Description:
Extension of Liability – Termed Groups
Extension of liability is the length of time a member is covered by his applicable group benefits after termination of the entire group contract or the member’s coverage.  Extension of liability applies to a member who is an inpatient at the time of cancellation or for a specified diagnosis for which the member qualifies as totally disabled.

Extension of Liability – New Groups
Extension of liability is the length of time a member is covered by a prior carrier under a terminated insured group contract and the group purchases coverage for its’ employees through a insured contract.  Benefits that are required to be provided by the prior carrier under the Extension of Liability provision apply only to services provided during the inpatient admission which began before and continues after the group’s effective date or for the specified diagnosis for which the member qualifies as totally disabled.

Policy Statement:
If the group contract or member’s coverage is terminated, all rights to receive benefits provided in the contract will cease on the date of that termination, except that a member who is an inpatient or a member who is totally disabled on the date of such termination will be entitled to receive continued benefits for each day of that admission or total disability.  This applies to all fully insured coverage.  Effective 10/01/05, ASO accounts will no longer be able to choose this option.  

Extension of liability applies to an employee or covered dependent whose coverage with a prior carrier was under an insured group contract, and whose group terminated coverage with the carrier during the time such employee or dependent was an inpatient or while totally disabled.  Benefits for such a new member will continue under the group’s terminated contract with the prior carrier during the admission or disability period for covered services provided during the admission or provided to treat the condition causing the disability as required under South Carolina Insurance Law.  Benefits for any other services not covered under the terminated contract will be considered under the new group’s contract.

Totally disabled is defined as a condition requiring that the individual receive ongoing medical care from a physician, and that such condition has resulted in the individual’s inability to perform any of the usual and customary duties of his or her occupation or, for a dependent, in the individual’s inability to perform any of the usual and customary duties or activities of a person in good health of the same age.

Benefits provided will be limited to services directly related to the illness or injury causing the admission or the total disability.

Benefits will continue until the earliest of the following:

• the date of  hospital discharge or recovery of the member from the total disability or
• a period of 365 days from the date of termination of his coverage or
• benefits to which the member is entitled are exhausted.

Claims filed as Extension of Liability must be accompanied by a physician’s statement of disability. The Medical Director makes the determination as to whether or not the definition of total disability extension has been met.

Benefits will be subject to all exclusions, limitations, coinsurance, co-payments and deductibles in the applicable group contract.  The applicable group contract is the Master Group contract in effect for the Member on his/her termination date.

If a member has Extension of Liability coverage and also replacement group coverage, the Extension of Liability coverage pays first for charges associated with the disabling condition.  

Contract Change During a Hospital Admission
When a patient is admitted to the hospital and a contract change occurs while the patient is hospitalized, the facility charges for the entire admission are paid in accordance with the benefits provisions in force at the time of admission.  All other services ( e. g., medical visits, surgery, anesthesia, etc.) are paid in accordance with benefits provisions in force on the date the service is rendered.

Carrier Changes
Effective July 30. 2002, a new section was added to the Extension of Benefits provisions of S.C. Code 38-71-360, which requires the succeeding carrier, rather than the prior carrier, to cover disabled members in certain situations.  Specifically, in all situations except the prior carrier’s withdrawal from the large group market, the small group market or both, the extension of benefits liability of the prior carrier ends at the earliest of:

• The date the individual has full coverage for the disabling condition under a group health plan with similar benefits and that makes reasonable provisions for continuity of care for the disabling condition;
• The date the individual is no longer disabled;
• A period of 365 days from the date of termination of coverage with the preceding carrier; or
• The date benefits with the preceding carrier are exhausted.

Accordingly, if a group changes carriers and (1) the group’s coverage under the succeeding carrier is similar to the group’s coverage under the preceding carrier and (2) the group’s coverage under the succeeding carrier has a reasonable provision for continuity of care for a disabled member, the preceding carrier will not have to cover disabled members under Extension of Benefits.