There is a newer version of the California Code
2005 California Health and Safety Code Sections 1358.1-1358.23 Supplement Contracts
HEALTH AND SAFETY CODESECTION 1358.1-1358.23
1358.1. Every health care service plan that offers any contract
that primarily or solely supplements Medicare or that is advertised
or represented as a supplement to Medicare, shall, in addition to
complying with this chapter and rules of the director, comply with
this article. The basic health care services required to be provided
pursuant to Sections 1345 and 1367 shall not be included in Medicare
supplement contracts subject to this article, to the extent that
California is required to disallow coverage for these health care
services under the federal Medicare supplement standardization
requirements set forth in Section 1882 of the federal Social Security
Act (42 U.S.C.A. Sec. 1395ss).
1358.2. The purpose of this article is to provide for the
reasonable standardization of coverage and simplification of terms
and benefits of Medicare supplement contracts, to facilitate public
understanding and comparison of those contracts, to eliminate
provisions contained in those contracts that may be misleading or
confusing in connection with the purchase of the contracts or with
the settlement of claims, and to provide for full disclosures in the
sale of Medicare supplement contracts to persons eligible for
Medicare.
1358.3. (a) Except as otherwise provided in this section or in
Sections 1358.7, 1358.12, 1358.13, 1358.16, and 1358.21, this article
shall apply to all group and individual Medicare supplement
contracts advertised, solicited, or issued for delivery in this state
on or after January 1, 2001.
(b) This article shall not apply to a contract of one or more
employers or labor organizations, or of the trustees of a fund
established by one or more employers or labor organizations, or
combination thereof, for employees or former employees, or a
combination thereof, or for members or former members, or a
combination thereof, of the labor organizations.
(c) This article shall not apply to Medicare supplement policies
or certificates subject to Article 6 (commencing with Section
10192.1) of Chapter 1 of Part 1 of Division 2 of the Insurance Code.
1358.4. The following definitions apply for the purposes of this
article:
(a) "Applicant" means:
(1) An individual enrollee who seeks to contract for health
coverage, in the case of an individual Medicare supplement contract.
(2) An enrollee who seeks to obtain health coverage through a
group, in the case of a group Medicare supplement contract.
(b) "Bankruptcy" means that situation in which a Medicare
Advantage organization that is not an issuer has filed, or has had
filed against it, a petition for declaration of bankruptcy and has
ceased doing business in the state.
(c) "Continuous period of creditable coverage" means the period
during which an individual was covered by creditable coverage, if
during the period of the coverage the individual had no breaks in
coverage greater than 63 days.
(d) (1) "Creditable coverage" means, with respect to an
individual, coverage of the individual provided under any of the
following:
(A) Any individual or group contract, policy, certificate, or
program that is written or administered by a health care service
plan, health insurer, fraternal benefits society, self-insured
employer plan, or any other entity, in this state or elsewhere, and
that arranges or provides medical, hospital, and surgical coverage
not designed to supplement other private or governmental plans. The
term includes continuation or conversion coverage.
(B) Part A or B of Title XVIII of the federal Social Security Act
(Medicare).
(C) Title XIX of the federal Social Security Act (medicaid), other
than coverage consisting solely of benefits under Section 1928 of
that act.
(D) Chapter 55 of Title 10 of the United States Code (CHAMPUS).
(E) A medical care program of the Indian Health Service or of a
tribal organization.
(F) A state health benefits risk pool.
(G) A health plan offered under Chapter 89 of Title 5 of the
United States Code (Federal Employees Health Benefits Program).
(H) A public health plan as defined in federal regulations
authorized by Section 2701(c)(1)(I) of the federal Public Health
Service Act, as amended by Public Law 104-191, the federal Health
Insurance Portability and Accountability Act of 1996.
(I) A health benefit plan under Section 5(e) of the federal Peace
Corps Act (Section 2504(e) of Title 22 of the United States Code).
(J) Any other publicly sponsored program, provided in this state
or elsewhere, of medical, hospital, and surgical care.
(K) Any other creditable coverage as defined by subsection (c) of
Section 2701 of Title XXVII of the federal Public Health Services Act
(42 U.S.C. Sec. 300gg(c)).
(2) "Creditable coverage" shall not include one or more, or any
combination of, the following:
(A) Coverage for accident-only or disability income insurance, or
any combination thereof.
(B) Coverage issued as a supplement to liability insurance.
(C) Liability insurance, including general liability insurance and
automobile liability insurance.
(D) Workers' compensation or similar insurance.
(E) Automobile medical payment insurance.
(F) Credit-only insurance.
(G) Coverage for onsite medical clinics.
(H) Other similar insurance coverage, specified in federal
regulations, under which benefits for medical care are secondary or
incidental to other insurance benefits.
(3) "Creditable coverage" shall not include the following benefits
if they are provided under a separate policy, certificate, or
contract or are otherwise not an integral part of the plan:
(A) Limited scope dental or vision benefits.
(B) Benefits for long-term care, nursing home care, home health
care, community-based care, or any combination thereof.
(C) Other similar, limited benefits as are specified in federal
regulations.
(4) "Creditable coverage" shall not include the following benefits
if offered as independent, noncoordinated benefits:
(A) Coverage only for a specified disease or illness.
(B) Hospital indemnity or other fixed indemnity insurance.
(5) "Creditable coverage" shall not include the following if
offered as a separate policy, certificate, or contract:
(A) Medicare supplemental health insurance as defined under
Section 1882(g)(1) of the federal Social Security Act.
(B) Coverage supplemental to the coverage provided under Chapter
55 of Title 10 of the United States Code.
(C) Similar supplemental coverage provided to coverage under a
group health plan.
(e) "Employee welfare benefit plan" means a plan, fund, or program
of employee benefits as defined in Section 1002 of Title 29 of the
United States Code (Employee Retirement Income Security Act).
(f) "Insolvency" means when an issuer, licensed to transact the
business of a health care service plan in this state, has had a final
order of liquidation entered against it with a finding of insolvency
by a court of competent jurisdiction in the issuer's state of
domicile.
(g) "Issuer" means a health care service plan delivering, or
issuing for delivery, Medicare supplement contracts in this state,
but does not include entities subject to Article 6 (commencing with
Section 10192.1) of Chapter 1 of Division 2 of the Insurance Code.
(h) "Medicare" means the federal Health Insurance for the Aged
Act, Title XVIII of the Social Security Amendments of 1965, as
amended.
(i) "Medicare Advantage Plan" means a plan of coverage for health
benefits under Medicare Part C and includes:
(1) Coordinated care plans that provide health care services,
including, but not limited to, health care service plans (with or
without a point-of-service option), plans offered by
provider-sponsored organizations, and preferred provider
organizations plans.
(2) Medical savings account plans coupled with a contribution into
a Medicare Advantage medical savings account.
(3) Medicare Advantage private fee-for-service plans.
(j) "Medicare supplement contract" means a group or individual
plan contract of hospital and medical service associations or health
care service plans, other than a contract issued pursuant to a
contract under Section 1876 of the federal Social Security Act (42
U.S.C.A. Section 1395mm) or an issued contract under a demonstration
project specified in Section 1395ss(g)(1) of Title 42 of the United
States Code, that is advertised, marketed, or designed primarily as a
supplement to reimbursements under Medicare for the hospital,
medical, or surgical expenses of persons eligible for Medicare.
"Contract" means "Medicare supplement contract," unless the context
requires otherwise. "Medicare supplement contract" does not include
a Medicare Advantage plan established under Medicare Part C, an
outpatient prescription drug plan established under Medicare Part D,
or a health care prepayment plan that provides benefits pursuant to
an agreement under subparagraph (A) of paragraph (1) of subsection
(a) of Section 1833 of the Social Security Act.
(k) "Secretary" means the Secretary of the United States
Department of Health and Human Services.
1358.5. (a) A contract shall not be advertised, solicited, or
issued for delivery as a Medicare supplement contract unless the
contract contains definitions or terms that conform to the
requirements of this section.
(1) (A) "Accident," "accidental injury," or "accidental means"
shall be defined to employ "result" language and shall not include
words that establish an accidental means test or use words such as
"external, violent, visible wounds" or other similar words of
description or characterization.
(B) The definition shall not be more restrictive than the
following: "injury or injuries for which benefits are provided means
accidental bodily injury sustained by the covered person that is the
direct result of an accident, independent of disease or bodily
infirmity or any other cause, and occurs while coverage is in force."
(C) The definition may provide that injuries shall not include
injuries for which benefits are provided or available under any
workers' compensation, employer's liability, or similar law, unless
prohibited by law.
(2) "Benefit period" or "Medicare benefit period" shall not be
defined more restrictively than as defined in the Medicare program.
(3) "Convalescent nursing home," "extended care facility," or
"skilled nursing facility" shall not be defined more restrictively
than as defined in the Medicare program.
(4) "Health care expenses" means for purposes of Section 1358.14,
expenses of health care service plans associated with the delivery of
health care services, which expenses are analogous to incurred
losses of insurers.
(5) "Hospital" may be defined in relation to its status,
facilities, and available services or to reflect its accreditation by
the Joint Commission on Accreditation of Hospitals, but not more
restrictively than as defined in the Medicare Program.
(6) "Medicare" shall be defined in the contract. "Medicare" may be
substantially defined as "The Health Insurance for the Aged Act,
Title XVIII of the Social Security Amendments of 1965, as amended,"
or "Title I, Part I of Public Law 89-97, as enacted by the 89th
Congress and popularly known as the Health Insurance for the Aged
Act, as amended," or words of similar import.
(7) "Medicare eligible expenses" shall mean expenses of the kinds
covered by Medicare Parts A and B, to the extent recognized as
reasonable and medically necessary by Medicare.
(8) "Physician" shall not be defined more restrictively than as
defined in the Medicare Program.
(9) (A) "Sickness" shall not be defined more restrictively than as
follows: "sickness means illness or disease of an insured person
that first manifests itself after the effective date of insurance and
while the insurance is in force."
(B) The definition may be further modified to exclude sicknesses
or diseases for which benefits are provided under any workers'
compensation, occupational disease, employer's liability, or similar
law.
(b) Nothing in this section shall be construed as prohibiting any
contract, by definitions or express provisions, from limiting or
restricting any or all of the benefits provided under the contract,
except in-area and out-of-area emergency services, to those health
care services that are delivered by issuer, employed, owned, or
contracting providers, and provider facilities, so long as the
contract complies with the provisions of Sections 1358.14 and 1367
and with Section 1300.67 of Title 28 of the California Code of
Regulations.
(c) Nothing in this section shall be construed as prohibiting any
contract that limits or restricts any or all of the benefits provided
under the contract in the manner contemplated in subdivision (b)
from limiting its obligation to deliver services, and disclaiming any
liability from any delay or failure to provide those services (1) in
the event of a major disaster or epidemic or (2) in the event of
circumstances not reasonably within the control of the issuer, such
as the partial or total destruction of facilities, war, riot, civil
insurrection, disability of a significant part of its health
personnel, or similar circumstances so long as the provisions comply
with the provisions of subdivision (h) of Section 1367.
1358.6. (a) (1) Except for permitted preexisting condition clauses
as described in Sections 1358.7 and 1358.8, a contract shall not be
advertised, solicited, or issued for delivery as a Medicare
supplement contract if the contract contains definitions,
limitations, exclusions, conditions, reductions, or other provisions
that are more restrictive or limiting than that term as officially
used in Medicare, except as expressly authorized by this article.
(2) No issuer may advertise, solicit, or issue for delivery any
Medicare supplement contract with hospital or medical coverage if the
contract contains any of the prohibited provisions described in
subdivision (b).
(b) The following provisions shall be deemed to be unfair,
unreasonable, and inconsistent with the objectives of this chapter
and shall not be contained in any Medicare supplement contract:
(1) Any waiver, exclusion, limitation, or reduction based on or
relating to a preexisting disease or physical condition, unless that
waiver, exclusion, limitation, or reduction (A) applies only to
coverage for specified services rendered not more than six months
from the effective date of coverage, (B) is based on or relates only
to a preexisting disease or physical condition defined no more
restrictively than a condition for which medical advice was given or
treatment was recommended by or received from a physician within six
months before the effective date of coverage, (C) does not apply to
any coverage under any group contract, and (D) is approved in advance
by the director. Any limitations with respect to a preexisting
condition shall appear as a separate paragraph of the contract and be
labeled "Preexisting Condition Limitations."
(2) Except with respect to a group contract subject to, and in
compliance with, Section 1399.62, any provision denying coverage,
after termination of the contract, for services provided continuously
beginning while the contract was in effect, during the continuous
total disability of the subscriber or enrollee, except that the
coverage may be limited to a reasonable period of time not less than
the duration of the contract benefit period, if any, and may be
limited to the maximum benefits provided under the contract.
(c) A Medicare supplement contract in force shall not contain
benefits that duplicate benefits provided by Medicare.
(d) (1) Subject to paragraphs (4) and (5) of subdivision (a) of
Section 1358.8, a Medicare supplement contract with benefits for
outpatient prescription drugs that was issued prior to January 1,
2006, shall be renewed for current enrollees and subscribers, at
their option, who do not enroll in Medicare Part D.
(2) A Medicare supplement contract with benefits for outpatient
prescription drugs shall not be issued on and after January 1, 2006.
