Rule to Implement Transitional Requirements for the Conversion of Medicare Supplement Insurance Benefits and Premiums to Conform to Medicare Program Revisions

PURPOSE: This rule attempts to assure the orderly implementation and conversion of Medicare supplement insurance benefits and premiums due to changes in the federal Medicare program; provides for the reasonable standardization of the coverage, terms and benefits of Medicare supplement policies or contracts; facilitates public understanding of these policies or contracts; eliminates provisions contained in these policies or contracts which may be misleading or confusing in connection with the purchase of these policies or contracts to eliminate policy or contract provisions which may duplicate Medicare benefits; provides full disclosure of policy or contract benefits and benefit changes; and provides for refunds of premiums associated with benefits duplicating Medicare program benefits. This rule is promulgated pursuant to sections 376.850—376.890, RSMo. (1) Applicability and Scope. This regulation shall take precedence over other rules and requirements relating to Medicare supplement policies or contracts only to the extent necessary to assure that benefits are not duplicated, that applicants receive adequate notice and disclosure of changes in Medicare supplement policies and contracts, that appropriate premium adjustments are made in a timely manner and that premiums are reasonable in relation to benefits. Except as otherwise provided, this rule shall apply to— (A) All Medicare supplement policies and contracts delivered, or issued for delivery, or which are otherwise subject to the jurisdiction of this state on or after October 27, 1988; and (B) All certificates issued under group Medicare supplement policies as provided in subsection (1)(A). (2) Definitions. For purposes of this rule— (A) Applicant means— 1. In the case of an individual Medicare supplement policy or contract, the person who seeks to contract for insurance benefits; and 2. In the case of a group Medicare policy or contract, the proposed certificate holder; (B) Certificate means any certificate issued under a group Medicare supplement policy, which policy has been delivered, or issued for delivery, in this state; and (C) Medicare supplement policy means a group or individual policy of accident and health insurance, or a subscriber contract of health service corporations, which is advertised, marketed or designed primarily to supplement coverage for hospital, medical or surgical expenses incurred by an insured person which are not covered by Medicare. This term does not include: 1. A policy or contract of one (1) or more employers or labor organizations, or of the trustees of a fund established by one (1) or more employers or labor organizations, or combination of them, for employees or former employees, or combination of them, or for members or former members, or combination of them, of the labor organizations; 2. A policy or contract of any professional, trade or occupational association for its members or former or retired members, or combination of them, if the association— A. Is composed of individuals all of whom are actively engaged in the same profession, trade or occupation; B. Has been maintained in good faith for purposes other than obtaining insurance; and C. Has been in existence for at least two (2) years prior to the date of its initial offering of the policy or plan to its members; or 3. Individual policies or contracts issued pursuant to a conversion privilege under a policy or contract of group or individual insurance when the group or individual policy or contract includes provisions which are inconsistent with the requirements of sections 376.850–376.885, RSMo nor to Medicare supplement policies being issued to employees or members as additions to franchise plans in existence on July 1, 1982. (3) Benefit Conversion Requirements. (A) Effective January 1, 1989, no Medicare supplement insurance policy, contract or certificate in force in this state shall contain benefits which duplicate benefits provided by Medicare. (B) General Requirements. 1. No later than thirty (30) days prior to the annual effective date of Medicare benefit changes mandated by the Medicare Catastrophic Coverage Act of 1988, every insurer, health care service plan or other entity providing Medicare supplement insurance or benefits to a resident of this state shall notify its policyholders, contract holders and certificate holders of modifications it has made to Medicare supplement insurance policies or contracts. This notice shall be in a format prescribed by the director or in a format adopted by the National Association of Insurance Commissioners (NAIC) in June of 1988 if no other format is prescribed by the director. 2. No modifications to any existing Medicare supplement contract or policy shall be made at the time of or in connection with the notice requirements of this regulation, except to the extent necessary to eliminate duplication of Medicare benefits and any modifications necessary under the policy or contract to provide indexed benefit adjustment. 