26-42-103. Coverage and limitations.

(a) This act shall provide coverage for the policies and contracts specified in subsection (b) of this section and provide coverage as follows:

(i) To persons who are owners, certificate holders or enrollees under the policies or contracts other than structured settlement annuities and in each case who:

(A) Are residents; or

(B) Are not residents but only under all of the following conditions:

(I) The member insurer that issued the policies or contracts is domiciled in this state;

(II) The states in which the persons reside have associations similar to the association created by this act; and

(III) The persons are not eligible for coverage by an association in any other state due to the fact that the insurer or health maintenance organization was not licensed in the state at the time specified in the state's guaranty association law.

(ii) To persons who are the beneficiaries, assignees or payees of the persons described in paragraph (a)(i) of this section, including health care providers rendering services covered under health insurance policies or certificates, regardless of where they reside except for nonresident certificate holders under group policies or contracts;

(iii) For structured settlement annuities specified in subsection (b) of this section, paragraphs (i) and (ii) of this subsection shall not apply, and this act shall, except as provided in paragraphs (iv) and (v) of this subsection, provide coverage to a person who is a payee under a 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, but only under both of the following conditions:

(I) The contract owner of the structured settlement annuity is a resident, or the contract owner of the structured settlement annuity is not a resident, but the insurer that issued the structured settlement annuity is domiciled in this state and the state in which the contract owner resides has an association similar to the association created by this act; and

(II) Neither the payee or beneficiary of the contract owner nor the contract owner is eligible for coverage by the association of the state in which the payee or contract owner resides.

(iv) This act shall not provide coverage to:

(A) A person who is a payee or beneficiary of a contract owner resident of this state, if the payee or beneficiary is afforded any coverage by the association of another state; or

(B) A person who acquires rights to receive payments through a structured settlement factoring transaction as defined in 26 U.S.C. §5891(c)(3)(A), regardless if the transaction occurred before or after 26 U.S.C. § 5891(c)(3)(A) became effective.

(v) This act is intended to provide coverage to a person who is a resident of this state and, in special circumstances, to a nonresident. In order to avoid duplicate coverage, if a person who would otherwise receive coverage under this act is provided coverage under the laws of any other state, the person shall not be provided coverage under this act. In determining the application of the provisions of this paragraph in situations where a person could be covered by the association of more than one (1) state, whether as an owner, payee, enrollee, beneficiary or assignee, this act shall be construed in conjunction with other state laws to result in coverage by only one (1) association.

(b) This act shall provide coverage to persons specified in subsection (a) of this section for policies or contracts of direct, nongroup life insurance, health insurance including health maintenance organization subscriber contracts and certificates, annuities and supplemental contracts to any of these policies or contracts and for certificates under direct group policies and contracts issued by member insurers except as limited by this act. Annuity contracts and certificates under group annuity contracts include allocated funding agreements, structured settlement annuities and any immediate or deferred annuity contracts.

(c) This act shall not provide coverage for:

(i) Any portion of a policy or contract not guaranteed by the insurer or under which the risk is borne by the policyholder or contract holder;

(ii) Any policy or contract of reinsurance unless assumption certificates have been issued pursuant to the reinsurance policy or contract;

(iii) Excluding any portion of a policy or contract, including a rider, that provides long term care or other health insurance benefits, any portion of a policy or contract to the extent that the rate of interest on which it is based:

(A) Averaged over the period of four (4) years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this act, exceeds a rate of interest determined by subtracting two (2) percentage points from Moody's Corporate Bond Yield Average averaged for that same four (4) year period or for a lesser period if the policy or contract was issued less than four (4) years before the member insurer becomes an impaired or insolvent insurer under this act; and

(B) On and after the date on which the member insurer becomes an impaired or insolvent insurer under this act, exceeds the rate of interest determined by subtracting three (3) percentage points from the most recent and available Moody's Corporate Bond Yield Average.

(iv) 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 similar entity under:

(A) A multiple employer welfare arrangement as defined in Section 3(40) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1002(40);

(B) A minimum premium group insurance plan;

(C) A stop-loss group insurance plan; or

(D) An administrative services only contract.