(3) On and after January 1, 2006, a Medicare supplement contract
with benefits for outpatient prescription drugs shall not be renewed
after the enrollee or subscriber enrolls in Medicare Part D unless
both of the following conditions exist:
(A) The contract is modified to eliminate outpatient prescription
drug coverage for outpatient prescription drug expenses incurred
after the effective date of the individual's coverage under a
Medicare Part D plan.
(B) The premium is adjusted to reflect the elimination of
outpatient prescription drug coverage at the time of enrollment in
Medicare Part D, accounting for any claims paid if applicable.
1358.7. A contract shall not be advertised, solicited, or issued
for delivery as a Medicare supplement contract prior to January 1,
2001, unless it meets or exceeds requirements applicable pursuant to
this code that were in effect prior to that date.
1358.8. The following standards are applicable to all Medicare
supplement contracts advertised, solicited, or issued for delivery on
or after January 1, 2001. A contract shall not be advertised,
solicited, or issued for delivery as a Medicare supplement contract
unless it complies with these benefit standards.
(a) The following general standards apply to Medicare supplement
contracts and are in addition to all other requirements of this
article:
(1) A Medicare supplement contract shall not exclude or limit
benefits for losses incurred more than six months from the effective
date of coverage because it involved a preexisting condition. The
contract shall not define a preexisting condition more restrictively
than a condition for which medical advice was given or treatment was
recommended by or received from a physician within six months before
the effective date of coverage.
(2) A Medicare supplement contract shall not indemnify against
losses resulting from sickness on a different basis than losses
resulting from accidents.
(3) A Medicare supplement contract shall provide that benefits
designed to cover cost-sharing amounts under Medicare will be changed
automatically to coincide with any changes in the applicable
Medicare deductible amount and copayment percentage factors. Prepaid
or periodic charges may be modified to correspond with those changes.
(4) A Medicare supplement contract shall not provide for
termination of coverage of a spouse solely because of the occurrence
of an event specified for termination of coverage of the covered
person, other than the nonpayment of the prepaid or periodic charge.
(5) Each Medicare supplement contract shall be guaranteed
renewable.
(A) The issuer shall not cancel or nonrenew the contract solely on
the ground of health status of the individual.
(B) The issuer shall not cancel or nonrenew the contract for any
reason other than nonpayment of the prepaid or periodic charge or
misrepresentation of the risk by the applicant that is shown by the
plan to be material to the acceptance for coverage. The
contestability period for Medicare supplement contracts shall be two
years.
(C) If a group Medicare supplement contract is terminated by the
subscriber and is not replaced as provided under subparagraph (E),
the issuer shall offer enrollees an individual Medicare supplement
contract that, at the option of the enrollee, either provides for
continuation of the benefits contained in the terminated contract or
provides for benefits that otherwise meet the requirements of this
subsection.
(D) If an individual is an enrollee in a group Medicare supplement
contract and the individual membership in the group is terminated,
the issuer shall either offer the enrollee the conversion opportunity
described in subparagraph (C) or, at the option of the subscriber,
shall offer the enrollee continuation of coverage under the group
contract.
(E) If a group Medicare supplement contract is replaced by another
group Medicare supplement contract purchased by the same subscriber,
the issuer of the replacement contract shall offer coverage to all
persons covered under the old group contract on its date of
termination. Coverage under the new contract shall not result in any
exclusion for preexisting conditions that would have been covered
under the group contract being replaced.
(F) If a Medicare supplement contract eliminates an outpatient
prescription drug benefit as a result of requirements imposed by the
Medicare Prescription Drug, Improvement, and Modernization Act of
2003 (P.L. 108-173), the contract as modified as a result of that act
shall be deemed to satisfy the guaranteed renewal requirements of
this paragraph.
(6) Termination of a Medicare supplement contract shall be without
prejudice to any continuous loss that commenced while the contract
was in force, but the extension of benefits beyond the period during
which the contract was in force may be predicated upon the continuous
total disability of the covered person, limited to the duration of
the contract benefit period, if any, or to payment of the maximum
benefits. Receipt of Medicare Part D benefits shall not be considered
in determining a continuous loss.
(7) (A) (i) A Medicare supplement contract shall provide that
benefits and prepaid or periodic charges under the contract shall be
suspended at the request of the enrollee for the period, not to
exceed 24 months, in which the enrollee has applied for and is
determined to be entitled to medical assistance under Title XIX of
the federal Social Security Act, but only if the enrollee notifies
the issuer of the contract within 90 days after the date the
individual becomes entitled to assistance.
If suspension occurs and if the enrollee loses entitlement to
medical assistance, the contract shall be automatically reinstituted,
effective as of the date of termination of entitlement, as of the
termination of entitlement if the enrollee provides notice of loss of
entitlement within 90 days after the date of loss and pays the
prepaid or periodic charge attributable to the period, effective as
of the date of termination of entitlement.
(ii) A Medicare supplement contract shall provide that benefits
and premiums under the contract shall be suspended at the request of
the enrollee or subscriber for any period that may be provided by
federal regulation if the enrollee or subscriber is entitled to
benefits under Section 226 (b) of the Social Security Act and is
covered under a group health plan, as defined in Section 1862 (b)(1)
(A)(v) of the Social Security Act. If suspension occurs and the
enrollee or subscriber loses coverage under the group health plan,
the contract shall be automatically reinstituted, effective as of the
date of loss of coverage if the enrollee or subscriber provides
notice within 90 days of the date of the loss of coverage.
(B) Reinstitution of coverages:
(i) Shall not provide for any waiting period with respect to
treatment of preexisting conditions.
(ii) Shall provide for resumption of coverage that is
substantially equivalent to coverage in effect before the date of
suspension. If the suspended Medicare supplement contract provided
coverage for outpatient prescription drugs, reinstitution of the
contract for a Medicare Part D enrollee shall not include coverage
for outpatient prescription drugs but shall otherwise provide
coverage that is substantially equivalent to the coverage in effect
before the date of suspension.
(iii) Shall provide for classification of prepaid or periodic
charges on terms at least as favorable to the enrollee as the prepaid
or periodic charge classification terms that would have applied to
the enrollee had the coverage not been suspended.
(8) A Medicare supplement contract shall not be limited to
coverage for a single disease or affliction.
(9) A Medicare supplement contract shall provide an examination
period of 30 days after the receipt of the contract by the applicant
for purposes of review, during which time the applicant may return
the contract as described in subdivision (e) of Section 1358.17.
(10) A Medicare supplement contract shall additionally meet any
other minimum benefit standards as established by the director.
(11) Within 30 days prior to the effective date of any Medicare
benefit changes, an issuer shall file with the director, and notify
its subscribers and enrollees of, modifications it has made to
Medicare supplement contracts.
(A) The notice shall include a description of revisions to the
Medicare Program and a description of each modification made to the
coverage provided under the Medicare supplement contract.
(B) The notice shall inform each subscriber and enrollee as to
when any adjustment in the prepaid or periodic charges will be made
due to changes in Medicare benefits.
(C) The notice of benefit modifications and any adjustments to the
prepaid or periodic charges shall be in outline form and in clear
and simple terms so as to facilitate comprehension. The notice shall
not contain or be accompanied by any solicitation.
(12) No modifications to existing Medicare supplement coverage
shall be made at the time of, or in connection with, the notice
requirements of this article except to the extent necessary to
eliminate duplication of Medicare benefits and any modifications
necessary under the contract to provide indexed benefit adjustment.
(b) With respect to the standards for basic (core) benefits for
benefit plans A to J, inclusive, every issuer shall make available a
contract including only the following basic "core" package of
benefits to each prospective applicant. This "core" package of
benefits shall be referred to as standardized Medicare supplement
benefit plan "A". An issuer may make available to prospective
applicants any of the other Medicare supplement insurance benefit
plans in addition to the basic core package, but not in lieu of it.
(1) Coverage of Part A Medicare eligible expenses for
hospitalization to the extent not covered by Medicare from the 61st
day to the 90th day, inclusive, in any Medicare benefit period.
(2) Coverage of Part A Medicare eligible expenses incurred for
hospitalization to the extent not covered by Medicare for each
Medicare lifetime inpatient reserve day used.
(3) Upon exhaustion of the Medicare hospital inpatient coverage
including the lifetime reserve days, coverage of 100 percent of the
Medicare Part A eligible expenses for hospitalization paid at the
applicable prospective payment system rate or other appropriate
Medicare standard of payment, subject to a lifetime maximum benefit
of an additional 365 days. The provider shall accept the issuer's
payment as payment in full and may not bill the enrollee or
subscriber for any balance.
(4) Coverage under Medicare Parts A and B for the reasonable cost
of the first three pints of blood, or equivalent quantities of packed
red blood cells, as defined under federal regulations, unless
replaced in accordance with federal regulations.
(5) Coverage for the coinsurance amount, or in the case of
hospital outpatient services, the copayment amount, of Medicare
eligible expenses under Part B regardless of hospital confinement,
subject to the Medicare Part B deductible.
(c) The following additional benefits shall be included in
Medicare supplement benefit plans B to J, inclusive, only as provided
by Section 1358.9.
(1) With respect to the Medicare Part A deductible, coverage for
all of the Medicare Part A inpatient hospital deductible amount per
benefit period.
(2) With respect to skilled nursing facility care, coverage for
the actual billed charges up to the coinsurance amount from the 21st
day to the 100th day, inclusive, in a Medicare benefit period for
posthospital skilled nursing facility care eligible under Medicare
Part A.
(3) With respect to the Medicare Part B deductible, coverage for
all of the Medicare Part B deductible amount per calendar year
regardless of hospital confinement.
(4) With respect to 80 percent of the Medicare Part B excess
charges, coverage for 80 percent of the difference between the actual
Medicare Part B charge as billed, not to exceed any charge
limitation established by the Medicare Program or state law, and the
Medicare-approved Part B charge.
(5) With respect to 100 percent of the Medicare Part B excess
charges, coverage for all of the difference between the actual
Medicare Part B charge as billed, not to exceed any charge limitation
established by the Medicare Program or state law, and the
Medicare-approved Part B charge.
(6) With respect to the basic outpatient prescription drug
benefit, coverage for 50 percent of outpatient prescription drug
charges, after a two-hundred-fifty-dollar ($250) calendar year
deductible, to a maximum of one thousand two hundred fifty dollars
($1,250) in benefits received by the insured per calendar year, to
the extent not covered by Medicare. On and after January 1, 2006, no
Medicare supplement contract may be sold or issued if it includes a
prescription drug benefit.
(7) With respect to the extended outpatient prescription drug
benefit, coverage for 50 percent of outpatient prescription drug
charges, after a two-hundred-fifty-dollar ($250) calendar year
deductible, to a maximum of three thousand dollars ($3,000) in
benefits received by the insured per calendar year, to the extent not
covered by Medicare. On and after January 1, 2006, no Medicare
supplement contract may be sold or issued if it includes a
prescription drug benefit.
(8) With respect to medically necessary emergency care in a
foreign country, coverage to the extent not covered by Medicare for
80 percent of the billed charges for Medicare-eligible expenses for
medically necessary emergency hospital, physician, and medical care
received in a foreign country, which care would have been covered by
Medicare if provided in the United States and which care began during
the first 60 consecutive days of each trip outside the United
States, subject to a calendar year deductible of two hundred fifty
dollars ($250), and a lifetime maximum benefit of fifty thousand
dollars ($50,000). For purposes of this benefit, "emergency care"
shall mean care needed immediately because of an injury or an illness
of sudden and unexpected onset.
(9) With respect to the preventive medical care benefit, coverage
for the following preventive health services:
(A) An annual clinical preventive medical history and physical
examination that may include tests and services from subparagraph (B)
and patient education to address preventive health care measures.
(B) The following screening tests or preventive services that are
not covered by Medicare, the selection and frequency of which are
determined to be medically appropriate by the attending physician:
(i) Fecal occult blood test.
(ii) Mammogram.
(C) Influenza vaccine administered at any appropriate time during
the year.
Reimbursement shall be for the actual charges up to 100 percent of
the Medicare-approved amount for each service, as if Medicare were
to cover the service as identified in American Medical Association
Current Procedural Terminology (AMACPT) codes, to a maximum of one
hundred twenty dollars ($120) annually under this benefit. This
benefit shall not include payment for any procedure covered by
Medicare.
(10) With respect to the at-home recovery benefit, coverage for
services to provide short-term, at-home assistance with activities of
daily living for those recovering from an illness, injury, or
surgery.
(A) For purposes of this benefit, the following definitions shall
apply:
(i) "Activities of daily living" include, but are not limited to,
bathing, dressing, personal hygiene, transferring, eating,
ambulating, assistance with drugs that are normally
self-administered, and changing bandages or other dressings.
(ii) "Care provider" means a duly qualified or licensed home
health aide or homemaker, or a personal care aide or nurse provided
through a licensed home health care agency or referred by a licensed
referral agency or licensed nurses registry.
(iii) "Home" shall mean any place used by the insured as a place
of residence, provided that the place would qualify as a residence
for home health care services covered by Medicare. A hospital or
skilled nursing facility shall not be considered the insured's place
of residence.
