Ohio Life & Health Insurance Guaranty Association

Covered Contracts

§3956.04.(B)(1). This chapter provides coverage, by the Ohio life and health insurance guaranty association, for the policies and contracts specified in division (C) of this section to all of the following persons: (1) Persons, regardless of where they reside, except for nonresident certificate holders or enrollees under group policies or contracts, who are the beneficiaries, assignees, or payees, including health care providers rendering services covered under health insurance policies or certificates, of the persons covered under division (A)(2) of this section; (2) Persons who are owners of or certificate holders or enrollees under the policies or contracts other than structured settlement annuities and unallocated annuity contracts if either of the following applies: (a) The persons are residents of this state. (b) The persons are not residents of this state and all of the following conditions apply: (i) The member insurer that issued the policies or contracts is domiciled in this state;. (ii) The persons are not eligible for coverage by an association in any other state due to the fact that the insurer or health insuring corporation did not hold a license or certificate of authority in the states in which the persons reside at the time specified in the state’s guaranty association laws. (iii) The states have associations similar to the association created by section 3956.06 of the Revised Code. (3) Persons who are the owners of unallocated annuity contracts specified in division (C) of this section when those contracts meet either of the following criteria: (a) The contracts are issued to or in connection with a specific benefit plan whose plan sponsor has its principal place of business in this state. (b) The contracts are issued to or in connection with government lotteries if the owners are residents of this state. (4) Persons who are payees, or the beneficiary of a payee if the payee is deceased, under a structured settlement annuity if the payee is a resident of this state, regardless of where the contract owner resides; (5) Persons who are payees, or the beneficiary of a payee if the payee is deceased, under a structured settlement annuity if the payee is not a resident of this state, but both of the following are true: (a) The contract owner of the structured settlement annuity is a resident of this state or, if the contract owner of the structured settlement annuity is not a resident of this state, 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 chapter. (b) The payee, the beneficiary, and the contract owner are not eligible for coverage by the association of the state in which the payee or contract owner resides. This chapter is intended to provide coverage to a person who is a resident of this state and, in special circumstances, to a nonresident. To avoid duplicate coverage, if a person who would otherwise receive coverage under this chapter receives coverage under the laws of another state, the person shall not be provided coverage under this chapter. In determining the application of the provisions of this chapter in situations in which a person could be covered by the association of more than one state, whether as an owner, payee, enrollee, beneficiary, or assignee, this chapter shall be construed in conjunction with other state laws to result in coverage by only one association.

Non-Covered Contracts

§3956.04.(B) and (C). This chapter shall not provide coverage to any of the following: (1) 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; (2) A person covered under division (A)(3) of this section, if any coverage is provided by the association of another state to the person; (3) 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 of whether the transaction occurred before or after such section became effective. (C) (1) This chapter provides coverage to the persons specified in division (A) of this section for direct, nongroup life insurance, health insurance, which for the purposes of this chapter includes sickness and accident insurance policies and contracts, and health insuring corporation subscriber policies, contracts, certificates, and agreements, or annuities, for certificates under direct group policies and contracts, for supplemental contracts to any of the preceding, and for unallocated annuity contracts, in each case issued by member insurers, except as otherwise limited in this chapter. Annuity contracts and certificates under group annuity contracts include, but are not limited to, guaranteed investment contracts, deposit administration contracts, unallocated funding agreements, allocated funding agreements, structured settlement annuities, annuities issued to or in connection with government lotteries, and any immediate or deferred annuity contracts. (2) Except as provided in division (C)(3) of this section, this chapter does not provide coverage for any of the following: (a) Any portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy or contract holder; (b) Any policy or contract of reinsurance, unless assumption certificates have been issued pursuant to the reinsurance policy or contract; (c) 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 the policy or contract or if the policy or contract has been issued for a lesser period averaged over that period, exceeds the rate of interest determined by subtracting two percentage points from the monthly average-corporates as published by Moody’s investors service, inc., or any successor to that service, averaged for the same period; (ii) On and after the date on which the association becomes obligated with respect to the policy or contract, exceeds the rate of interest determined by subtracting three percentage points from the monthly average-corporates as published by Moody’s investors service, inc., or any successor to that service, as most recently available. If the monthly average-corporates is no longer published, the superintendent, by rule, shall establish a substantially similar average. (d) 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 the plan or program is self-funded or uninsured, including but not limited to benefits payable by an employer, association, or similar entity under any of the following: (i) A multiple employer welfare arrangement as defined in section 3(40) of the “Employee Retirement Income Security Act of 1974,” 88 Stat. 833, 29 U.S.C.A. 1002(40), as amended; (ii) A minimum premium group insurance plan; (iii) A stop-loss group insurance plan; (iv) An administrative services only contract. (e) Any portion of a policy or contract to the extent that it provides dividends, voting rights, 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 the policy or contract; (f) 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; (g) Any unallocated annuity contract issued to an employee benefit plan protected under the federal pension benefit guaranty corporation, regardless of whether the federal pension benefit guaranty corporation has yet become liable to make any payments with respect to the benefit plan; (h) Any portion of any unallocated annuity contract that is not issued to or in connection with a governmental lottery or a benefit plan of a specific employee, union, or association of natural persons; (i) Any portion of a policy or contract to the extent that the assessments required by section 3956.09 of the Revised Code 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 member insurer to the enrollee, certificate holder, contract owner, or policy owner, including all of the following: (i) Claims based on marketing materials; (ii) 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; (iii) Misrepresentations of or regarding policy or contract benefits; (iv) Extra-contractual claims; (v) A claim for penalties or consequential or incidental damages. (k) 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; (l) Any policy or contract providing hospital, medical, prescription drug, or other health care benefits pursuant to 42 U.S.C. Chapter 7, Title XVIII, Parts C and D or 42 U.S.C. Chapter 7, Title XIX and any corresponding regulations; (m) Structured settlement annuity benefits to which a payee or the beneficiary of a payee, if the payee is deceased, has transferred his or her rights in a structured settlement factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A), regardless of whether the transaction occurred before or after such section became effective; (n) (i) 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 chapter, whichever is earlier. (ii) 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 division (C)(2)(n) of this section, 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. (3) The exclusion from coverage referenced in division (C)(2)(c) of this section shall not apply to any portion of a policy or contract, including a rider, that provides long-term care or any other health insurance benefits.

