58-16-54. Responsibilities of prior carrier and succeeding carrier upon discontinuance. The following provisions dictate the responsibility of the prior carrier and succeeding carrier when coverage is discontinued:

(1) After discontinuance of the policy, contract, or certificate, the prior carrier remains liable only to the extent of its accrued liabilities and extensions of benefits. The position of the prior carrier shall be the same whether the group policyholder or other entity secures replacement coverage from a new carrier, self-insures, or foregoes the provision of coverage;

(2) If the individual was validly covered under the prior plan on the date of discontinuance, each individual who is eligible for coverage in accordance with the succeeding carrier's plan of benefits is, with respect to the class or classes of individuals, eligible and shall be covered under the succeeding carrier's plan if (a) any actively-at-work and nonconfinement rules are met, and (b) if required by the succeeding carrier, the individual requests enrollment;

(3) Each person not covered under the succeeding carrier's plan of benefits in accordance with subdivision (2) shall nevertheless be covered by the succeeding carrier in accordance with the following rules if the individual was validly covered, including benefit extension, under the prior plan on the date of discontinuance and if the individual is a member of the class or classes of individuals eligible for coverage under the succeeding carrier's plan. Any reference in the following subdivisions to an individual who was or was not totally disabled is a reference to the individual's status immediately prior to the date the succeeding carrier's coverage becomes effective;

(4) The minimum level of benefits to be provided by the succeeding carrier shall be the applicable level of benefits of the prior carrier's plan reduced by any benefits payable by the prior plan;

(5) Coverage shall be provided by the succeeding carrier until the earliest of the following dates:

(a) The date the individual becomes eligible under the succeeding carrier's plan as described in subdivision (1);

(b) The date the individual's coverage would terminate in accordance with the succeeding carrier's plan provisions applicable to individual termination of coverage, such as at termination of employment or ceasing to be an eligible dependent; or

(c) In the case of an individual who was totally disabled, and in the case of a type of coverage for which § 58-16-53 requires an extension of benefits or accrued liability, the end of any period of extension benefits or accrued liability that is required of the prior carrier by § 53-16-53, or if the prior carrier's policy, contract, or certificate is not subject to that section, but would have been required of the prior carrier had the policy, contract, or certificate been subject to § 58-16-53 at the time the prior carrier's plan was discontinued and replaced by the succeeding carrier's plan;

(6) In any situation in which a determination of the prior carrier's benefit is required by the succeeding carrier, at the succeeding carrier's request the prior carrier shall furnish a statement of the benefits available or pertinent information, sufficient to permit verification of the benefit determination or the determination itself by the succeeding carrier. For the purposes of this subdivision, benefits of the prior plan shall be determined in accordance with all of the definitions, conditions, and covered expense provisions of the prior plan rather than those of the succeeding plan. The benefit determination shall be made as if coverage had not been replaced by the succeeding carrier;

(7) A succeeding carrier's policy may contain a provision limiting benefits to employees who are actively at work. However, any individual who remains as an employee, was covered by the prior carrier, and was disabled as of the date the succeeding carrier coverage became effective for that employer, will continue to be covered by the prior carrier as long as the individual remains an employee. An individual who is not disabled and is not at work on the date the succeeding carrier's coverage commences is considered actively at work as long as the absence from work is an employer-approved absence.Source: SL 2009, ch 261, § 6.