(iv) "At-home recovery visit" means the period of a visit required
to provide at-home recovery care, without any limit on the duration
of the visit, except that each consecutive four hours in a 24-hour
period of services provided by a care provider is one visit.
(B) With respect to coverage requirements and limitations, the
following shall apply:
(i) At-home recovery services provided shall be primarily services
that assist in activities of daily living.
(ii) The covered person's attending physician shall certify that
the specific type and frequency of at-home recovery services are
necessary because of a condition for which a home care plan of
treatment was approved by Medicare.
(iii) Coverage is limited to the following:
(I) No more than the number and type of at-home recovery visits
certified as necessary by the covered person's attending physician.
The total number of at-home recovery visits shall not exceed the
number of Medicare-approved home health care visits under a
Medicare-approved home care plan of treatment.
(II) The actual charges for each visit up to a maximum
reimbursement of forty dollars ($40) per visit.
(III) One thousand six hundred dollars ($1,600) per calendar year.
(IV) Seven visits in any one week.
(V) Care furnished on a visiting basis in the insured's home.
(VI) Services provided by a care provider as defined in
subparagraph (A).
(VII) At-home recovery visits while the covered person is covered
under the policy or certificate and not otherwise excluded.
(VIII) At-home recovery visits received during the period the
covered person is receiving Medicare-approved home care services or
no more than eight weeks after the service date of the last
Medicare-approved home health care visit.
(C) Coverage is excluded for the following:
(i) Home care visits paid for by Medicare or other government
programs.
(ii) Care provided by family members, unpaid volunteers, or
providers who are not care providers.
(d) The standardized Medicare supplement benefit plan "K" shall
consist of the following benefits:
(1) Coverage of 100 percent of the Medicare Part A hospital
coinsurance amount for each day used from the 61st to the 90th day,
inclusive, in any Medicare benefit period.
(2) Coverage of 100 percent of the Medicare Part A hospital
coinsurance amount for each Medicare lifetime inpatient reserve day
used from the 91st to the 150th day, inclusive, in any Medicare
benefit period.
(3) Upon exhaustion of the Medicare hospital inpatient coverage,
including the lifetime reserve days, coverage of 100 percent of the
Medicare Part A eligible expenses for hospitalization paid at the
applicable prospective payment system rate, or other appropriate
Medicare standard of payment, subject to a lifetime maximum benefit
of an additional 365 days. The provider shall accept the issuer's
payment for this benefit as payment in full and shall not bill the
enrollee or subscriber for any balance.
(4) With respect to the Medicare Part A deductible, coverage for
50 percent of the Medicare Part A inpatient hospital deductible
amount per benefit period until the out-of-pocket limitation
described in paragraph (10) is met.
(5) With respect to skilled nursing facility care, coverage for
50 percent of the coinsurance amount for each day used from the 21st
day to the 100th day, inclusive, in a Medicare benefit period for
posthospital skilled nursing facility care eligible under Medicare
Part A until the out-of-pocket limitation described in paragraph (10)
is met.
(6) With respect to hospice care, coverage for 50 percent of cost
sharing for all Medicare Part A eligible expenses and respite care
until the out-of-pocket limitation described in paragraph (10) is
met.
(7) Coverage for 50 percent, under Medicare Part A or B, of the
reasonable cost of the first three pints of blood or equivalent
quantities of packed red blood cells, as defined under federal
regulations, unless replaced in accordance with federal regulations,
until the out-of-pocket limitation described in paragraph (10) is
met.
(8) Except for coverage provided in paragraph (9), coverage for
50 percent of the cost sharing otherwise applicable under Medicare
Part B after the enrollee or subscriber pays the Part B deductible,
until the out-of-pocket limitation is met as described in paragraph
(10).
(9) Coverage of 100 percent of the cost sharing for Medicare Part
B preventive services, after the enrollee or subscriber pays the
Medicare Part B deductible.
(10) Coverage of 100 percent of all cost sharing under Medicare
Parts A and B for the balance of the calendar year after the
individual has reached the out-of-pocket limitation on annual
expenditures under Medicare Parts A and B of four thousand dollars
($4,000) in 2006, indexed each year by the appropriate inflation
adjustment specified by the secretary.
(e) The standardized Medicare supplement benefit plan "L" shall
consist of the following benefits:
(1) The benefits described in paragraphs (1), (2), (3), and (9) of
subdivision (d).
(2) With respect to the Medicare Part A deductible, coverage for
75 percent of the Medicare Part A inpatient hospital deductible
amount per benefit period until the out-of-pocket limitation
described in paragraph (8) is met.
(3) With respect to skilled nursing facility care, coverage for
75 percent of the coinsurance amount for each day used from the 21st
day to the 100th day, inclusive, in a Medicare benefit period for
posthospital skilled nursing facility care eligible under Medicare
Part A until the out-of-pocket limitation described in paragraph (8)
is met.
(4) With respect to hospice care, coverage for 75 percent of cost
sharing for all Medicare Part A eligible expenses and respite care
until the out-of-pocket limitation described in paragraph (8) is met.
(5) Coverage for 75 percent, under Medicare Part A or B, of the
reasonable cost of the first three pints of blood or equivalent
quantities of packed red blood cells, as defined under federal
regulations, unless replaced in accordance with federal regulations,
until the out-of-pocket limitation described in paragraph (8) is met.
(6) Except for coverage provided in paragraph (7), coverage for 75
percent of the cost sharing otherwise applicable under Medicare Part
B after the enrollee or subscriber pays the Part B deductible until
the out-of-pocket limitation described in paragraph (8) is met.
(7) Coverage for 100 percent of the cost sharing for Medicare Part
B preventive services after the enrollee or subscriber pays the Part
B deductible.
(8) Coverage of 100 percent of the cost sharing for Medicare Parts
A and B for the balance of the calendar year after the individual
has reached the out-of-pocket limitation on annual expenditures under
Medicare Parts A and B of two thousand dollars ($2,000) in 2006,
indexed each year by the appropriate inflation adjustment specified
by the secretary.
(f) A contract shall not contain any provision delaying the
effective date of coverage beyond the first day of the month
following the date of receipt by the issuer of the applicant's
properly completed application, except that the effective date of
coverage may be delayed until the 65th birthday of an applicant who
is to become eligible for Medicare by reason of age if the
application is received any time during the three months immediately
preceding the applicant's 65th birthday.
1358.9. (a) An issuer shall make available to each prospective
enrollee a contract form containing only the basic (core) benefits,
as defined in subdivision (b) of Section 1358.8.
(b) No groups, packages, or combinations of Medicare supplement
benefits other than those listed in this section shall be offered for
sale in this state, except as may be permitted by subdivision (f)
and by Section 1358.10.
(c) Benefit plans shall be uniform in structure, language,
designation and format to the standard benefit plans A to J,
inclusive, listed in subdivision (e), and shall conform to the
definitions in Section 1358.4. Each benefit shall be structured in
accordance with the format provided in subdivisions (b), (c), (d),
and (e) of Section 1358.8 and list the benefits in the order listed
in subdivision (e). For purposes of this section, "structure,
language, and format" means style, arrangement, and overall content
of a benefit.
(d) An issuer may use, in addition to the benefit plan
designations required in subdivision (c), other designations to the
extent permitted by law.
(e) With respect to the makeup of benefit plans, the following
shall apply:
(1) Standardized Medicare supplement benefit plan A shall be
limited to the basic (core) benefit common to all benefit plans, as
defined in subdivision (b) of Section 1358.8.
(2) Standardized Medicare supplement benefit plan B shall include
only the following: the core benefit, plus the Medicare Part A
deductible as defined in paragraph (1) of subdivision (c) of Section
1358.8.
(3) Standardized Medicare supplement benefit plan C shall include
only the following: the core benefit, plus the Medicare Part A
deductible, skilled nursing facility care, Medicare Part B
deductible, and medically necessary emergency care in a foreign
country as defined in paragraphs (1), (2), (3), and (8) of
subdivision (c) of Section 1358.8, respectively.
(4) Standardized Medicare supplement benefit plan D shall include
only the following: the core benefit, plus the Medicare Part A
deductible, skilled nursing facility care, medically necessary
emergency care in a foreign country, and the at-home recovery benefit
as defined in paragraphs (1), (2), (8), and (10) of subdivision (c)
of Section 1358.8, respectively.
(5) Standardized Medicare supplement benefit plan E shall include
only the following: the core benefit, plus the Medicare Part A
deductible, skilled nursing facility care, medically necessary
emergency care in a foreign country, and preventive medical care as
defined in paragraphs (1), (2), (8), and (9) of subdivision (c) of
Section 1358.8, respectively.
(6) Standardized Medicare supplement benefit plan F shall include
only the following: the core benefit, plus the Medicare Part A
deductible, the skilled nursing facility care, the Medicare Part B
deductible, 100 percent of the Medicare Part B excess charges, and
medically necessary emergency care in a foreign country as defined in
paragraphs (1), (2), (3), (5), and (8) of subdivision (c) of Section
1358.8, respectively.
(7) Standardized Medicare supplement benefit high deductible plan
F shall include only the following: 100 percent of covered expenses
following the payment of the annual high deductible plan F
deductible. The covered expenses include the core benefit, plus the
Medicare Part A deductible, skilled nursing facility care, the
Medicare Part B deductible, 100 percent of the Medicare Part B excess
charges, and medically necessary emergency care in a foreign country
as defined in paragraphs (1), (2), (3), (5), and (8) of subdivision
(c) of Section 1358.8, respectively. The annual high deductible plan
F deductible shall consist of out-of-pocket expenses, other than
premiums, for services covered by the Medicare supplement plan F
policy, and shall be in addition to any other specific benefit
deductibles. The annual high deductible Plan F deductible shall be
one thousand five hundred dollars ($1,500) for 1998 and 1999, and
shall be based on the calendar year, as adjusted annually thereafter
by the secretary to reflect the change in the Consumer Price Index
for all urban consumers for the 12-month period ending with August of
the preceding year, and rounded to the nearest multiple of ten
dollars ($10).
(8) Standardized Medicare supplement benefit plan G shall include
only the following: the core benefit, plus the Medicare Part A
deductible, skilled nursing facility care, 80 percent of the Medicare
Part B excess charges, medically necessary emergency care in a
foreign country, and the at-home recovery benefit as defined in
paragraphs (1), (2), (4), (8), and (10) of Section 1358.8,
respectively.
(9) Standardized Medicare supplement benefit plan H shall consist
of only the following: the core benefit, plus the Medicare Part A
deductible, skilled nursing facility care, basic outpatient
prescription drug benefit, and medically necessary emergency care in
a foreign country as defined in paragraphs (1), (2), (6), and (8) of
Section 1358.8, respectively. The outpatient prescription drug
benefit shall not be included in a Medicare supplement contract sold
on or after January 1, 2006.
(10) Standardized Medicare supplement benefit plan I shall consist
of only the following: the core benefit, plus the Medicare Part A
deductible, skilled nursing facility care, 100 percent of the
Medicare Part B excess charges, basic outpatient prescription drug
benefit, medically necessary emergency care in a foreign country, and
at-home recovery benefit as defined in paragraphs (1), (2), (5),
(6), (8), and (10) of subdivision (c) of Section 1358.8,
respectively. The outpatient prescription drug benefit shall not be
included in a Medicare supplement contract sold on or after January
1, 2006.
(11) Standardized Medicare supplement benefit plan J shall consist
of only the following: the core benefit, plus the Medicare Part A
deductible, skilled nursing facility care, Medicare Part B
deductible, 100 percent of the Medicare Part B excess charges,
extended outpatient prescription drug benefit, medically necessary
emergency care in a foreign country, preventive medical care, and
at-home recovery benefit as defined in paragraphs (1), (2), (3), (5),
(7), (8), (9), and (10) of subdivision (c) of Section 1358.8,
respectively. The outpatient prescription drug benefit shall not be
included in a Medicare supplement contract sold on or after January
1, 2006.
(12) Standardized Medicare supplement benefit high deductible plan
J shall consist of only the following: 100 percent of covered
expenses following the payment of the annual high deductible plan J
deductible. The covered expenses include the core benefit, plus the
Medicare Part A deductible, skilled nursing facility care, Medicare
Part B deductible, 100 percent of the Medicare Part B excess charges,
extended outpatient prescription drug benefit, medically necessary
emergency care in a foreign country, preventive medical care benefit,
and at-home recovery benefit as defined in paragraphs (1), (2), (3),
(5), (7), (8), (9), and (10) of subdivision (c) of Section 1358.8,
respectively. The annual high deductible plan J deductible shall
consist of out-of-pocket expenses, other than premiums, for services
covered by the Medicare supplement plan J policy, and shall be in
addition to any other specific benefit deductibles. The annual
deductible shall be one thousand five hundred dollars ($1,500) for
1998 and 1999, and shall be based on a calendar year, as adjusted
annually thereafter by the secretary to reflect the change in the
Consumer Price Index for all urban consumers for the 12-month period
ending with August of the preceding year, and rounded to the nearest
multiple of ten dollars ($10). The outpatient prescription drug
benefit shall not be included in a Medicare supplement contract sold
on or after January 1, 2006.
(13) Standardized Medicare supplement benefit plan K shall consist
of only those benefits described in subdivision (d) of Section
1358.8.
