Indiana Code
Chapter 8. Indiana Life and Health Insurance Guaranty Association Law
27-8-8-2.3. Coverage Provided; Exclusions; Limitations

Sec. 2.3. (a) Except as otherwise excluded or limited by this chapter, this chapter provides coverage for policies and contracts specified in subsection (d) as follows:
(1) To a person, other than a certificate holder or enrollee under a group policy or a group contract, that, regardless of where the person resides, is the health care provider, beneficiary, nonowner assignee, or payee of a person covered under subdivision (2).
(2) To a person that is a certificate holder under a group policy or group contract, and to a person that is the owner of a nongroup policy or nongroup contract that is not an unallocated annuity contract or a structured settlement annuity, and that:
(A) is a resident; or
(B) is not a resident if all the following conditions are satisfied:
(i) The member insurer that issued the policy or contract is domiciled in Indiana.
(ii) The state in which the person resides has an association similar to the association.
(iii) The nonresident is not eligible for coverage by the other association referred to in item (ii) solely because the member insurer was not licensed in the state of residence at the time specified in the guaranty association law of the state of residence.
(3) For an unallocated annuity contract, subdivisions (1) and (2) do not apply, and this chapter provides coverage to the following:
(A) A person that is the owner of the unallocated annuity contract, if the contract was issued to or in connection with a benefit plan whose plan sponsor is a resident or, if the plan sponsor is not a resident, if all the following conditions are satisfied:
(i) The member insurer that issued the unallocated annuity contract is domiciled in Indiana.
(ii) The state in which the plan sponsor resides has an association similar to the association.
(iii) The other association referred to in item (ii) does not provide coverage of the unallocated annuity contract solely because the member insurer was not licensed in the state of residence at the time specified in the guaranty association law of the state of residence.
(B) A person that is the owner of an unallocated annuity contract issued to or in connection with a government lottery, if the owner is a resident or, if the owner is not a resident, if all the following conditions are satisfied:
(i) The member insurer that issued the unallocated annuity contract is domiciled in Indiana.
(ii) The state in which the owner resides has an association similar to the association.
(iii) The other association referred to in item (ii) does not provide coverage of the unallocated annuity contract solely because the member insurer was not licensed in the state of residence at the time specified in the guaranty association law of the state of residence.
(4) For a structured settlement annuity, subdivisions (1) and (2) do not apply, and this chapter provides coverage to a person that is a payee under the structured settlement annuity (or beneficiary of a payee if the payee is deceased), if the payee:
(A) is a resident, regardless of where the contract owner resides; or
(B) is not a resident if all the following conditions are satisfied:
(i) The member insurer that issued the structured settlement annuity is domiciled in Indiana.
(ii) The state in which the payee resides has an association similar to the association.
(iii) Neither the payee nor the beneficiary of the payee (if the payee is deceased) is eligible for coverage by the other association referred to in item (ii) solely because the member insurer was not licensed in the state of residence at the time specified in the guaranty association law of the state of residence.
(b) This chapter does not provide coverage to a person that is:
(1) a payee or beneficiary of a contract owner that is a resident, if the payee or beneficiary is afforded any coverage by the association of another state; or
(2) otherwise covered under subsection (a)(3), if any coverage is provided to the person by the association of another state.
(c) To avoid duplicate coverage, if a person that would otherwise receive coverage under this chapter is provided coverage under the laws of another state, the person is not eligible for coverage under this chapter. In determining the application of this subsection when a person may be covered by the association of more than one (1) state as an owner, a payee, a beneficiary, or an assignee, this chapter must be construed in conjunction with the laws of the other state to result in coverage by only one (1) association.
(d) Except as otherwise excluded or limited by this chapter, this chapter provides coverage to the persons specified in subsection (a) for:
(1) direct nongroup life insurance and health insurance policies or contracts, including health maintenance organization subscriber contracts and certificates;
(2) direct nongroup annuity contracts;
(3) supplemental contracts to direct nongroup policies and contracts described in subdivisions (1) and (2);
(4) certificates under direct group life insurance and health insurance policies and contracts;
(5) certificates under direct group annuity contracts; and
(6) unallocated annuity contracts;
issued by member insurers.
(e) This chapter does not provide coverage for or with respect to the following:
(1) A part of a certificate, policy, or contract:
(A) not guaranteed by the member insurer; or
(B) under which the risk is borne by the payee, certificate holder, or the policy or contract owner.
