In California, when a group disability policy is discontinued, what must the carrier make available to eligible covered members?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
California law on discontinuance of group disability insurance (CIC §§10128-10128.4) protects covered employees and dependents when a group disability policy or a self-insured welfare benefit plan ends. The framework addresses discontinuance, extension of benefits, and replacement coverage so that eligible members do not lose protection without a path forward. Under the statutory scheme, when a group disability plan is discontinued, the carrier must make conversion or replacement coverage available to eligible members rather than simply ending the coverage. This conversion or replacement requirement is the CA-specific anchor for group disability termination under the A&H general concepts (AH-I.C.4), and because the tested rule is California law, the question is marked state=CA.
Why the other options are wrong
- B) Premium refunds are not part of the discontinuance framework. Premiums already paid for the coverage that was provided are earned by the carrier, and California's group disability discontinuance rules do not require a refund of prior-year premiums to members.
- C) The protection required on discontinuance is a conversion or replacement of disability coverage, not a guaranteed issue life insurance policy. No coverage is provided at zero cost, and the rule does not require the carrier to issue free life insurance to members.
- D) Continuation under the statutory rules is limited in scope and duration, and it is designed to bridge the gap to replacement coverage. The law does not provide free lifetime continuation of the group disability coverage.
Memory hook
Group disability ends? California gives members a conversion or replacement path.