(14) Standardized Medicare supplement benefit plan L shall consist
of only those benefits described in subdivision (e) of Section
1358.8.
(f) An issuer may, with the prior approval of the director, offer
contracts with new or innovative benefits in addition to the benefits
provided in a contract that otherwise complies with the applicable
standards. The new or innovative benefits may include benefits that
are appropriate to Medicare supplement contracts, that are not
otherwise available and that are cost-effective and offered in a
manner that is consistent with the goal of simplification of Medicare
supplement contracts. On and after January 1, 2006, the innovative
benefit shall not include an outpatient prescription drug benefit.
1358.10. (a) (1) This section shall apply to Medicare Select
contracts, as defined in this section.
(2) A contract shall not be advertised as a Medicare Select
contract unless it meets the requirements of this section.
(b) For the purposes of this section:
(1) "Complaint" means any dissatisfaction expressed by an
individual concerning a Medicare Select issuer or its network
providers.
(2) "Grievance" means dissatisfaction expressed in writing by an
individual covered by a Medicare Select contract with the
administration, claims practices, or provision of services concerning
a Medicare Select issuer or its network providers.
(3) "Medicare Select issuer" means an issuer offering, or seeking
to offer, a Medicare Select contract.
(4) "Medicare Select contract" means a Medicare supplement
contract that contains restricted network provisions.
(5) "Network provider" means a provider of health care, or a group
of providers of health care, which has entered into a written
agreement with the issuer to provide benefits covered under a
Medicare Select contract. "Provider network" means a grouping of
network providers.
(6) "Restricted network provision" means any provision which
conditions the payment of benefits, in whole or in part, on the use
of network providers.
(7) "Service area" means the geographic area approved by the
director within which an issuer is authorized to offer a Medicare
Select contract.
(c) The director may authorize an issuer to offer a Medicare
Select contract pursuant to Section 4358 of the federal Omnibus
Budget Reconciliation Act (OBRA) of 1990 if the director finds that
the issuer's Medicare Select contracts are in compliance with this
chapter and if the director finds that the issuer has satisfied all
of the requirements of this section.
(d) A Medicare Select issuer shall not issue a Medicare Select
contract in this state until its plan of operation has been approved
by the director.
(e) A Medicare Select issuer shall file a proposed plan of
operation with the director in a format prescribed by the director.
The plan of operation shall contain at least the following
information:
(1) Evidence that all covered services that are subject to
restricted network provisions are available and accessible through
network providers, including a demonstration of all of the following:
(A) That services can be provided by network providers with
reasonable promptness with respect to geographic location, hours of
operation, and afterhour care. The hours of operation and
availability of afterhour care shall reflect usual practice in the
local area. Geographic availability shall reflect the usual travel
times within the community.
(B) That the number of network providers in the service area is
sufficient, with respect to current and expected enrollees, as to
either of the following:
(i) To deliver adequately all services that are subject to a
restricted network provision.
(ii) To make appropriate referrals.
(C) There are written agreements with network providers describing
specific responsibilities.
(D) Emergency care is available 24 hours per day and seven days
per week.
(E) In the case of covered services that are subject to a
restricted network provision and are provided on a prepaid basis,
that there are written agreements with network providers prohibiting
the providers from billing or otherwise seeking reimbursement from or
recourse against any individual covered under a Medicare Select
contract.
This subparagraph shall not apply to supplemental charges or
coinsurance amounts as stated in the Medicare Select contract.
(2) A statement or map providing a clear description of the
service area.
(3) A description of the grievance procedure to be utilized.
(4) A description of the quality assurance program, including all
of the following:
(A) The formal organizational structure.
(B) The written criteria for selection, retention, and removal of
network providers.
(C) The procedures for evaluating quality of care provided by
network providers, and the process to initiate corrective action when
warranted.
(5) A list and description, by specialty, of the network
providers.
(6) Copies of the written information proposed to be used by the
issuer to comply with subdivision (i).
(7) Any other information requested by the director.
(f) (1) A Medicare Select issuer shall file any proposed changes
to the plan of operation, except for changes to the list of network
providers, with the director prior to implementing the changes.
Changes shall be considered approved by the director after 30 days
unless specifically disapproved.
(2) An updated list of network providers shall be filed with the
director at least quarterly.
(g) A Medicare Select contract shall not restrict payment for
covered services provided by nonnetwork providers if:
(1) The services are for symptoms requiring emergency care or are
immediately required for an unforeseen illness, injury, or condition.
(2) It is not reasonable to obtain services through a network
provider.
(h) A Medicare Select contract shall provide payment for full
coverage under the contract for covered services that are not
available through network providers.
(i) A Medicare Select issuer shall make full and fair disclosure
in writing of the provisions, restrictions, and limitations of the
Medicare Select contract to each applicant. This disclosure shall
include at least the following:
(1) An outline of coverage sufficient to permit the applicant to
compare the coverage and charges of the Medicare Select contract with
both of the following:
(A) Other Medicare supplement contracts offered by the issuer.
(B) Other Medicare Select contracts.
(2) A description, including address, telephone number, and hours
of operation, of the network providers, including primary care
physicians, specialty physicians, hospitals, and other providers.
(3) A description of the restricted network provisions, including
payments for coinsurance and deductibles when providers other than
network providers are utilized. The description shall inform the
applicant that expenses incurred when using out-of-network providers
are excluded from the out-of-pocket annual limit in benefit plans K
and L, unless the contract provides otherwise.
(4) A description of coverage for emergency and urgently needed
care and other out-of-service area coverage.
(5) A description of limitations on referrals to restricted
network providers and to other providers.
(6) A description of the enrollee's rights to purchase any other
Medicare supplement contract otherwise offered by the issuer.
(7) A description of the Medicare Select issuer's quality
assurance program and grievance procedure.
(j) Prior to the sale of a Medicare Select contract, a Medicare
Select issuer shall obtain from the applicant a signed and dated form
stating that the applicant has received the information provided
pursuant to subdivision (i) and that the applicant understands the
restrictions of the Medicare Select contract.
(k) A Medicare Select issuer shall have and use procedures for
hearing complaints and resolving written grievances from the
enrollees. The procedures shall be aimed at mutual agreement for
settlement and may include arbitration procedures.
(1) The grievance procedure shall be described in the contract and
in the outline of coverage.
(2) At the time the contract is issued, the issuer shall provide
detailed information to the enrollee describing how a grievance may
be registered with the issuer.
(3) Grievances shall be considered in a timely manner and shall be
transmitted to appropriate decisionmakers who have authority to
fully investigate the issue and take corrective action.
(4) If a grievance is found to be valid, corrective action shall
be taken promptly.
(5) All concerned parties shall be notified about the results of a
grievance.
(6) The issuer shall report no later than each March 31st to the
director regarding its grievance procedure. The report shall be in a
format prescribed by the director and shall contain the number of
grievances filed in the past year and a summary of the subject,
nature, and resolution of those grievances.
(l) At the time of initial purchase, a Medicare Select issuer
shall make available to each applicant for a Medicare Select contract
the opportunity to purchase any Medicare supplement contract
otherwise offered by the issuer.
(m) (1) At the request of an enrollee under a Medicare Select
contract, a Medicare Select issuer shall make available to the
enrollee the opportunity to purchase a Medicare supplement contract
offered by the issuer that has comparable or lesser benefits and that
does not contain a restricted network provision, if a Medicare
supplement contract of that nature is offered by the issuer. The
issuer shall make the contracts available without regard to the
health status of the enrollee and without requiring evidence of
insurability after the Medicare Select contract has been in force for
six months.
(2) For the purposes of this subdivision, a Medicare supplement
contract will be considered to have comparable or lesser benefits
unless it contains one or more significant benefits not included in
the Medicare Select contract being replaced. For the purposes of this
paragraph, a significant benefit means coverage for the Medicare
Part A deductible, coverage for at-home recovery services, or
coverage for Medicare Part B excess charges.
(n) Medicare Select contracts shall provide for continuation of
coverage in the event the secretary determines that Medicare Select
contracts issued pursuant to this section should be discontinued due
to either the failure of the Medicare Select program to be
reauthorized under law or its substantial amendment.
(1) Each Medicare Select issuer shall make available to each
enrollee covered by a Medicare Select contract the opportunity to
purchase any Medicare supplement contract offered by the issuer that
has comparable or lesser benefits and that does not contain a
restricted provider network provision, if a Medicare supplement
contract of that nature is offered by the issuer. The issuer shall
make the contracts available without regard to the health status of
the enrollee and without requiring evidence of insurability after the
Medicare Select contract has been in force for six months.
(2) For the purposes of this subdivision, a Medicare supplement
contract will be considered to have comparable or lesser benefits
unless it contains one or more significant benefits not included in
the Medicare Select contract being replaced. For the purposes of this
paragraph, a significant benefit means coverage for the Medicare
Part A deductible, coverage for at-home recovery services, or
coverage for Medicare Part B excess charges.
(o) An issuer offering Medicare Select contracts shall comply with
reasonable requests for data made by state or federal agencies,
including the United States Department of Health and Human Services,
for the purpose of evaluating the Medicare Select program. An issuer
shall not issue a Medicare Select contract in this state until the
contract has been approved by the director.
1358.11. (a) (1) An issuer shall not deny or condition the offering
or effectiveness of any Medicare supplement contract available for
sale in this state, nor discriminate in the pricing of a contract
because of the health status, claims experience, receipt of health
care, or medical condition of an applicant in the case of an
application for a contract that is submitted prior to or during the
six-month period beginning with the first day of the first month in
which an individual is both 65 years of age or older and is enrolled
for benefits under Medicare Part B. Each Medicare supplement contract
currently available from an issuer shall be made available to all
applicants who qualify under this subdivision and who are 65 years of
age or older.
(2) An issuer shall make available Medicare supplement benefit
plans A, B, C, and F, if currently available, to an applicant who
qualifies under this subdivision who is 64 years of age or younger
and who does not have end-stage renal disease. An issuer shall also
make available to those applicants, Medicare supplement benefit plan
H, I, or J, if currently available, and commencing January 1, 2007,
shall make available to them Medicare supplement benefit plan K or L,
if currently available. The selection among Medicare supplement
benefit plan H, I, or J and the selection between Medicare supplement
benefit plan K or L shall be made at the issuer's discretion.
(3) This section and Section 1358.12 do not prohibit an issuer in
determining subscriber rates from treating applicants who are under
65 years of age and are eligible for Medicare Part B as a separate
risk classification.
(b) (1) If an applicant qualifies under subdivision (a) and
submits an application during the time period referenced in
subdivision (a) and, as of the date of application, has had a
continuous period of creditable coverage of at least six months, the
issuer shall not exclude benefits based on a preexisting condition.
(2) If the applicant qualifies under subdivision (a) and submits
an application during the time period referenced in subdivision (a)
and, as of the date of application, has had a continuous period of
creditable coverage that is less than six months, the issuer shall
reduce the period of any preexisting condition exclusion by the
aggregate of the period of creditable coverage applicable to the
applicant as of the enrollment date. The manner of the reduction
under this subdivision shall be as specified by the director.
(c) Except as provided in subdivision (b) and Section 1358.23,
subdivision (a) shall not be construed as preventing the exclusion of
benefits under a contract, during the first six months, based on a
preexisting condition for which the enrollee received treatment or
was otherwise diagnosed during the six months before the coverage
became effective.
(d) An individual enrolled in Medicare by reason of disability
shall be entitled to open enrollment described in this section for
six months after the date of his or her enrollment in Medicare Part
B, or if notified retroactively of his or her eligibility for
Medicare, for six months following notice of eligibility. Sales
during the open enrollment period shall not be discouraged by any
means, including the altering of the commission structure.
(e) (1) An individual enrolled in Medicare Part B is entitled to
open enrollment described in this section for six months following:
(A) Receipt of a notice of termination or, if no notice is
received, the effective date of termination from any
employer-sponsored health plan including an employer-sponsored
retiree health plan.
(B) Receipt of a notice of loss of eligibility due to the divorce
or death of a spouse or, if no notice is received, the effective date
of loss of eligibility due to the divorce or death of a spouse, from
any employer-sponsored health plan including an employer-sponsored
retiree health plan.
(C) Termination of health care services for a military retiree or
the retiree's Medicare eligible spouse or dependent as a result of a
military base closure or loss of access to health care services
because the base no longer offers services or because the individual
relocates.
(2) For purposes of this subdivision, "employer-sponsored retiree
health plan" includes any coverage for medical expenses that is
directly or indirectly sponsored or established by an employer for
employees or retirees, their spouses, dependents, or other included
covered persons.
(f) An individual enrolled in Medicare Part B is entitled to open
enrollment described in this section if the individual was covered
under a policy, certificate, or contract providing Medicare
supplement coverage but that coverage terminated because the
individual established residence at a location not served by the
issuer.
(g) (1) An individual whose coverage was terminated by a Medicare
Advantage plan shall be entitled to an additional 60-day open
enrollment period to be added on to and run consecutively after any
open enrollment period authorized by federal law or regulation, for
any and all Medicare supplement coverage available on a guaranteed
basis under state and federal law or regulations for persons
terminated by their Medicare Advantage plan.
