2009 Iowa Code
Title 13 - Commerce
Subtitle 1 - Insurance and Related Regulation
CHAPTER 509 - GROUP INSURANCE
509.1 - FORM OF POLICY.

        509.1  FORM OF POLICY.
         No policy of group life, accident or health insurance shall be
      delivered in this state unless it conforms to one of the following
      descriptions:
         1.  A policy issued to an employer, or to the trustees of a fund
      established by an employer, which employer or trustee shall be deemed
      the policyholder, to insure employees of the employer for the benefit
      of persons other than the employer, subject to the following
      requirements:
         a.  The employees eligible for insurance under the policy
      shall be all of the employees of the employer, or all of any class or
      classes thereof determined by conditions pertaining to their
      employment.  The policy may provide that the term "employees"
      shall include the employees of one or more subsidiary corporations,
      and the employees, individual proprietors, and partners of one or
      more affiliated corporations, proprietors or partnerships if the
      business of the employer and of such affiliated corporations,
      proprietors or partnerships is under common control through stock
      ownership, contract, or otherwise.  The policy may provide that the
      term "employees" shall include the individual proprietor or
      partners if the employer is an individual proprietor or a
      partnership.  The policy may provide that the term "employees"
      shall include retired employees.  The policy may also provide that
      the term "employees" shall include the board of directors if the
      employer is a corporation.
         b.  The premium for the group policy shall be paid by the
      policyholder, either from the employer's funds or funds contributed
      by the insured employees, or from both.  A policy of group accident
      and health insurance on which part of the premium is to be derived
      from funds contributed by the insured employees may be placed in
      force only if at least seventy-five percent of the then eligible
      employees, excluding any as to whom evidence of individual
      insurability is not satisfactory to the insurer, elect to make the
      required contributions.  A policy on which no part of the premium is
      to be derived from funds contributed by the insured employees must
      insure all eligible employees, or all except any as to whom evidence
      of individual insurability is not satisfactory to the insurer.  As
      used in this paragraph, "accident and health insurance" does not
      include disability income insurance.
         c.  The amounts of insurance under the policy must be based
      upon some plan precluding individual selection either by the
      employees or by the employer or trustees.
         d.  Group policies may include dependents of the employee,
      including the spouse.
         e.  The policy shall not exclude from coverage an employee or
      an employee's spouse or dependents on the basis of the eligibility of
      the employee or the employee's spouse or dependents for medical
      assistance under chapter 249A.
         2.  A policy issued to any one of the following to be considered
      the policyholder:
         a.  An advisory, supervisory, or governing body or bodies of a
      regularly organized religious denomination to insure its clergy,
      priests, or ministers of the gospel.
         b.  A teachers' association, to insure its members.
         c.  A lawyers' association, to insure its members.
         d.  A volunteer fire company, to insure all of its members.
         e.  A fraternal society or association, or any subordinate
      lodge or branch thereof, to insure its members.
         f.  A common principal of any group of persons similarly
      engaged between whom there exists a contractual relationship, to
      insure the members of such group.
         g.  An association, the members of which are students,
      teachers, administrators or officials of any elementary or secondary
      school or of any college, to insure the members thereof.  For the
      purpose of this paragraph the students, teachers, administrators or
      officials of or for any such school or college shall constitute an
      association.
         Provided that the provisions and requirements of subsection 1 of
      this section shall apply to such policy and the policyholder and
      insured in like manner as said subsection 1 of this section applies
      to employers and employees, except that if a policy is issued to a
      volunteer fire company or an association, the members of which are
      students, teachers, administrators or officials of any elementary or
      secondary school or of any college, the requirement for twenty-five
      members shall not apply, and, if issued to a teachers' association or
      lawyers' association, not less than sixty-five percent of the members
      thereof may be insured.
         3.  A policy issued to a creditor, who shall be deemed the
      policyholder, to insure debtors of the creditor, subject to the
      following requirements:
         a.  The debtors eligible for insurance under the policy shall
      be all of the debtors of the creditor, or all of any class or classes
      thereof determined by conditions pertaining to the indebtedness or to
      the purchase giving rise to the indebtedness.  The policy may provide
      that the term "debtors" shall include the debtors of one or more
      subsidiary corporations, and the debtors of one or more affiliated
      corporations, proprietors or partnerships if the business of the
      policyholder and of such affiliated corporations, proprietors or
      partnerships is under common control through stock ownership,
      contract, or otherwise.
         b.  The premium for the policy shall be paid by the
      policyholder, either from the creditor's funds, or from charges
      collected from the insured debtors, or from both.  A policy on which
      part or all of the premium is to be derived from the collection from
      the insured debtors of identifiable charges not required of uninsured
      debtors shall not include, in the class or classes of debtors
      eligible for insurance, debtors under obligations outstanding at its
      date of issue without evidence of individual insurability unless at
      least seventy-five percent of the then eligible debtors elect to pay
      the required charges.  A policy on which no part of the premium is to
      be derived from the collection of such identifiable charges must
      insure all eligible debtors, or all except any as to whom evidence of
      individual insurability is not satisfactory to the insurer.
         c.  The policy may be issued only if the group of eligible
      debtors is then receiving new entrants at the rate of at least one
      hundred persons yearly, or may reasonably be expected to receive at
      least one hundred new entrants during the first policy year, and only
      if the policy reserves to the insurer the right to require evidence
      of individual insurability if less than seventy-five percent of the
      new entrants become insured.
         d.  The amount of insurance on the life of a debtor shall not
      exceed the amount owed by the debtor to the creditor, or the face
      amount of a totally or partially executed loan or loan commitment
      creating personal liability and made in good faith for general
      agricultural or horticultural purposes to a debtor with seasonal
      income.  However, in no event shall the amount of insurance exceed
