                                 CODE OF VIRGINIA

NOTICE TO EMPLOYEES UPON TERMINATION OF COVERAGE; PENALTY FOR FAILURE TO REMIT
FUNDS (§ 38.2-3542)

A. Any employer who (i) assumes part or all of the cost of providing group
accident and sickness insurance or a group health services plan or group health
care plan for his employees under a group insurance policy or subscription
contract or other evidence of coverage; (ii) provides a facility for deducting
the full amount of the premium from employees&#8217; salaries and remitting such
premium to the insurer, health services plan, or health maintenance
organization; or (iii) provides for health and medical care or reimbursement of
medical expenses for his employees as a self-insurer, shall give written notice
to participating employees in the event of termination or upon the receipt of
notice of termination of any such policy, contract, coverage, or self-insurance
not later than fifteen days after the termination of a self-insured plan or
receipt of the notice of termination required by subsection C of this section.

B. Any employer who collects from his employees or covers any part of the cost
of any of the policies, contracts, or coverages specified in subsection A of
this section and who knowingly fails to remit to the insurer or plan such funds
required to maintain coverage in accordance with the policy or contract
provisions under which the employees are covered shall be guilty of a Class 1
misdemeanor and shall be subject to civil suit for any medical expenses the
employee may become liable for as a result of the employer letting such coverage
be terminated.

C. In the event the coverages specified in subsection A of this section are
terminated due to nonpayment of premium by the employer, no such coverages shall
be terminated by an insurer, health services plan, health maintenance
organization or health insurance issuer as defined in &#xA7; 38.2-3431 with
respect to a covered individual unless and until the employer has been provided
with a written or printed notice of termination, including a specific date, not
less than fifteen days from the date of such notice, by which coverage will
terminate if overdue premium is not paid. Coverage shall not be permitted to
terminate for at least fifteen days after such notice has been mailed. Each
insurer, health services plan, or health maintenance organization shall make
reimbursement on all valid claims for services incurred prior to the date
coverage is terminated.

HISTORY: 1982, c. 586, § 38.1-356.01; 1986, cc. 251, 562; 1990, c. 301; 1999,
c. 276.