(2) Health plans that terminate Medicare enrollees shall notify
those enrollees in the termination notice of the additional open
enrollment period authorized by this subdivision. Health plan notices
shall inform enrollees of the opportunity to secure advice and
assistance from the HICAP in their area, along with the toll-free
telephone number for HICAP.
(h) An individual shall be entitled to an annual open enrollment
period lasting 30 days or more, commencing with the individual's
birthday, during which time that person may purchase any Medicare
supplement coverage that offers benefits equal to or lesser than
those provided by the previous coverage. During this open enrollment
period, no issuer that falls under this provision shall deny or
condition the issuance or effectiveness of Medicare supplement
coverage, nor discriminate in the pricing of coverage, because of
health status, claims experience, receipt of health care, or medical
condition of the individual if, at the time of the open enrollment
period, the individual is covered under another Medicare supplement
policy, certificate, or contract. An issuer that offers Medicare
supplement contracts shall notify an enrollee of his or her rights
under this subdivision at least 30 and no more than 60 days before
the beginning of the open enrollment period.
(i) Commencing January 1, 2007, an individual enrolled in
Medicare Part B is entitled to open enrollment described in this
section upon being notified that he or she is no longer eligible for
benefits under the Medi-Cal program because of an increase in the
individual's income or assets.
1358.12. (a) (1) With respect to the guaranteed issue of a Medicare
supplement contract, eligible persons are those individuals
described in subdivision (b) who seek to enroll under the contract
during the period specified in subdivision (c), and who submit
evidence of the date of termination or disenrollment or enrollment in
Medicare Part D with the application for a Medicare supplement
contract.
(2) With respect to eligible persons, an issuer shall not take any
of the following actions:
(A) Deny or condition the issuance or effectiveness of a Medicare
supplement contract described in subdivision (e) that is offered and
is available for issuance to new enrollees by the issuer.
(B) Discriminate in the pricing of that Medicare supplement
contract because of health status, claims experience, receipt of
health care, or medical condition.
(C) Impose an exclusion of benefits based on a preexisting
condition under that Medicare supplement contract.
(b) An eligible person is an individual described in any of the
following paragraphs:
(1) The individual is enrolled under an employee welfare benefit
plan that provides health benefits that supplement the benefits under
Medicare, and the plan either terminates or ceases to provide all of
those supplemental health benefits to the individual.
(2) The individual is enrolled with a Medicare Advantage
organization under a Medicare Advantage plan under Medicare Part C,
and any of the following circumstances apply:
(A) The certification of the organization or plan has been
terminated.
(B) The organization has terminated or otherwise discontinued
providing the plan in the area in which the individual resides.
(C) The individual is no longer eligible to elect the plan because
of a change in the individual's place of residence or other change
in circumstances specified by the secretary. Those changes in
circumstances shall not include termination of the individual's
enrollment on the basis described in Section 1851(g)(3)(B) of the
federal Social Security Act where the individual has not paid
premiums on a timely basis or has engaged in disruptive behavior as
specified in standards under Section 1856, or the plan is terminated
for all individuals within a residence area.
(D) The Medicare Advantage plan in which the individual is
enrolled reduces any of its benefits or increases the amount of cost
sharing or discontinues for other than good cause relating to quality
of care, its relationship or contract under the plan with a provider
who is currently furnishing services to the individual. An
individual shall be eligible under this subparagraph for a Medicare
supplement contract issued by the same issuer through which the
individual was enrolled at the time the reduction, increase, or
discontinuance described above occurs or, commencing January 1, 2007,
for one issued by a subsidiary of the parent company of that issuer
or by a network that contracts with the parent company of that
issuer.
(E) The individual demonstrates, in accordance with guidelines
established by the secretary, either of the following:
(i) The organization offering the plan substantially violated a
material provision of the organization's contract under this article
in relation to the individual, including the failure to provide on a
timely basis medically necessary care for which benefits are
available under the plan or the failure to provide the covered care
in accordance with applicable quality standards.
(ii) The organization, or agent or other entity acting on the
organization's behalf, materially misrepresented the plan's
provisions in marketing the plan to the individual.
(F) The individual meets other exceptional conditions as the
secretary may provide.
(3) The individual is 65 years of age or older, is enrolled with a
Program of All-Inclusive Care for the Elderly (PACE) provider under
Section 1894 of the Social Security Act, and circumstances similar to
those described in paragraph (2) exist that would permit
discontinuance of the individual's enrollment with the provider, if
the individual were enrolled in a Medicare Advantage plan.
(4) The individual meets both of the following conditions:
(A) The individual is enrolled with any of the following:
(i) An eligible organization under a contract under Section 1876
of the Social Security Act (Medicare cost).
(ii) A similar organization operating under demonstration project
authority, effective for periods before April 1, 1999.
(iii) An organization under an agreement under Section 1833(a)(1)
(A) of the Social Security Act (health care prepayment plan).
(iv) An organization under a Medicare Select policy.
(B) The enrollment ceases under the same circumstances that would
permit discontinuance of an individual's election of coverage under
paragraph (2) or (3).
(5) The individual is enrolled under a Medicare supplement
contract, and the enrollment ceases because of any of the following
circumstances:
(A) The insolvency of the issuer or bankruptcy of the nonissuer
organization, or other involuntary termination of coverage or
enrollment under the contract.
(B) The issuer of the contract substantially violated a material
provision of the contract.
(C) The issuer, or an agent or other entity acting on the issuer's
behalf, materially misrepresented the contract's provisions in
marketing the contract to the individual.
(6) The individual meets both of the following conditions:
(A) The individual was enrolled under a Medicare supplement
contract and terminates enrollment and subsequently enrolls, for the
first time, with any Medicare Advantage organization under a Medicare
Advantage plan under Medicare Part C, any eligible organization
under a contract under Section 1876 of the Social Security Act
(Medicare cost), any similar organization operating under
demonstration project authority, any PACE provider under Section 1894
of the Social Security Act, or a Medicare Select policy.
(B) The subsequent enrollment under subparagraph (A) is terminated
by the individual during any period within the first 12 months of
the subsequent enrollment (during which the enrollee is permitted to
terminate the subsequent enrollment under Section 1851(e) of the
federal Social Security Act).
(7) The individual upon first becoming eligible for benefits under
Medicare Part A at age 65 years of age, enrolls in a Medicare
Advantage plan under Medicare Part C or with a PACE provider under
Section 1894 of the Social Security Act, and disenrolls from the plan
or program not later than 12 months after the effective date of
enrollment.
(8) The individual while enrolled under a Medicare supplement
contract that covers outpatient prescription drugs enrolls in a
Medicare Part D plan during the initial enrollment period, terminates
enrollment in the Medicare supplement contract, and submits evidence
of enrollment in Medicare Part D along with the application for a
contract described in paragraph (4) of subdivision (e).
(c) (1) In the case of an individual described in paragraph (1) of
subdivision (b), the guaranteed issue period begins on the later of
the following two dates and ends on the date that is 63 days after
the date the applicable coverage terminated:
(A) The date the individual receives a notice of termination or
cessation of all supplemental health benefits or, if no notice is
received, the date of the notice denying a claim because of a
termination or cessation of benefits.
(B) The date that the applicable coverage terminates or ceases.
(2) In the case of an individual described in paragraphs (2), (3),
(4), (6), and (7) of subdivision (b) whose enrollment is terminated
involuntarily, the guaranteed issue period begins on the date that
the individual receives a notice of termination and ends 63 days
after the date the applicable coverage is terminated.
(3) In the case of an individual described in subparagraph (A) of
paragraph (5) of subdivision (b), the guaranteed issue period begins
on the earlier of the following two dates and ends on the date that
is 63 days after the date the coverage is terminated:
(A) The date that the individual receives a notice of termination,
a notice of the issuer's bankruptcy or insolvency, or other similar
notice if any.
(B) The date that the applicable coverage is terminated.
(4) In the case of an individual described in paragraph (2), (3),
(6), or (7) of, or in subparagraph (B) or (C) of paragraph (5) of,
subdivision (b) who disenrolls voluntarily, the guaranteed issue
period begins on the date that is 60 days before the effective date
of the disenrollment and ends on the date that is 63 days after the
effective date of the disenrollment.
(5) In the case of an individual described in paragraph (8) of
subdivision (b), the guaranteed issue period begins on the date the
individual receives notice pursuant to Section 1882(v)(2)(B) of the
Social Security Act from the Medicare supplement issuer during the
60-day period immediately preceding the initial enrollment period for
Medicare Part D and ends on the date that is 63 days after the
effective date of the individual's coverage under Medicare Part D.
(6) In the case of an individual described in subdivision (b) who
is not included in this subdivision, the guaranteed issue period
begins on the effective date of disenrollment and ends on the date
that is 63 days after the effective date of disenrollment.
(d) (1) In the case of an individual described in paragraph (6) of
subdivision (b), or deemed to be so described pursuant to this
paragraph, whose enrollment with an organization or provider
described in subparagraph (A) of paragraph (6) of subdivision (b) is
involuntarily terminated within the first 12 months of enrollment and
who, without an intervening enrollment, enrolls with another such
organization or provider, the subsequent enrollment shall be deemed
to be an initial enrollment described in paragraph (6) of subdivision
(b).
(2) In the case of an individual described in paragraph (7) of
subdivision (b), or deemed to be so described pursuant to this
paragraph, whose enrollment with a plan or in a program described in
paragraph (7) of subdivision (b) is involuntarily terminated within
the first 12 months of enrollment and who, without an intervening
enrollment, enrolls in another such plan or program, the subsequent
enrollment shall be deemed to be an initial enrollment described in
paragraph (7) of subdivision (b).
(3) For purposes of paragraphs (6) and (7) of subdivision (b), an
enrollment of an individual with an organization or provider
described in subparagraph (A) of paragraph (6) of subdivision (b), or
with a plan or in a program described in paragraph (7) of
subdivision (b) shall not be deemed to be an initial enrollment under
this paragraph after the two-year period beginning on the date on
which the individual first enrolled with such an organization,
provider, plan, or program.
(e) (1) Under paragraphs (1), (2), (3), (4), and (5) of
subdivision (b), an eligible individual is entitled to a Medicare
supplement contract that has a benefit package classified as Plan A,
B, C, F (including a high deductible Plan F), K, or L offered by any
issuer.
(2) (A) Under paragraph (6) of subdivision (b), an eligible
individual is entitled to the same Medicare supplement contract in
which he or she was most recently enrolled, if available from the
same issuer. If that contract is not available, the eligible
individual is entitled to a Medicare supplement contract that has a
benefit package classified as Plan A, B, C, F (including a high
deductible Plan F), K, or L offered by any issuer.
(B) On and after January 1, 2006, an eligible individual described
in this paragraph who was most recently enrolled in a Medicare
supplement contract with an outpatient prescription drug benefit, is
entitled to a Medicare supplement contract that is available from the
same issuer but without an outpatient prescription drug benefit or,
at the election of the individual, has a benefit package classified
as a Plan A, B, C, F (including high deductible Plan F), K, or L that
is offered by any issuer.
(3) Under paragraph (7) of subdivision (b), an eligible individual
is entitled to any Medicare supplement contract offered by any
issuer.
(4) Under paragraph (8) of subdivision (b), an eligible individual
is entitled to a Medicare supplement contract that has a benefit
package classified as Plan A, B, C, F (including a high deductible
Plan F), K, or L and that is offered and is available for issuance to
a new enrollee by the same issuer that issued the individual's
Medicare supplement contract with outpatient prescription drug
coverage.
(f) (1) At the time of an event described in subdivision (b) by
which an individual loses coverage or benefits due to the termination
of a contract or agreement, policy, or plan, the organization that
terminates the contract or agreement, the issuer terminating the
policy or contract, or the administrator of the plan being
terminated, respectively, shall notify the individual of his or her
rights under this section and of the obligations of issuers of
Medicare supplement contracts under subdivision (a). The notice shall
be communicated contemporaneously with the notification of
termination.
(2) At the time of an event described in subdivision (b) by which
an individual ceases enrollment under a contract or agreement,
policy, or plan, the organization that offers the contract or
agreement, regardless of the basis for the cessation of enrollment,
the issuer offering the policy or contract, or the administrator of
the plan, respectively, shall notify the individual of his or her
rights under this section, and of the obligations of issuers of
Medicare supplement contracts under subdivision (a). The notice shall
be communicated within 10 working days of the date the issuer
received notification of disenrollment.
(g) An issuer shall refund any unearned premium that an enrollee
or subscriber paid in advance and shall terminate coverage upon the
request of an enrollee or subscriber.
1358.13. (a) An issuer shall comply with Section 1882(c)(3) of the
federal Social Security Act (as enacted by Section 4081(b)(2)(C) of
the federal Omnibus Budget Reconciliation Act of 1987 (OBRA), Public
Law 100-203) by doing all of the following:
(1) Accepting a notice from a Medicare carrier on dually assigned
claims submitted by participating physicians and suppliers as a claim
for benefits in place of any other claim form otherwise required and
making a payment determination on the basis of the information
contained in that notice.
(2) Notifying the participating physician or supplier and the
beneficiary of the payment determination.
(3) Paying the participating physician or supplier directly.
(4) Furnishing, at the time of enrollment, each enrollee with a
card listing the contract name, number, and a central mailing address
to which notices respecting coverage from a Medicare carrier may be
sent.