3. As soon as practicable, but no longer than forty-five (45) days after the effective date of the Medicare benefit changes, every insurer, health care service plan or other entity providing Medicare supplement insurance or contracts in this state shall file with the division, in accordance with the applicable filing procedures of this state— A. Appropriate premium adjustments necessary to produce loss ratios as originally anticipated for the applicable policies or contracts. Supporting documents as necessary to justify the adjustment shall accompany the filing; and B. Any appropriate riders, endorsements or policy forms needed to accomplish the Medicare supplement insurance modifications necessary to eliminate benefit duplications with Medicare. Any such riders, endorsements or policy forms shall provide a clear description of the Medicare supplement benefits provided by the policy or contract. 4. Upon satisfying the filing and approval requirements of this state, every insurer, health care service plan or other entity providing Medicare supplement insurance in this state shall provide each covered person with any rider, endorsement or policy form necessary to eliminate any benefit duplications under the policy or contract with benefits provided by Medicare. In the event a covered person must be issued a new policy, contract or certificate to eliminate benefit duplications, the insurer shall credit the covered person with all deductible amounts which have been incurred under the prior policy, contract or certificate and with all time periods for pre-existing condition satisfied under the prior coverage. 5. No insurer, health care service plan or other entity shall require any person covered under a Medicare supplement policy or contract which was in force prior to January 1, 1989 to purchase additional coverage under the policy or contract unless additional coverage was provided for in the policy or contract. 6. Every insurer, health care service plan or other entity providing Medicare supplement insurance or benefits to a resident of this state shall make the premium adjustments that are necessary to produce an expected loss ratio under the policy or contract as will conform with minimum loss ratio standards for Medicare supplement policies and which is expected to result in a loss ratio at least as great as that originally anticipated by the insurer, health care service plan or other entity for Medicare supplement insurance policies or contracts. No premium adjustment which would modify the loss ratio experience under the policy other than the adjustments described in this rule should be made with respect to a policy at any time other than upon its renewal date. Premium adjustments shall be in the form of refunds or premium credits and shall be made no later than upon renewal if a credit is given, or within sixty (60) days of the renewal date if a refund is provided to the premium payer. (4) Requirements for New Policies and Certificates. (A) Effective January 1, 1989 no Medicare supplement insurance policy, contract or certificate shall be issued or issued for delivery in this state which provides benefits which duplicate benefits provided by Medicare. No medicare supplement insurance policy, contract or certificate shall provide fewer benefits than those required under existing Medicare Supplement Minimum Standards Act or regulations except where duplication of Medicare benefits would result. (B) General Requirements. 1. Within ninety (90) days (January 25, 1989) of the effective date of this rule (October 27, 1988), every insurer, health care service plan or other entity required to file its policies or contracts with this state shall file new Medicare supplement insurance policies or contracts which eliminate any duplication of Medicare supplement benefits with benefits provided by Medicare and which provide a clear description of the policy or contract benefit. 2. The filing required under paragraph (4)(B)1. shall provide for loss ratios which are in compliance with all minimum standards. 3. Every applicant for a Medicare supplement insurance policy, contract or certificate shall be provided with an outline of coverage which simplifies and accurately describes benefits provided by Medicare and policy or contract benefits along with benefit limitations. (5) Filing Requirements for Advertising. Every insurer, health care service plan or other entity providing Medicare supplement insurance or benefits in this state shall provide a copy of any advertisement intended for use in this state whether through written, radio or television medium to the director of insurance of this state for review by the director. This advertisement shall be submitted to the director no later than the first day on which the advertisement is used. The department shall stamp each advertisement in a manner which indicates that it has been reviewed but that the review does not constitute approval by the department. All Medicare supplement advertisements will be retained for thirty (30) days before being returned to the company. The advertisement shall comply with all applicable laws and rules of this state. (6) Buyer’s Guide. No insurer, health care service plan or other entity shall make use of or otherwise disseminate any buyer’s guide or informational brochure which does not accurately outline current Medicare benefits and which has not been adopted by the director. (7) Separability. If any provision of this regulation or the application of it to any persons or circumstances is for any reason held to be invalid, the remainder of the regulation and the application of that provision to other persons or circumstances shall not be affected by it. AUTHORITY: section 374.045, RSMo (1986).* This rule was previously filed as 4 CSR 190-14.112. Original rule filed July 5, 1988, effective Oct. 27, 1988. *Original authority 1967.