      two hundred thousand dollars.
         e.  The insurance shall be payable to the policyholder.  Such
      payment shall reduce or extinguish the unpaid indebtedness of the
      debtor to the extent of such payment.  Provided that in the case of a
      debtor for agricultural or horticultural purposes of the type
      described in paragraph "d", the insurance in excess of
      indebtedness to the creditor, if any, shall be payable to a named
      beneficiary, to the estate of the debtor or under the provision of a
      facility of payment clause.
         4.  A policy issued to a labor union, which shall be deemed the
      policyholder, to insure members of such union for the benefit of
      persons other than the union or any of its officials,
      representatives, or agents, subject to the following requirements:
         a.  The members eligible for insurance under the policy shall
      be all of the members of the union or all of any class or classes
      thereof determined by conditions pertaining to their employment, or
      to membership in the union, or both.
         b.  The premium for the group life policy shall be paid by the
      policyholder, either wholly from the union's funds, or partly from
      such funds and partly from funds contributed by the insured members
      specifically for their insurance.  No policy, except accident and
      health, may be issued on which the entire premium is to be derived
      from funds contributed by the insured members specifically for their
      insurance.  A policy on which part of the premium is to be derived
      from funds contributed by the insured members specifically for their
      insurance may be placed in force only if at least sixty-five percent
      of the then eligible members, excluding any as to whom evidence of
      individual insurability is not satisfactory to the insurer, elect to
      make the required contributions.  A policy on which no part of the
      premium is to be derived from funds contributed by the insured
      members specifically for their insurance must insure all eligible
      members, or all except any as to whom evidence of individual
      insurability is not satisfactory to the insurer.
         c.  The policy must cover at least ten members at date of
      issue.
         d.  The amounts of insurance under the policy must be based
      upon some plan precluding individual selection either by the members
      or by the union.
         e.  Policies may include dependents of the insured, including
      the spouse.
         f.  The policy shall not exclude from coverage a member or a
      member's spouse or dependents on the basis of the eligibility of the
      member or the member's spouse or dependents for medical assistance
      under chapter 249A.
         5.  A policy issued to the trustees of a fund established by two
      or more employers in the same industry or by two or more labor unions
      or by one or more employers and by one or more labor unions which
      trustees shall be deemed the policyholder, to insure employees of the
      employers or members of the unions for the benefit of persons other
      than the employers or the unions, subject to the following
      requirements:
         a.  The persons eligible for insurance shall be all of the
      employees of the employers or all of the members of the unions, or
      all of any class or classes thereof determined by conditions
      pertaining to their employment, or to membership in the unions, or
      both.  The policy may provide that the term "employees" shall
      include the individual proprietor or partners if an employer is an
      individual proprietor or a partnership.  The policy may provide that
      the term "employees" shall include the trustees or their
      employees, or both, if their duties are principally connected with
      such trusteeship.  The policy may provide that the term
      "employees" shall include retired employees.  The policy may also
      provide that the term "employees" shall include the board of
      directors if the employer is a corporation.
         b.  The premium for the policy shall be paid by the trustees
      wholly from funds established by the employers of the insured
      persons.  The policy must insure all eligible persons, or all except
      any as to whom evidence of individual insurability is not
      satisfactory to the insurer, if the funds are contributed wholly by
      the employer or unions.
         c.  The policy must cover at least one hundred persons at date
      of issue.
         d.  The amounts of insurance under the policy must be based
      upon some plan precluding individual selection either by the insured
      persons or by the policyholder, employers, or unions.
         e.  Policies may include dependents of the insured, including
      the spouse.
         f.  The policy shall not exclude from coverage an employee or
      member or an employee's or member's spouse or dependents on the basis
      of the eligibility of the employee or member or employee's or
      member's spouse or dependents for medical assistance under chapter
      249A.
         6.  A policy issued to any nonprofit industrial association (to be
      deemed the policyholder) incorporated for a period of at least ten
      years and organized for purposes other than obtaining insurance,
      subject to the following requirements:
         a.  If two or more members of the association, or any class or
      classes of members thereof determined by conditions pertaining to
      insurance, elect to insure their employees or any class or classes of
      employees determined by conditions pertaining to employment; and
         b.  The total number of insured employees must not be less
      than one thousand, and of these not less than seventy-five percent
      must be employees of members with at least twenty insured employees
      each, and further, not more than ten percent may be employees of
      members with less than ten insured employees each; and
         c.  The insurance premiums are paid by such members to the
      association; each member, insofar as applicable to the member's own
      employees, may collect part of the premium from insured employees,
      and the method of apportionment of the premium payment between the
      member and the member's employees may be varied as among individual
      members; and
         d.  Not less than seventy-five percent of the eligible
      employees of each participating member may be insured where the
      employees pay a part of the premium.  The word "employees" as used in
      this subsection shall also include the individual members and
      employees of such association.
         e.  Policies may include dependents of the employees,
      including the spouse.
         f.  The policy shall not exclude from coverage an employee or
      an employee's spouse or dependents on the basis of the eligibility of
      the employee or the employee's spouse or dependents for medical
      assistance under chapter 249A.  This paragraph shall also apply to
      corporations operating within the state who provide insurance
      coverage for their employees directly, and the commissioner shall
      have the authority to enforce the provisions of this paragraph.
         7.  A policy issued to the department of human services, which
      shall be deemed the policyholder, to insure eligible persons for
      medical assistance, or for both medical assistance and additional
      medical assistance, as defined by chapter 249A as hereafter amended.