(5) Paying user fees established under Section 1395u(h)(3)(B) of
Title 42 of the United States Code, for claim notices that are
transmitted electronically or otherwise.
(6) Providing to the secretary, at least annually, a central
mailing address to which all claims may be sent by Medicare carriers.
(b) Compliance with the requirements set forth in subdivision (a)
shall be certified on the Medicare supplement insurance experience
reporting form provided by the director.
1358.14. (a) (1) (A) With respect to loss ratio standards, a
Medicare supplement contract shall not be advertised, solicited, or
issued for delivery unless the contract can be expected, as estimated
for the entire period for which prepaid or periodic charges are
computed to provide coverage, to return to subscribers and enrollees
in the form of aggregate benefits under the contract, not including
anticipated refunds or credits provided under the contract, at least
75 percent of the aggregate amount of charges earned in the case of
group contracts, or at least 65 percent of the aggregate amount of
charges earned in the case of individual contracts, on the basis of
incurred claims or costs of health care services experience and
earned prepaid or periodic charges for that period and in accordance
with accepted actuarial principles and practices.
(B) Loss ratio standards shall be calculated on the basis of
incurred health care expenses where coverage is provided by a health
care service plan on a service rather than reimbursement basis, and
earned prepaid or periodic charges shall be calculated for the period
and in accordance with accepted actuarial principles and practices.
Incurred health care expenses where coverage is provided by a health
care service plan shall not include any of the following:
(i) Home office and overhead costs.
(ii) Advertising costs.
(iii) Commissions and other acquisition costs.
(iv) Taxes.
(v) Capital costs.
(vi) Administrative costs.
(vii) Claims processing costs.
(2) All filings of rates and rating schedules shall demonstrate
that expected claims in relation to prepaid or periodic charges
comply with the requirements of this section when combined with
actual experience to date. Filings of rate revisions shall also
demonstrate that the anticipated loss ratio over the entire future
period for which the revised rates are computed to provide coverage
can be expected to meet the appropriate loss ratio standards.
(3) For purposes of applying paragraph (1) of subdivision (a) and
paragraph (3) of subdivision (d) of Section 1358.15 only, contracts
issued as a result of solicitations of individuals through the mail
or by mass media advertising, including both print and broadcast
advertising, shall be deemed to be individual contracts.
(b) (1) With respect to refund or credit calculations, an issuer
shall collect and file with the director by May 31 of each year the
data contained in the applicable reporting form required by the
director (NAIC Appendix A) for each type of coverage in a standard
Medicare supplement benefit plan.
(2) If on the basis of the experience as reported the benchmark
ratio since inception (ratio 1) exceeds the adjusted experience ratio
since inception (ratio 3), then a refund or credit calculation is
required. The refund calculation shall be done on a statewide basis
for each type of contract offered by the issuer. For purposes of the
refund or credit calculation, experience on contracts issued within
the reporting year shall be excluded.
(3) For the purposes of this section, with respect to contracts
advertised, solicited, or issued for delivery prior to January 1,
2001, the issuer shall make the refund or credit calculation
separately for all individual contracts, including all group
contracts subject to an individual loss ratio standard when issued,
combined and all other group contracts combined for experience after
January 1, 2001. The first report pursuant to paragraph (1) shall be
due by May 31, 2003.
(4) A refund or credit shall be made only when the benchmark loss
ratio exceeds the adjusted experience loss ratio and the amount to be
refunded or credited exceeds ten dollars ($10). The refund shall
include interest from the end of the calendar year to the date of the
refund or credit at a rate specified by the secretary, but in no
event shall it be less than the average rate of interest for 13-week
Treasury notes. A refund or credit against prepaid or periodic
charges due shall be made by September 30 following the experience
year upon which the refund or credit is based.
(c) An issuer of Medicare supplement contracts shall file annually
its prepaid or periodic charges and supporting documentation
including ratios of incurred losses to earned prepaid or periodic
charges by contract duration for approval by the director in
accordance with the filing requirements and procedures prescribed by
the director. The supporting documentation shall also demonstrate in
accordance with actuarial standards of practice using reasonable
assumptions that the appropriate loss ratio standards can be expected
to be met over the entire period for which charges are computed. The
demonstration shall exclude active life reserves. An expected
third-year loss ratio that is greater than or equal to the applicable
percentage shall be demonstrated for contracts in force less than
three years.
As soon as practicable, but prior to the effective date of
enhancements in Medicare benefits, every issuer of Medicare
supplement contracts shall file with the director, in accordance with
applicable filing procedures, all of the following:
(1) (A) Appropriate prepaid or periodic charge adjustments
necessary to produce loss ratios as anticipated for the current
charge for the applicable contracts. The supporting documents
necessary to justify the adjustment shall accompany the filing.
(B) An issuer shall make prepaid or periodic charge adjustments
necessary to produce an expected loss ratio under the contract to
conform to minimum loss ratio standards for Medicare supplement
contracts and that are expected to result in a loss ratio at least as
great as that originally anticipated in the rates used to produce
current charges by the issuer for the Medicare supplement contracts.
No charge adjustment that would modify the loss ratio experience
under the contract other than the adjustments described in this
section shall be made with respect to a contract at any time other
than upon its renewal date or anniversary date.
(C) If an issuer fails to make prepaid or periodic charge
adjustments acceptable to the director, the director may order charge
adjustments, refunds, or credits deemed necessary to achieve the
loss ratio required by this section.
(2) Any appropriate contract amendments needed to accomplish the
Medicare supplement contract modifications necessary to eliminate
benefit duplications with Medicare. The contract amendments shall
provide a clear description of the Medicare supplement benefits
provided by the contract.
(d) (1) The director may conduct a public hearing to gather
information concerning a request by an issuer for an increase in a
rate for a contract form issued before or after the effective date of
January 1, 2001, if the experience of the form for the previous
reporting period is not in compliance with the applicable loss ratio
standard. The determination of compliance is made without
consideration of any refund or credit for the reporting period.
Public notice of the hearing shall be furnished in a manner deemed
appropriate by the director.
(2) The director may conduct a public hearing to gather
information if the experience of the form filed under paragraph (1)
of subdivision (b) for the previous reporting period is not in
compliance with the applicable loss ratio standard.
The determination of compliance is made without consideration of
any refund or credit for the reporting period. Public notice of the
hearing shall be furnished in a manner deemed appropriate by the
director.
1358.145. (a) The calculation of actual or expected loss ratios
shall be pursuant to the formula in subdivision (a) of Section
1358.14, and pursuant to definitions, procedures, and other
provisions as may be deemed by the director, with due consideration
of the circumstances of the particular issuer, to be fair,
reasonable, and consistent with the objectives of this chapter.
(b) Each issuer shall submit to the department a copy of the
calculations for the actual or expected loss ratio as required by
Section 1358.14. The calculations shall include the following data:
the actual loss ratio for the entire period in which the contract
has been in force, as well as for the immediate past three years and
for each year in which the contract has been in force, the scale of
prepaid or periodic charges for the loss ratio calculation period, a
description of all assumptions, the formula used to calculate gross
prepaid or periodic charges, the expected level of earned prepaid or
periodic charges in the loss ratio calculation period, and the
expected level of incurred claims for reimbursement, including paid
claims and incurred but not paid claims, in the loss ratio
calculation period. The calculations shall be accompanied by an
actuarial certification, consisting of a signed declaration of an
actuary who is a member in good standing of the American Academy of
Actuaries in which the actuary states that the assumptions used in
calculating the expected loss ratio are appropriate and reasonable,
taking into account that the calculations are in accordance with the
provisions of subdivision (a) and the provisions referred to therein.
In addition, the director may require the issuer to submit
actuarial certification, as described above, by one or more
unaffiliated actuaries acceptable to the director.
(c) Notwithstanding the calculations required by subdivision (b),
contracts shall be deemed to comply with the loss ratio standards if,
and shall be deemed not to comply with the loss standards unless:
(1) for the most recent year, the ratio of the incurred losses to
earned prepaid charges for contracts that have been in force for
three years or more is greater than or equal to the applicable
percentages contained in this section; and (2) the expected losses in
relation to charges over the entire period for which the contract is
rated comply with the requirements of this section. An expected
third-year loss ratio that is greater than or equal to the applicable
percentage shall be demonstrated for contracts in force less than
three years.
1358.146. The following format shall be used for reporting loss
ratio experience:
MEDICARE SUPPLEMENT
HEALTH CARE SERVICE PLAN
CONTRACT EXPERIENCE EXHIBIT
For the year ended December 31, 20__.
For the State of California.
Of the ____ health care service plan.
Address (City, State, and Zip Code) ____
Person Completing this Exhibit ____
To be filed by June 30th following the filing under Section 1358.14
of the Health and Safety Code.
Costs for Health Care
Services
______________________________
Prepaid or Percentage
Periodic of Prepaid
Charges or Periodic
Classification Earned Amount Charges Earned
----------------------------------------------------------------------
-
Experience on
Individual Plan
Contracts
1. Contracts issued
through 20__
Reporting State
___________________________________________________
Nationwide
________________________________________________________
2. Contracts issued
after 20__
Reporting State
___________________________________________________
Nationwide
________________________________________________________
Experience on Group
Plan Contracts
1. Contracts Issued
through 20__
Reporting State
___________________________________________________
Nationwide
________________________________________________________
2. Contracts Issued
after 20__
Reporting State
___________________________________________________
Nationwide
________________________________________________________
The undersigned officer hereby certifies that the company named
above has complied with the requirements contained in the federal
Omnibus Budget Reconciliation Act of 1987, Section 4081.
Signature
_________________________________________________________
Title and name (please type)
______________________________________
INSTRUCTIONS FOR COMPLETING MEDICARE SUPPLEMENT HEALTH CARE
SERVICE PLAN CONTRACT EXPERIENCE EXHIBIT
1. Experience on plan contracts issued more than three years prior
to the reporting year should be shown separately as indicated on the
form. For example, for the reporting year ended 12/31/88 (filed on
June 30, 1989), experience on plan contracts issued in 1985 and prior
should be shown separately from that of plan contracts issued in
1986 and later. For group coverage, the year of issue should be
based on when the contract was issued if available; otherwise use
the master plan contract year of issue.
2. Allocation of reserves on a state-by-state basis should be on
sound actuarial principles and be consistent from year to year.
3. Membership or plan contract fees, if any, constitute, and
should be included with, prepaid or periodic charges earned. Earned
prepaid or periodic charges may be shown on an annual basis net of
loadings for nonannual modes.
4. Mass marketing group coverage subject to individual loss ratio
standards should be included with individual plan contracts.
5. Any dividends paid to subscribers should be included with costs
for health care.
6. Neither costs for health care services nor earned prepaid or
periodic charges should be adjusted for changes in plan contract
(additional) reserves.
DEFINITIONS
For purposes of this form:
1. "Costs for health care services" means payment for health care
services plus the increase in claim reserves. Claim reserves include
only those unpaid liabilities for claims that have already been
incurred. Costs for health care services in this exhibit do not
include plan contract additional reserves.
1358.15. (a) An issuer shall not advertise, solicit, or issue for
delivery a Medicare supplement contract to a resident of this state
unless the contract has been filed with and approved by the director
in accordance with filing requirements and procedures prescribed by
the director. Until January 1, 2001, or 90 days after approval of
Medicare supplement contracts submitted for approval pursuant to this
section, whichever is later, issuers may continue to offer and
market previously approved Medicare supplement contracts.
(b) An issuer shall file any riders or amendments to contract
forms to delete outpatient prescription drug benefits, as required by
the Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 (P.L. 108-173), only in the state where the contract was
issued.
(c) An issuer shall not use or change prepaid or periodic charges
for a Medicare supplement contract unless the charges and supporting
documentation have been filed with and approved by the director in
accordance with the filing requirements and procedures prescribed by
the director.
(d) (1) Except as provided in paragraph (2), an issuer shall not
file for approval more than one contract of each type for each
standard Medicare supplement benefit plan.
(2) An issuer may offer, with the approval of the director, up to
four additional contracts of the same type for the same standard
Medicare supplement benefit plan, one for each of the following
cases:
(A) The inclusion of new or innovative benefits.
(B) The addition of either direct response or agent marketing
methods.
(C) The addition of either guaranteed issue or underwritten
coverage.
(D) The offering of coverage to individuals eligible for Medicare
by reason of disability.
(3) For the purposes of this section, a "type" means an individual
contract, a group contract, an individual Medicare Select contract,
or a group Medicare Select contract.
(e) (1) Except as provided in subdivision (a), an issuer shall
continue to make available for purchase any contract issued after
January 1, 2001, that has been approved by the director. A contract
shall not be considered to be available for purchase unless the
issuer has actively offered it for sale in the previous 12 months.
(A) An issuer may discontinue the availability of a contract if
the issuer provides to the director in writing its decision at least
30 days prior to discontinuing the availability of the form of the
contract. After receipt of the notice by the director, the issuer
shall no longer offer for sale the contract in this state.
(B) An issuer that discontinues the availability of a contract
pursuant to subparagraph (A) shall not file for approval a new
contract of the same type for the same standard Medicare supplement
benefit plan as the discontinued contract for a period of five years
after the issuer provides notice to the director of the
discontinuance. The period of discontinuance may be reduced if the
director determines that a shorter period is appropriate.