(2) A reinsurance policy or contract, unless and to the extent that assumption certificates have been issued under the reinsurance policy or contract.
(3) A part of a certificate, policy, or contract to the extent that the certificate's, policy's, or contract's interest rate, crediting rate, or similar factor employed in calculating returns or changes in values, whether expressly stated in the certificate, policy, or contract or determined by use of an index or other external referent stated in the certificate, policy, or contract, either:
(A) when averaged over a period of four (4) years immediately before the applicable coverage date, exceeds the rate of interest determined by subtracting two (2) percentage points from Moody's Corporate Bond Yield Average averaged for the same four (4) year period or for a lesser period if the certificate, policy, or contract was issued less than four (4) years before the applicable coverage date; or
(B) in effect under the certificate, policy, or contract on and after the applicable coverage date, exceeds the rate of interest determined by subtracting three (3) percentage points from Moody's Corporate Bond Yield Average as most recently available on the applicable coverage date.
However, this subdivision does not apply to a part of a certificate, policy, or contract (including a rider) that provides long term care or another health insurance benefit.
(4) The obligations of a plan or program of an employer, an association, or another person to provide life, health, or annuity benefits to the employer's, association's, or other person's employees, members, or others, including obligations arising under and benefits payable by the employer, association, or other person under a multiple employer welfare arrangement.
(5) A minimum premium group insurance plan.
(6) A stop-loss or excess loss insurance policy or contract providing for the indemnification of or payment to a policy owner, a contract owner, a plan, or another person obligated to pay life, health, or annuity benefits or to provide services in connection with a benefit plan or another plan, fund, or program for the provision of employee welfare or pension benefits.
(7) An administrative services only contract.
(8) A part of a certificate, policy, or contract to the extent that the certificate, policy, or contract provides for:
(A) dividends or experience rating credits;
(B) voting rights; or
(C) payment of fees or allowances to a person, including the certificate holder or policy or contract owner, in connection with service with respect to or administration of the certificate, policy, or contract.
(9) A certificate, policy, or contract issued in Indiana by a member insurer when the member insurer did not have a certificate of authority to issue the certificate, policy, or contract in Indiana.
(10) An unallocated annuity contract issued to or in connection with a benefit plan protected by the federal Pension Benefit Guaranty Corporation, regardless of whether the federal Pension Benefit Guaranty Corporation has yet been required to make payments with respect to the benefit plan.
(11) An unallocated annuity contract or part of an unallocated annuity contract that is not issued to or in connection with a benefit plan or a government lottery.
(12) A certificate, policy, or contract or part of a certificate, policy, or contract with respect to which the Class B assessments contemplated by section 6 of this chapter may not be made or collected under federal or state law.
(13) An obligation or claim that does not arise under the express written terms of the policy or contract issued by the member insurer to the contract owner or policy owner, including any of the following obligations and claims:
(A) Obligations and claims based on marketing materials.
(B) Obligations and claims based on side letters, riders, or other documents issued by the member insurer without meeting applicable policy or contract form filing or approval requirements.
(C) Obligations and claims based on actual or alleged misrepresentations.
(D) Obligations and claims that are extracontractual claims.
(E) Obligations and claims for penalties or consequential, incidental, punitive, or exemplary damages.
(14) An obligation 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:
(A) benefit plan; or
(B) benefit plan's trustee;
that is not an affiliate of the member insurer.
(15) A part of a certificate, policy, or contract to the extent the:
(A) certificate, policy, or contract provides for the certificate's, policy's, or contract's interest rate, crediting rate, or similar factor employed in calculating returns or changes in values, to be determined by use of an index or other external referent stated in the certificate, policy, or contract; and
(B) returns or changes in value have not been credited to the certificate, policy, or contract, or as to which the certificate holder's or policy or contract owner's rights are subject to forfeiture, as of the applicable coverage date.
If a certificate's, policy's, or contract's returns or changes in values are credited to the certificate, policy, or contract less frequently than annually, for purposes of determining the returns and values that have been credited and are not subject to forfeiture under this subdivision, the returns and changes in value determined by using the procedures defined in the certificate, policy, or contract must be considered credited as if the contractual date of crediting returns or changes in values were the applicable coverage date, and those credited returns or changes in value are not subject to forfeiture under this subdivision, but will be subject to any other applicable limitations under this chapter.