Non-Resident Coverage

§3956.04.(A)(2)(b). Yes. Covers nonresidents if all of the following conditions apply: (i) The insurers that issued the policies or contracts are domiciled in this state; (ii) At the time the policies or contracts were issued, the insurers did not hold a license or certificate of authority in the states in which the persons reside; (iii) The states have associations similar to the association created by section 3956.06 of the Revised Code;

§3956.04(D) The benefits for which the association may become liable shall not exceed the lesser of either of the following: (1) The contractual obligations for which the insurer is liable or would have been liable if it were not an impaired or insolvent insurer; (2) (a) 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 for life insurance; (ii) One hundred thousand dollars in health insurance benefits other than basic hospital, medical, and surgical insurance, major medical insurance, disability insurance, or long-term care insurance, including any net cash surrender and net cash withdrawal values; (iii) Three hundred thousand dollars in disability insurance; (iv) Three hundred thousand dollars in long-term care insurance; (v) Five hundred thousand dollars for health benefit plan coverage; (vi) Two hundred fifty thousand dollars in the present value of annuity benefits, including net cash surrender and net cash withdrawal values. (b) With respect to each individual participating in a governmental retirement plan established under section 401, 403(b), or 457 of the “Internal Revenue Code of 1986,” 100 Stat. 2085, 26 U.S.C.A. 1, as amended, and covered by an unallocated annuity contract, or the beneficiaries of each such individual if deceased, in the aggregate, two hundred fifty thousand dollars in present value annuity benefits, including net cash surrender and net cash withdrawal values. The association is not liable to expend more than three hundred thousand dollars in the aggregate with respect to any one individual under divisions (C)(2)(a), (b), and (d) of this section combined, except with respect to benefits for basic hospital, medical, and surgical insurance and major medical insurance under division (C)(2)(a)(v) of this section, in which case the aggregate liability of the association shall not exceed five hundred thousand dollars with respect to any one individual. (c) With respect to any one contract holder, covered by any unallocated annuity contract not included in division (C)(2)(b) of this section, one million dollars in benefits, irrespective of the number of those contracts held by that contract holder. (d) With respect to each payee of a structured settlement annuity, or the beneficiary or beneficiaries of the payee if the payee is deceased, two hundred fifty thousand dollars in present value of annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any. (Amended effective 12.22.2015)

Discretionary Triggers

§3956.08(A). When a domestic insurer is impaired.

Mandatory Triggers

§3956.08(B). When a member insurer is insolvent.

Foreign Triggers

No provision.

"Impaired Insurer"

§3956.01(G). “Impaired insurer” means a member insurer that, after November 20, 1989, is not an insolvent insurer and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. (Amended effective 12.22.2015)

"Insolvent Insurer"

§3956.01(H). “Insolvent insurer” means a member insurer that, after November 20, 1989, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

"Member Insurer"

§3956.01(I) (1) “Member insurer” means any insurer or health insuring corporation that holds a certificate of authority or is licensed to transact in this state any kind of insurance or health insuring corporation business for which coverage is provided under section 3956.04 of the Revised Code, and includes any insurer or health insuring corporation whose certificate of authority or license in this state may have been suspended, revoked, not renewed, or voluntarily withdrawn after November 20, 1989. (2) “Member insurer” does not include any of the following: (a) A fraternal benefit society; (b) A self-insurance or joint self-insurance pool or plan of the state or any political subdivision of the state; (c) A mutual protective association; (d) An insurance exchange; (e) Any person who qualifies as a “member insurer” under section 3955.01 of the Revised Code and who does not receive premiums on covered policies or contracts; (f) Any entity similar to any of those described in divisions (I)(2)(a) to (e) of this section. (3) “Member insurer” includes any insurer or health insuring corporation that operates any of the entities described in division (I)(2) of this section as a line of business, and not as a separate, affiliated legal entity, and otherwise qualifies as a member insurer.