         8.  A policy of group health insurance coverage, as defined in
      section 513B.2, issued by a small employer carrier, as defined in
      section 513B.2, to a bona fide association, subject to the following
      requirements:
         a.  The policy provides group health insurance coverage to
      eligible employees of members of a bona fide association that are
      small employers as defined in section 513B.2, and to the spouses and
      dependents of such employees.
         b.  The policy is issued to a bona fide association.  For the
      purposes of this subsection, a bona fide association is an
      association which meets all of the following requirements:
         (1)  The association is a trade, industry, or professional
      association which is organized in good faith as a nonprofit
      corporation under chapter 504 for purposes other than obtaining
      insurance and has been in existence and actively maintained for at
      least five continuous years at the time the policy is issued.
         (2)  The association does not condition membership in the
      association on the health status of employees of its members or the
      health status of the spouses and dependents of such employees.
         (3)  Group health insurance coverage offered by the association is
      available to all eligible employees of its members that are small
      employers as defined in section 513B.2 who choose to participate in
      the health insurance coverage offered, and to the spouses and
      dependents of such employees, regardless of the health status of such
      employees or their spouses and dependents.
         (4)  Group health insurance coverage offered by the association is
      available only to persons who are eligible employees of a small
      employer as defined in section 513B.2 that is a member of the
      association, or to the spouses or dependents of such employees.
         9.  A policy issued to a resident of this state under a group
      life, accident, or health insurance policy issued to a group other
      than one described in subsections 1 through 8, subject to the
      following requirements:
         a.  The commissioner determines that all of the following
      apply:
         (1)  The issuance of the group policy is not contrary to the best
      interest of the public.
         (2)  The issuance of the group policy will result in economies of
      acquisition or administration.
         (3)  The benefits under the group policy are reasonable in
      relation to the premium charged.
         b.  The commissioner need not make a determination under
      paragraph "a" if the commissioner determines that the group
      insurance coverage offered in this state by an insurer or other
      person is offered under a policy issued in another state and that
      state or another state in which the policy is offered, having
      requirements substantially similar to those in paragraph "a", has
      determined that the policy meets those requirements.
         c.  The premium for the policy shall be paid either from the
      policyholder's funds, or from funds contributed by the covered
      person, or both.
         d.  The insurer may exclude or limit the coverage on any
      person as to whom evidence of individual insurability is not
      satisfactory to the insurer.
         e.  If compensation of any kind will or may be paid to the
      policyholder in connection with the group policy, the insurer shall
      provide to the prospective insured written notice that compensation
      will or may be paid.  Notice shall be provided whether the
      compensation is direct or indirect, and whether the compensation is
      paid to or retained by the policyholder, or paid to or retained by a
      third party at the direction of the policyholder or any entity
      affiliated with the policyholder by ownership, contract, or
      employment.  The notice shall be placed on or accompany any document
      designed for the enrollment of prospective insureds.  

         Section History: Early Form

         [C24, 27, 31, § 8675, 8676; C35, § 8684-e1--8684-e3; C39, §
      8684.01--8684.03; C46, § 509.1--509.3; C50, 54, 58, 62, 66, 71,
      73, 75, 77, 79, 81, § 509.1] 

         Section History: Recent Form

         83 Acts, ch 96, § 157, 159; 85 Acts, ch 69, § 1; 87 Acts, ch 63, §
      1; 91 Acts, ch 244, § 25; 92 Acts, ch 1162, § 11; 2006 Acts, ch 1117,
      §33; 2007 Acts, ch 57, §1, 2, 8
         Referred to in § 513B.2