(16) A funding agreement.
(17) An annuity not subject to regulation as described in IC 27-1-12.4.
(18) A certificate, policy, or contract that provides a hospital, medical, prescription drug, or other health care benefit under:
(A) Part C of Title XVIII of the federal Social Security Act (42 U.S.C. 1395w-21 through 1395w-28);
(B) Part D of Title XVIII of the federal Social Security Act (42 U.S.C. 1395w-101 through 1395w-153);
(C) Title XIX of the federal Social Security Act (42 U.S.C. 1396 et seq.); or
(D) regulations adopted under a law specified in clause (A), (B), or (C).
(f) The benefits that the association is obligated to cover do not exceed the lesser 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 insurer or insolvent insurer.
(2) The applicable limitations as follows:
(A) With respect to certificates, policies, and contracts not subject to clause (B), (C), (E), or (F), with respect to one (1) life, regardless of the number of policies or contracts, the following limitations:
(i) Three hundred thousand dollars ($300,000) in life insurance death benefits, but not more than one hundred thousand dollars ($100,000) in net cash surrender and net cash withdrawal values.
(ii) One hundred thousand dollars ($100,000) in health insurance benefits (other than those relating to disability income insurance, health benefit plans, and long term care insurance), including net cash surrender and net cash withdrawal values.
(iii) Three hundred thousand dollars ($300,000) in disability income insurance.
(iv) Three hundred thousand dollars ($300,000) in long term care insurance benefits (as defined in IC 27-8-12-5).
(v) Five hundred thousand dollars ($500,000) in health benefit plan benefits.
(vi) Two hundred fifty thousand dollars ($250,000) in the present value of annuity benefits, including net cash surrender and net cash withdrawal values.
(B) With respect to unallocated annuity contracts issued to or in connection with a governmental benefit plan established under Section 401, 403(b), or 457 of the United States Internal Revenue Code, two hundred fifty thousand dollars ($250,000) in the present value of annuity benefits, including net cash surrender and net cash withdrawal values, per participant.
(C) With respect to structured settlement annuities, two hundred fifty thousand dollars ($250,000) in the present value of annuity benefits, including net cash surrender and net cash withdrawal values, per payee.
(D) In addition to the foregoing limitations, the association is not obligated to cover more than:
(i) an aggregate of three hundred thousand dollars ($300,000) in benefits with respect to any one (1) person under clauses (A), (B), and (C), except with respect to benefits for health benefit plans under clause (A)(v), an aggregate of five hundred thousand dollars ($500,000) with respect to any one (1) person; or
(ii) with respect to one (1) owner of multiple nongroup policies of life insurance, whether the policy owner is an individual, a firm, a corporation, or another person, and whether the persons insured are officers, managers, employees, or other persons, five million dollars ($5,000,000) in benefits, including net cash surrender and net cash withdrawal values, regardless of the number of policies and contracts held by the owner.
(E) With respect to unallocated annuity contracts issued to or in connection with a government lottery, five million dollars ($5,000,000) in benefits per contract owner, regardless of the number of contracts held by the contract owner.
(F) With respect to unallocated annuity contracts:
(i) issued to or in connection with a benefit plan; and
(ii) not subject to clause (B);
five million dollars ($5,000,000) in benefits per plan sponsor, regardless of the number of unallocated annuity contracts entitled to coverage under this chapter.
(g) The limitations set forth in subsection (f) are limitations on the benefits for which the association is obligated before taking into account the:
(1) association's subrogation and assignment rights; or
(2) extent to which the benefits could be provided out of the assets of the impaired insurer or insolvent insurer attributable to covered policies.
The costs of discharging the association's obligations under this chapter may be met by the use of assets attributable to covered policies or reimbursed to the association under the association's subrogation and assignment rights.
(h) In discharging the association's obligations to provide coverage under this chapter, the association is not required to:
(1) guarantee, assume, reissue, reinsure, or perform;
(2) cause to be guaranteed, assumed, reissued, reinsured, or performed; or
(3) otherwise assure the discharge of;
the obligations of the insolvent insurer or impaired insurer under a covered policy that do not materially affect the economic values or economic benefits of the covered policy.
As added by P.L.193-2006, SEC.11. Amended by P.L.276-2013, SEC.33; P.L.208-2018, SEC.14.