(2) The sale or other transfer of Medicare supplement business to
another issuer shall be considered a discontinuance for the purposes
of this section.
(3) A change in the rating structure or methodology shall be
considered a discontinuance under paragraph (1) unless the issuer
complies with the following requirements:
(A) The issuer provides an actuarial memorandum, in a form and
manner prescribed by the director, describing the manner in which the
revised rating methodology and resultant rates differ from the
existing rating methodology and existing rates.
(B) The issuer does not subsequently put into effect a change of
rates or rating factors that would cause the percentage differential
between the discontinued and subsequent rates as described in the
actuarial memorandum to change. The director may approve a change to
the differential that is in the public interest.
(f) (1) Except as provided in paragraph (2), the experience of all
contracts of the same type in a standard Medicare supplement benefit
plan shall be combined for purposes of the refund or credit
calculation prescribed in Section 1358.14.
(2) Contracts assumed under an assumption reinsurance agreement
shall not be combined with the experience of other contracts for
purposes of the refund or credit calculation.
(g) A Medicare supplement contract shall be deemed not to be fair,
just, or consistent with the objectives of this chapter at all
times, and shall not be advertised, solicited, or issued for delivery
at any time, except during that period of time, if any, beginning
with the date of receipt by the plan of notification by the director
that the provisions of the contract are deemed to be fair, just, and
consistent with the objectives of this chapter, and ending with the
earlier to occur of the events indicated in subdivision (h).
(h) The period of time indicated in subdivision (g) shall
terminate at the earlier to occur of (1) receipt by the plan of
written revocation by the director of the immediate past notification
referred to in subdivision (g) specifying the basis for the
revocation, (2) the last day of the prepaid or periodic charge
calculation period, that in no event may exceed one year, or (3) June
30, of the next succeeding calendar year.
(i) An issuer shall secure the director's review of a contract
subject to this article by submitting, not less than 30 days prior to
any proposed advertising or other use of the contract not already
protected by a currently effective notice under subdivision (g), the
following for the director's review:
(1) A copy of the contract.
(2) A copy of the disclosure form.
(3) A representation that the contract complies with the
provisions of this chapter and the rules adopted thereunder.
(4) A completed copy of the "Medicare Supplement Health Care
Service Plan Contract Experience Exhibit" set forth in Section
1358.145.
(5) A copy of the calculations for the actual or expected loss
ratio.
(6) Supporting data used in calculating the actual or expected
loss ratio as indicated in Section 1358.14.
(7) An actuarial certification, as specified in Section 1358.14,
of the loss ratio computations.
(8) If required by the director, actuarial certification, as
specified in Section 1358.14, of the loss ratio computations by one
or more unaffiliated actuaries acceptable to the director.
(9) An undertaking by the issuer to notify the subscribers in
writing within 60 days of decertification, if the contract is
identified as a certified contract at the time of sale and later
decertified.
(10) A signed statement of the president of the issuer or other
officer of the issuer designated by that person attesting that the
information submitted for review is accurate and complete and does
not misrepresent any material fact.
(j) An issuer that submits information pursuant to subdivision (i)
shall provide any additional information as may be requested by the
director to enable the director to conclude that the contract
complies with the provisions of this chapter and rules adopted
thereunder.
(k) For the purposes of this section, the term "decertified," as
applied to a contract, means that the director by written notice has
found that the contract no longer complies with the provisions of
this chapter and the rules adopted thereunder and has revoked the
prior authorization to display on the contract the emblem indicating
certification.
(l) Benefits designed to cover cost-sharing amounts under Medicare
will be changed automatically to coincide with any changes in the
applicable Medicare deductible amount and copayment percentage
factors and the amount of prepaid charges may be modified, as
indicated in paragraph (6) of subdivision (a) of Section 1300.67.4 of
Title 28 of the California Code of Regulations, to correspond with
those changes.
1358.16. (a) An issuer or other entity may provide a commission or
other compensation to a solicitor or other representative for the
sale of a Medicare supplement contract only if the first year
commission or other first year compensation is no more than 200
percent of the commission or other compensation paid for selling or
servicing the contract in the second year or period.
(b) The commission or other compensation provided in subsequent
renewal years shall be the same as that provided in the second year
or period and shall be provided for no fewer than five renewal years.
(c) No issuer shall provide compensation to a solicitor or
solicitor firm, and no solicitor or solicitor firm shall receive
compensation, greater than the renewal compensation payable by the
replacing issuer on renewal contracts if an existing contract is
replaced.
(d) For purposes of this section, "commission" or "compensation"
includes pecuniary or nonpecuniary remuneration of any kind relating
to the sale or renewal of the contract, including, but not limited
to, bonuses, gifts, prizes, awards, and finders' fees.
1358.17. (a) (1) Medicare supplement contracts shall include a
renewal or continuation provision. The language or specifications of
the provision shall be consistent with subdivision (a) of Section
1365 and the rules adopted thereunder. The provision shall be
appropriately captioned and shall appear on the first page of the
contract, and shall include any reservation by the issuer of the
right to change prepaid or periodic charges and any automatic renewal
increases based on the enrollee's age.
(2) The contract shall contain the provisions required to be set
forth by Section 1300.67.4 of Title 28 of the California Code of
Regulations.
(b) (1) Except for contract amendments by which the issuer
effectuates a request made in writing by the enrollee, exercises a
specifically reserved right under a Medicare supplement contract, or
is required to reduce or eliminate benefits to avoid duplication of
Medicare benefits, all amendments to a Medicare supplement contract
after the date of issue or upon reinstatement or renewal that reduce
or eliminate benefits or coverage in the contract shall require a
signed acceptance by the subscriber. After the date of contract
issue, any amendment that increases benefits or coverage with a
concomitant increase in prepaid or periodic charges during the
contract term shall be agreed to in writing signed by the subscriber,
unless the benefits are required by the minimum standards for
Medicare supplement contracts, or if the increased benefits or
coverage is required by law. If a separate additional charge is made
for benefits provided in connection with contract amendments, the
charge shall be set forth in the contract.
(2) An issuer shall not in any way reduce or eliminate any benefit
or coverage under a Medicare supplement contract at any time after
the date of entering the contract, including dates of reinstatement
or renewal, unless and until the change is voluntarily agreed to in
writing signed by the subscriber or enrollee, or is required to
reduce or eliminate benefits to avoid duplication of Medicare
benefits. The issuer shall not increase benefits or coverage with a
concomitant increase in prepaid or periodic charges during the term
of the contract unless and until the change is voluntarily agreed to
in writing signed by the subscriber or enrollee or unless the
increased benefits or coverage is required by law or regulation.
(c) Medicare supplement contracts shall not provide for the
payment of benefits based on standards described as "usual and
customary," "reasonable and customary," or words of similar import.
(d) If a Medicare supplement contract contains any limitations
with respect to preexisting conditions, those limitations shall
appear as a separate paragraph of the contract and be labeled as
"Preexisting Condition Limitations."
(e) (1) Medicare supplement contracts shall have a notice
prominently printed in no less than 10-point uppercase type, on the
cover page of the contract or attached thereto stating that the
applicant shall have the right to return the contract within 30 days
of its receipt via regular mail, and to have any charges refunded in
a timely manner if, after examination of the contract, the covered
person is not satisfied for any reason. The return shall void the
contract from the beginning, and the parties shall be in the same
position as if no contract had been issued.
(2) For purposes of this section, a timely manner shall be no
later than 30 days after the issuer receives the returned contract.
(3) If the issuer fails to refund all prepaid or periodic charges
paid in a timely manner, then the applicant shall receive interest on
the paid charges at the legal rate of interest on judgments as
provided in Section 685.010 of the Code of Civil Procedure. The
interest shall be paid from the date the issuer received the returned
contract.
(f) (1) Issuers of health care service plan contracts that provide
hospital or medical expense coverage on an expense incurred or
indemnity basis to persons eligible for Medicare shall provide to
those applicants a guide to health insurance for people with Medicare
in the form developed jointly by the National Association of
Insurance Commissioners and the Centers for Medicare and Medicaid
Services and in a type size no smaller than 12-point type. Delivery
of the guide shall be made whether or not the contracts are
advertised, solicited, or issued for delivery as Medicare supplement
contracts as defined in this article. Except in the case of direct
response issuers, delivery of the guide shall be made to the
applicant at the time of application, and acknowledgment of receipt
of the guide shall be obtained by the issuer. Direct response issuers
shall deliver the guide to the applicant upon request, but not later
than at the time the contract is delivered.
(2) For the purposes of this section, "form" means the language,
format, type size, type proportional spacing, bold character, and
line spacing.
(g) As soon as practicable, but no later than 30 days prior to the
annual effective date of any Medicare benefit changes, an issuer
shall notify its enrollees and subscribers of modifications it has
made to Medicare supplement contracts in a format acceptable to the
director. The notice shall include both of the following:
(1) A description of revisions to the Medicare Program and a
description of each modification made to the coverage provided under
the Medicare supplement contract.
(2) Inform each enrollee as to when any adjustment in prepaid or
periodic charges is to be made due to changes in Medicare.
(h) The notice of benefit modifications and any adjustments of
prepaid or periodic charges shall be in outline form and in clear and
simple terms so as to facilitate comprehension.
(i) The notices shall not contain or be accompanied by any
solicitation.
(j) (1) Issuers shall provide an outline of coverage to all
applicants at the time application is presented to the prospective
applicant and, except for direct response policies, shall obtain an
acknowledgment of receipt of the outline from the applicant. If an
outline of coverage is provided at the time of application and the
Medicare supplement contract is issued on a basis which would require
revision of the outline, a substitute outline of coverage properly
describing the contract shall accompany the contract when it is
delivered and contain the following statement, in no less than
12-point type, immediately above the company name:
"NOTICE: Read this outline of coverage carefully. It is not
identical to the outline of coverage provided upon application and
the coverage originally applied for has not been issued."
(2) The outline of coverage provided to applicants pursuant to
this section consists of four parts: a cover page, information about
prepaid or periodic charges, disclosure pages, and charts displaying
the features of each benefit plan offered by the issuer. The outline
of coverage shall be in the language and format prescribed below in
no less than 12-point type. All benefit plans A-L shall be shown on
the cover page, and the plans that are offered by the issuer shall be
prominently identified. Information about prepaid or periodic
charges for plans that are offered shall be shown on the cover page
or immediately following the cover page and shall be prominently
displayed. The charge and mode shall be stated for all plans that are
offered to the prospective applicant. All possible charges for the
prospective applicant shall be illustrated.
(3) The disclosure pages shall be in the language and format
described below in no less than 12-point type.
INFORMATION ABOUT PREPAID OR PERIODIC CHARGES
Insert plan's name can only raise your charges if it raises the
charge for all contracts like yours in this state. If the charge is
based on the increasing age of the enrollee, include information
specifying when charges will change.
DISCLOSURES
Use this outline to compare benefits and charges among policies.
READ YOUR POLICY VERY CAREFULLY
This is only an outline describing the most important features of
your Medicare supplement plan contract. This is not the plan contract
and only the actual contract provisions will control. You must read
the contract itself to understand all of the rights and duties of
both you and insert the health care service plan's name.
RIGHT TO RETURN POLICY
If you find that you are not satisfied with your contract, you may
return it to insert plan's address. If you send the contract back to
us within 30 days after you receive it, we will treat the contract
as if it had never been issued and return all of your payments.
POLICY REPLACEMENT
If you are replacing other health coverage, do NOT cancel it until
you have actually received your new contract and are sure you want
to keep it.
NOTICE
This contract may not fully cover all of your medical costs.
Neither insert the health care service plan's name nor its agents are
connected with Medicare.
This outline of coverage does not give all the details of Medicare
coverage. Contact your local social security office or consult "The
Medicare Handbook" for further details and limitations applicable to
Medicare.
COMPLETE ANSWERS ARE VERY IMPORTANT
When you fill out the application for the new contract, be sure to
answer truthfully and completely all questions about your medical
and health history. The company may cancel your contract and refuse
to pay any claims if you leave out or falsify important medical
information. If the contract is guaranteed issue, this paragraph need
not appear. Review the application carefully before you sign it. Be
certain that all information has been properly recorded. The charts
displaying the features of each benefit plan offered by the issuer
shall use the uniform format and language shown in the charts set
forth in Section 17 of the Model Regulation to Implement the NAIC
Medicare Supplement Insurance Minimum Standards Model Act, as most
recently adopted by the National Association of Insurance
Commissioners. No more than four benefit plans may be shown on one
chart. For purposes of illustration, charts for each benefit plan are
set forth below. An issuer may use additional benefit plan
designations on these charts.)
(Include an explanation of any innovative benefits on the cover
page and in the chart, in a manner approved by the director.)
(k) Notwithstanding Section 1300.63.2 of Title 28 of the
California Code of Regulations, no issuer shall combine the evidence
of coverage and disclosure form into a single document relating to a
contract that supplements Medicare, or is advertised or represented
as a supplement to Medicare, with hospital or medical coverage.
(l) The director may adopt regulations to implement this article,
including, but not limited to, regulations that specify the required
information to be contained in the outline of coverage provided to
applicants pursuant to this section, including the format of tables,
charts, and other information.
