be paid to any person, including the policy or contract holder, in connection with the service to or administration of such policy or contract; (g) any policy or contract issued in the commonwealth by a member insurer at a time when it was not licensed or did not have a certificate of authority to issue such policy or contract in the commonwealth; (h) any policy or contract and any portion of a policy or contract to the extent that the assessments required by subsection (9) with respect to the policy or contract are preempted by federal or state law; (i) any obligation that does not arise under the express written terms of the policy or contract issued to the contract owner or policy owner, including without limitation: (i) claims based on marketing materials; (ii) claims based on side letters, riders or other documents that were issued by the insurer without meeting applicable policy form filing or approval requirements; (iii) misrepresentation of or regarding policy benefits; (iv) extra-contractual claims, such as claims relating to bad faith in the payment of claims, punitive or exemplary damages or attorneys’ fees and costs; or (v) a claim for penalties or consequential or incidental damages; (j) 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 which 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 or insolvent insurer under this section, whichever is earlier; provided, that if a policy’s or contract’s interest or changes in value are credited less frequently than annually, then for the purposes of determining the values that have been credited and are not subject to forfeiture under this clause, the interest or change in value determined by using the procedures defined in the policy or contract shall be credited as if the contractual date of crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and shall not be subject to forfeiture; and (k) a policy or contract providing any hospital, medical, prescription drug or other health care benefits pursuant to Part C or Part D of Subchapter XVIII, Chapter 7 of Title 42 of the United States Code, commonly known as Medicare Part C and D, or any regulation issued pursuant thereto. (Amended effective 3/19/2015)

Non-Resident Coverage

§146B(4)(A)(2)(b). Yes. Covers persons who are not residents, but only under all of the following conditions: (i) the insurers which issued such policies or contracts are domiciled in the commonwealth, (ii) the states in which the persons reside have a life and health insurance guaranty association and (iii) such persons are not eligible for coverage by such guaranty association due to the fact that the insurer was not licensed in the state at the time specified in the state’s guaranty association law. (Amended effective 3/19/2015)

Benefit Limits
§146B(4)(B)(3)(b) with respect to any 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 under life insurance policies; (ii) in health insurance benefits: (I) $100,000 for coverage not defined as disability income insurance or basic hospital expense insurance, basic medical-surgical insurance, major medical expense insurance or long term care insurance, including any cash surrender and net cash withdrawal values, (II) $300,000 for disability income insurance, (III) $300,000 for long term care insurance and (IV) $500,000 for basic hospital expense insurance, basic medical-surgical expense insurance or major medical expense insurance; (iii) $250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; and (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 of annuity benefits in the aggregate, including net cash surrender and net cash withdrawal values. (4) The association shall not be obligated to cover more than (i) an aggregate of $300,000 in benefits with respect to any 1 life under clauses (b) or (c) of subparagraph (3), except with respect to benefits for basic hospital expense insurance, basic medical-surgical insurance or major medical expense insurance under item (IV) of subclause (ii) of clause (b) of said subparagraph (3), in which case the aggregate liability of the association shall not exceed $500,000 with respect to any 1 individual, or (ii) with respect to 1 owner of multiple non-group 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, more than $5,000,000 in benefits, regardless of the number of policies and contracts held by the owner. (Amended effective 3/19/2015)
Triggers

Discretionary Triggers

§146B(8)(A). If a member is an impaired insurer (Amended effective 3/19/2015)

Mandatory Triggers

§146B(8)(B). If a member insurer is an insolvent insurer (Amended effective 3/19/2015)

Foreign Triggers

No separate provision. (Amended effective 3/19/2015)

"Impaired Insurer"

§146B(2). A member insurer which, is not an insolvent insurer, and (i) is deemed by the commissioner to be potentially unable to meet its obligations, or (ii) is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.

"Insolvent Insurer"

§146B(2). A member insurer which is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

"Member Insurer"

§146B (2) "Member insurer", any insurer licensed or which holds a certificate of authority to transact in the commonwealth any kind of insurance for which coverage is provided under subsection (4) and any insurer whose license or certificate of authority to transact in the commonwealth such insurance may have been suspended, revoked, not renewed, or voluntarily withdrawn after the effective date of this section, other than a (a) fraternal benefit society, (b) mutual protective association, (c) mutual assessment company or other entity that operates on an assessment basis, (d) medical service corporation, (e) hospital service corporation, (f) health maintenance organization, (g) dental service corporation, (h) optometric service corporation, (i) mandatory state pooling plan, (j) insurance exchange, or (k) any other entity similar to any of the above.

Account Structure
§146B(6)(A). Three accounts: health insurance, life insurance and annuity.
Assessments

Assessment Limits

§146B(9)(E). Two percent (2%) of insurers average premiums received in the state for policies covered by each account during the three calendar years preceding the year of impairment/insolvency.

Assessment Classes

§146B(9)(B). Two classes of assessments: Class A for administrative costs, other expenses and examinations; and Class B to carry out the powers and duties of the association with regard to an impaired or insolvent insurer.

Interest Rate Adjustments
§146B(4)(B)(2)(d). 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 employed in calculating returns or changes in value (i) averaged over the period of four years prior to the date on which the association becomes obligated with respect to such policy or contract, exceeds the rate of interest determined by subtracting two percentage points from the published monthly average as averaged for the same four year period, and (ii) on and after the date on which the association becomes obligated with respect to such policy or contract, exceeds the rate of interest determined by subtracting three percentage points from the published monthly average as most recently available on the date on which the association becomes obligated with respect to such policy or contract; (Amended effective 3/19/2015)
Tax Offsets
§146B(13)(A). Yes. Up to 10% of assessment amount may be offset for next five years; covers all assessments but administrative expenses. Total offsets of all member insurers against premium, excise, franchise, or income tax may not exceed $3 million per year. Carry forward of offset is permitted when cap is exceeded.
Definition of Premium
175 §146B(2) “Premiums”, amounts received on covered policies or contracts, less premiums, considerations and deposits returned thereon, and less dividends and experience credits thereon; provided, that “premiums” shall not include any amount received for any policies or contracts or for the portions of any policies or contracts for which coverage is not provided under paragraph (B) of subsection (4), except that assessable premiums shall not be reduced on account of clause (d) of subparagraph (2) of said paragraph (B) of said subsection (4) relating to interest limitations and subparagraph (3) of said paragraph (B) of said subsection (4) relating to limitations with respect to 1 individual and 1 contract owner; provided, further that “Premiums” shall not include, with respect to multiple non-group policies of life insurance owned by 1 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. (Amended effective 3/19/2015)
Advertising Prohibition
175§146B: (19) No person, including an insurer, agent or affiliate of an insurer shall make, publish, disseminate, circulate, or place before the public, or cause directly, to be made, published, disseminated, circulated or placed before the public, in any newspaper, magazine or other 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, which uses the existence of the Massachusetts Life and Health Insurance Guaranty Association for the purposes of sales, solicitation, or inducement to purchase any form of insurance covered by this §; provided, however, that this § shall not apply to the Massachusetts Life and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance.
Build Report
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National Organization of Life & Health Insurance Guaranty Associations
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Phone Number: 703.481.5206