§3956.06(A). Two accounts: (1)life insurance and annuity which includes sub accounts: (a)life insurance (b)annuity (c)unallocated annuity (includes I.R.C. § 403(b) annuities); and (2) health account.

Assessment Limits

§3956.09(E)(1). Two percent (2%) of the average premiums in state for policies covered by the account during the three calendar years preceeding the impairment or insolvency.

Assessment Classes

§3956.09(B). Two classes of assessments: Class A for administrative and legal 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. The amount of any class A assessment shall be determined by the board and may be authorized and called on a pro rata or non-pro rata basis. If pro rata, the board may provide that it be credited against future class B assessments. The amount of any class B assessment, except for assessments related to long-term care insurance, shall be allocated for assessment purposes between the accounts and among the subaccounts of the life insurance and annuity account pursuant to an allocation formula which may be based on the premiums or reserves of the impaired or insolvent insurer or on any other standard considered by the board in its sole discretion as being fair and reasonable under the circumstances. The amount of the class B assessments for long-term care insurance written by the impaired or insolvent insurer shall be allocated according to a methodology included in the plan of operation and approved by the superintendent of insurance. The methodology shall provide for fifty percent of the assessment to be allocated to sickness and accident and health member insurers and fifty percent to be allocated to life and annuity member insurers.

§3956.04(C) 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 the policy or contract or if the policy or contract has been issued for a lesser period averaged over that period, exceeds the rate of interest determined by subtracting two percentage points from the monthly average-corporates as published by Moody’s investors service, inc., or any successor to that service, averaged for the same period; (ii) On and after the date on which the association becomes obligated with respect to the policy or contract, exceeds the rate of interest determined by subtracting three percentage points from the monthly average-corporates as published by Moody’s investors service, inc., or any successor to that service, as most recently available. If the monthly average-corporates is no longer published, the superintendent, by rule, shall establish a substantially similar average.

§3956.20. Yes. A member insurer may offset against its premium or franchise tax liability twenty percent of the assessment in each of the five calendar years following the fiscal biennium in which the assessment was paid. The offsets shall be allowed on a year-per-year basis commencing with the first tax payment due after the fiscal biennium in which the assessment was paid. If the aggregate total of the assessments eligible for offset in a particular year exceeds a member insurer’s tax liability to this state for such year, the aggregate total of the remaining eligible assessments, notwithstanding the five-year limitation may be offset against such tax liability in future years. If a member insurer ceases doing business, all uncredited assessments may be credited against its premium or franchise tax liability for the year it ceases doing business. The Ohio life and health insurance guaranty association may require a member insurer to report any offset to the association. A member insurer that is exempt from taxes may recoup its assessments by a surcharge on its premiums in a sum reasonably calculated to recoup the assessments over a reasonable period of time, as approved by the superintendent. Amounts recouped shall not be considered premiums for any other purpose, including the computation of gross premium tax, the medical loss ratio, or agent commission. If a member insurer collects excess surcharges, the member insurer shall remit the excess amount to the association, and the excess amount shall be applied to reduce future assessments in the appropriate account.

§ 3956.01 (K) “Premiums” means amounts received on covered policies or contracts, less premiums, considerations, and deposits returned on the policies or contracts, and less dividends and experience credits on the policies and contracts. “Premiums” does not include either of the following: (1) Any amounts in excess of one million dollars received on any unallocated annuity contract not issued under a governmental retirement plan established under Section 401, 403(b), or 457 of the “Internal Revenue Code of 1986,” 100 Stat. 2085, 26 U.S.C.A. 1, as amended; (2) Any amounts received for any policies or contracts or for the portions of any policies or contracts for which coverage is not provided under section 3956.04 of the Revised Code. Division (G)(2) of this section shall not be construed to require the exclusion, from assessable premiums, of premiums paid for coverages in excess of the interest limitations specified in division (B)(2)(c) of section 3956.04 of the Revised Code or of premiums paid for coverages in excess of the limitations with respect to any one individual, any one participant, or any one contract holder specified in division (C)(2) of section 3956.04 of the Revised Code.

§3956.18 “Use of existence of association to sell insurance prohibited...” (A)(1) No person shall make, publish, disseminate, circulate, or place before the public, or cause 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 or television station, or in any other manner, any advertisement, announcement, or statement, written or oral, that uses the existence of the Ohio life and health insurance guaranty association for the purposes of sales, solicitation, or inducement to purchase any form of insurance covered by this chapter. (2) As used in division (A)(1) of this §, "person" includes but is not limited to any insurer or any agent or affiliate of any insurer. (3) Division (A)(1) of this § does not apply to the association or any other entity that does not sell or solicit insurance.