(v) Any portion of a policy or contract to the extent it provides dividends or experience rating credits, voting rights or provides payment of any fees or allowances to any person, including the policyholder or contract holder, in connection with the service to or administration of the policy or contract;

(vi) 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;

(vii) Any annuity contract or group annuity certificate which is not issued to and not owned by an individual, except to the extent of any annuity benefits guaranteed to an individual by an insurer under the contract or certificate;

(viii) Any annuity contract or group annuity certificate which is issued by a nonprofit insurance company exclusively for the benefit of nonprofit educational institutions and their employees for the purpose of providing retirement benefits;

(ix) A portion of a policy or contract to the extent that the assessments required by W.S. 26-42-107 with respect to the policy or contract are preempted or otherwise not permitted by federal or state law;

(x) An obligation that does not arise under the express written terms of the policy or contract issued by the member insurer to the enrollee, certificate holder, contract owner or policy owner, including without limitation:

(A) Claims based on marketing materials;

(B) Claims based on side letters, riders or other documents that were issued by the member insurer without meeting applicable policy or contract form filing or approval requirements;

(C) Misrepresentations of or regarding policy or contract benefits;

(D) Extra-contractual claims; or

(E) A claim for penalties or consequential or incidental damages.

(xi) A 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, which in each case is not an affiliate of the member insurer;

(xii) An unallocated annuity contract;

(xiii) 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 & D) or Subchapter XIX, Chapter 7 of Title 42 of the United States Code (commonly known as Medicaid) or any regulations issued pursuant thereto;

(xiv) A 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 act, 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 provision, 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;

(xv) Structured settlement annuity benefits to which a payee or beneficiary has transferred his rights in a structured settlement factoring transaction as defined in 26 U.S.C. § 5891(c)(3)(A), regardless if the transaction occurred before or after 26 U.S.C. § 5891(c)(3)(A) became effective.

(d) The benefits for which the association may be liable shall in no event exceed the lesser of:

(i) The contractual obligations for which the member insurer is liable or would have been liable if it was not an impaired or insolvent insurer; or

(ii) With respect to any one (1) life, regardless of the number of policies or contracts:

(A) Three hundred thousand dollars ($300,000.00) in life insurance death benefits but not more than one hundred thousand dollars ($100,000.00) in net cash surrender and net cash withdrawal values for life insurance;

(B) For health insurance benefits:

(I) One hundred thousand dollars ($100,000.00) for coverages not defined as disability insurance, disability income insurance, health benefit plan or long term care insurance including any net cash surrender and net cash withdrawal values;

(II) Three hundred thousand dollars ($300,000.00) for disability insurance, disability income insurance and long-term care insurance;

(III) Three hundred thousand dollars ($300,000.00) for health benefit plans.

(C) Two hundred fifty thousand dollars ($250,000.00) in the present value of annuity benefits including net cash surrender and net cash withdrawal values;

(D) With respect to each payee of a structured settlement annuity or beneficiary or beneficiaries of the payee if deceased, two hundred fifty thousand dollars ($250,000.00) in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values;

(E) However, in no event shall the association be obligated to cover more than:

(I) An aggregate of five hundred thousand dollars ($500,000.00) in benefits with respect to any one (1) life under paragraphs (A) through (D) of this subsection; or

(II) With respect to one (1) owner of multiple nongroup policies of life insurance, whether the policy owner or contract owner is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees or other persons, more than five million dollars ($5,000,000.00) in benefits, regardless of the number of policies and contracts held by the owner.

(F) The limitations set forth in this subsection are limitations on the benefits for which the association is obligated before taking into account either its subrogation and assignment rights or the extent to which those benefits could be provided out of the assets of the impaired or insolvent insurer attributable to covered policies. The costs of the association's obligations under this act may be met by the use of assets attributable to covered policies or reimbursed to the association pursuant to its subrogation and assignment rights;

(G) For purposes of this act, benefits provided by a long term care rider to a life insurance policy or annuity contract shall be considered the same type of benefits as the base life insurance policy or annuity contract to which it relates.

(e) The liability of the association is strictly limited by the express terms of the covered policies and contracts and by the provisions of this act and is not affected by the contents of any brochures, illustrations, advertisements or oral statements by agents, brokers or others used or made in connection with their sale. The association is not liable for any extracontractual, exemplary or punitive damages, attorney's fees or interest other than as provided for by the terms of such policies or contracts, as limited by this act.

(f) Repealed By Laws 2014, Ch. 21, § 2.

(g) In performing its obligations to provide coverage under W.S. 26-42-106, the association shall not be required to guarantee, assume, reinsure, reissue or perform, or cause to be guaranteed, assumed, reinsured, reissued or performed, the contractual obligations of the insolvent or impaired insurer under a covered policy or contract that do not materially affect the economic values or economic benefits of the covered policy or contract.