(m) (1) Any health care service plan contract, other than a
Medicare supplement contract, a contract issued pursuant to a
contract under Section 1876 of the federal Social Security Act (42
U.S.C. Sec. 1395 et seq.), a disability income policy, or any other
contract identified in subdivision (b) of Section 1358.3, issued for
delivery in this state to persons eligible for Medicare, shall notify
enrollees under the contract that the contract is not a Medicare
supplement contract. The notice shall either be printed or attached
to the first page of the outline of coverage delivered to enrollees
under the contract, or if no outline of coverage is delivered, to the
first page of the contract delivered to enrollees. The notice shall
be in no less than 12-point type and shall contain the following
language:
"THIS CONTRACT IS NOT A MEDICARE SUPPLEMENT. If you are eligible
for Medicare, review the Guide to Health Insurance for People with
Medicare available from the company."
(2) Applications provided to persons eligible for Medicare for the
health insurance contracts described in paragraph (1) shall disclose
the extent to which the contract duplicates Medicare in a manner
required by the director. The disclosure statement shall be provided
as a part of, or together with, the application for the contract.
(n) A Medicare supplement contract that does not cover custodial
care shall, on the cover page of the outline of coverages, contain
the following statement in uppercase type: "THIS POLICY DOES NOT
COVER CUSTODIAL CARE IN A SKILLED NURSING CARE FACILITY."
(o) An issuer shall comply with all notice requirements of the
Medicare Prescription Drug, Improvement, and Modernization Act of
2003 (P.L. 108-173).
1358.18. In the interest of full and fair disclosure, and to assure
the availability of necessary consumer information to potential
subscribers or enrollees not possessing a special knowledge of
Medicare, health care service plans, or Medicare supplement
contracts, an issuer shall comply with the following provisions:
(a) Application forms shall include the following questions
designed to elicit information as to whether, as of the date of the
application, the applicant currently has Medicare supplement,
Medicare Advantage, Medi-Cal coverage, or another health insurance
policy or certificate or plan contract in force or whether a Medicare
supplement contract is intended to replace any other disability
policy or certificate, or plan contract, presently in force. A
supplementary application or other form to be signed by the applicant
and solicitor containing those questions and statements may be used.
"(Statements)
(1) You do not need more than one Medicare supplement policy or
contract.
(2) If you purchase this contract, you may want to evaluate your
existing health coverage and decide if you need multiple coverages.
(3) You may be eligible for benefits under Medi-Cal or Medicaid
and may not need a Medicare supplement contract.
(4) If after purchasing this contract you become eligible for
Medi-Cal, the benefits and premiums under your Medicare supplement
contract can be suspended, if requested, during your entitlement to
benefits under Medi-Cal or Medicaid for 24 months. You must request
this suspension within 90 days of becoming eligible for Medi-Cal or
Medicaid. If you are no longer entitled to Medi-Cal or Medicaid,
your suspended Medicare supplement contract or if that is no longer
available, a substantially equivalent contract, will be reinstituted
if requested within 90 days of losing Medi-Cal or Medicaid
eligibility. If the Medicare supplement contract provided coverage
for outpatient prescription drugs and you enrolled in Medicare Part D
while your contract was suspended, the reinstituted contract will
not have outpatient prescription drug coverage, but will otherwise be
substantially equivalent to your coverage before the date of the
suspension.
(5) If you are eligible for, and have enrolled in, a Medicare
supplement contract by reason of disability and you later become
covered by an employer or union-based group health plan, the benefits
and premiums under your Medicare supplement contract can be
suspended, if requested, while you are covered under the employer or
union-based group health plan. If you suspend your Medicare
supplement contract under these circumstances and later lose your
employer or union-based group health plan, your suspended Medicare
supplement contract or if that is no longer available, a
substantially equivalent contract, will be reinstituted if requested
within 90 days of losing your employer or union-based group health
plan. If the Medicare supplement contract provided coverage for
outpatient prescription drugs and you enrolled in Medicare Part D
while your contract was suspended, the reinstituted contract will not
have outpatient prescription drug coverage, but will otherwise be
substantially equivalent to your coverage before the date of the
suspension.
(6) Counseling services are available in this state to provide
advice concerning your purchase of Medicare supplement coverage and
concerning medical assistance through the Medi-Cal or Medicaid
Program, including benefits as a qualified Medicare beneficiary (QMB)
and a specified low-income Medicare beneficiary (SLMB). Information
regarding counseling services may be obtained from the California
Department of Aging.
(Questions)
If you lost or are losing other health insurance coverage and
received a notice from your prior insurer saying you were eligible
for guaranteed issue of a Medicare supplement insurance contract or
that you had certain rights to buy such a contract, you may be
guaranteed acceptance in one or more of our Medicare supplement
plans. Please include a copy of the notice from your prior insurer
with your application. PLEASE ANSWER ALL QUESTIONS.
(Please mark Yes or No below with an "X.")
To the best of your knowledge,
(1) (a) Did you turn 65 years of age in the last 6 months
Yes____ No____
(b) Did you enroll in Medicare Part B in the last 6 months
Yes____ No____
(c) If yes, what is the effective date ___________________
(2) Are you covered for medical assistance through California's
Medi-Cal program
NOTE TO APPLICANT: If you have a share of cost under the Medi-Cal
program, please answer NO to this question.
Yes____ No____
If yes,
(a) Will Medi-Cal pay your premiums for this Medicare supplement
contract
Yes____ No____
(b) Do you receive benefits from Medi-Cal OTHER THAN payments
toward your Medicare Part B premium
Yes____ No____
(3) (a) If you had coverage from any Medicare plan other than
original Medicare within the past 63 days (for example, a Medicare
Advantage plan or a Medicare HMO or PPO), fill in your start and end
dates below. If you are still covered under this plan, leave "END"
blank.
START __/__/__ END __/__/__
(b) If you are still covered under the Medicare plan, do you
intend to replace your current coverage with this new Medicare
supplement contract
Yes____ No____
(c) Was this your first time in this type of Medicare plan
Yes____ No____
(d) Did you drop a Medicare supplement contract to enroll in the
Medicare plan
Yes____ No____
(4) (a) Do you have another Medicare supplement policy or
certificate or contract in force
Yes____ No____
(b) If so, with what company, and what plan do you have (optional
for Direct Mailers)
Yes____ No____
(c) If so, do you intend to replace your current Medicare
supplement policy or certificate or contract with this contract
Yes____ No____
(5) Have you had coverage under any other health insurance within
the past 63 days (For example, an employer, union, or individual
plan)
Yes____ No____
(a) If so, with what companies and what kind of policy
________________________________________________
________________________________________________
________________________________________________
________________________________________________
(b) What are your dates of coverage under the other policy
START __/__/__ END __/__/__
(If you are still covered under the other policy, leave "END"
blank).
(b) Solicitors shall list any other health insurance policies or
plan contracts they have sold to the applicant as follows:
(1) List policies and contracts sold that are still in force.
(2) List policies and contracts sold in the past five years that
are no longer in force.
(c) An issuer issuing Medicare supplement contracts without a
solicitor or solicitor firm (a direct response issuer) shall return
to the applicant, upon delivery of the contract, a copy of the
application or supplemental forms, signed by the applicant and
acknowledged by the issuer.
(d) Upon determining that a sale will involve replacement of
Medicare supplement coverage, any issuer, other than a direct
response issuer, or its agent, shall furnish the applicant, prior to
issuance for delivery of the Medicare supplement contract, a notice
regarding replacement of Medicare supplement coverage. One copy of
the notice signed by the applicant and the agent, except where the
coverage is sold without an agent, shall be provided to the applicant
and an additional signed copy shall be retained by the issuer. A
direct response issuer shall deliver to the applicant at the time of
the issuance of the contract the notice regarding replacement of
Medicare supplement coverage.
(e) The notice required by subdivision (d) for an issuer shall be
provided in substantially the following form in no less than 10-point
type:
NOTICE TO APPLICANT REGARDING REPLACEMENT OF MEDICARE
SUPPLEMENT COVERAGE OR MEDICARE ADVANTAGE
(Company name and address)
SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE
According to your application information you have furnished, you
intend to lapse or otherwise terminate an existing Medicare
supplement policy or contract or Medicare Advantage plan and replace
it with a contract to be issued by Plan Name. Your contract to be
issued by Plan Name will provide 30 days within which you may decide
without cost whether you desire to keep the contract. You should
review this new coverage carefully. Compare it with all accident and
sickness coverage you now have. Terminate your present policy or
contract only if, after due consideration, you find that purchase of
this Medicare supplement coverage is a wise decision. STATEMENT TO
APPLICANT BY PLAN, SOLICITOR, SOLICITOR FIRM, OR OTHER
REPRESENTATIVE:
(1) I have reviewed your current medical or health coverage. The
replacement of coverage involved in this transaction does not
duplicate coverage, to the best of my knowledge. The replacement
contract is being purchased for the following reason (check
one):__Additional benefits. __No change in benefits, but lower
premiums or charges. __Fewer benefits and lower premiums or
charges.__Plan has outpatient prescription drug coverage and
applicant is enrolled in Medicare Part D.__Disenrollment from a
Medicare Advantage plan. Reasons for disenrollment:__ Other. (please
specify) ________
(2) You may not be immediately eligible for full coverage under
the new contract. This could result in denial or delay of a claim for
benefits under the new contract, whereas a similar claim might have
been payable under your present policy or contract.
(3) State law provides that your replacement Medicare supplement
contract may not contain new preexisting conditions, waiting periods,
elimination periods, or probationary periods. The plan will waive
any time periods applicable to preexisting conditions, waiting
periods, elimination periods, or probationary periods in the new
coverage for similar benefits to the extent that time was spent
(depleted) under the original contract.
(4) If you still wish to terminate your present policy or contract
and replace it with new coverage, be certain to truthfully and
completely answer any and all questions on the application concerning
your medical and health history. Failure to include all material
medical information on an application requesting that information may
provide a basis for the plan to deny any future claims and to refund
your prepaid or periodic payment as though your contract had never
been in force. After the application has been completed and before
you sign it, review it carefully to be certain that all information
has been properly recorded.
(5) Do not cancel your present Medicare supplement coverage until
you have received your new contract and are sure you want to keep it.
_________________________________________________
(Signature of Solicitor, Solicitor Firm, or
Other
Representative)
(Typed Name and Address of Plan,
Solicitor, or Solicitor Firm)
_________________________________________________
(Applicant's Signature)
_________________________________________________
(Date)
(f) The application form or other consumer information for persons
eligible for Medicare and used by an issuer shall contain as an
attachment a Medicare supplement buyer's guide in the form approved
by the director. The application or other consumer information,
containing as an attachment the buyer's guide, shall be mailed or
delivered to each applicant applying for that coverage at or before
the time of application and, to establish compliance with this
subdivision, the issuer shall obtain an acknowledgment of receipt of
the attached buyer's guide from each applicant. No issuer shall make
use of or otherwise disseminate any buyer's guide that does not
accurately outline current Medicare supplement benefits. No issuer
shall be required to provide more than one copy of the buyer's guide
to any applicant.
(g) An issuer may comply with the requirement of this section in
the case of group contracts by causing the subscriber (1) to
disseminate copies of the disclosure form containing as an attachment
the buyer's guide to all persons eligible under the group contract
at the time those persons are offered the Medicare supplement plan,
and (2) collecting and forwarding to the issuer an acknowledgment of
receipt of the disclosure form containing as an attachment the buyer'
s guide from each enrollee.
(h) Commencing January 1, 2007, an issuer shall not require or
request health information from an applicant who is guaranteed
issuance of any Medicare supplement coverage or require or request
the applicant to sign a form required by the federal Health Insurance
Portability and Accountability Act of 1996. The application form
shall include a clear and conspicuous statement that the applicant is
not required to provide health information or to sign a form
required by the federal Health Insurance Portability and
Accountability Act of 1996 during a period of guaranteed issuance of
any Medicare supplement coverage and shall inform the applicant of
periods of guaranteed issuance of Medicare supplement coverage. A
supplementary application or other form containing those statements
that the applicant and solicitor are required to sign may be used for
this purpose. This subdivision shall not prohibit an issuer from
requiring proof of eligibility for a guaranteed issuance of Medicare
supplement coverage.
1358.19. An issuer shall provide a copy of any Medicare supplement
advertisement intended for use in this state whether through written,
radio, or television medium to the director for review or approval.
1358.20. (a) An issuer, directly or through solicitors or other
representatives, shall do each of the following:
(1) Establish marketing procedures to ensure that any comparison
of Medicare supplement coverage by its solicitors or other
representatives will be fair and accurate.
(2) Establish marketing procedures to ensure that excessive
coverage is not sold or issued.
(3) Display prominently by type, stamp, or other appropriate
means, on the first page of the outline of coverage and contract, the
following:
"Notice to buyer: This Medicare supplement contract may not cover
all of your medical expenses."
(4) Inquire and otherwise make every reasonable effort to identify
whether a prospective applicant for a Medicare supplement contract
already has health care coverage and the types and amounts of that
coverage.
(5) Establish auditable procedures for verifying compliance with
this subdivision.
(b) In addition to the practices prohibited by this code or any
other law, the following acts and practices are prohibited:
(1) Twisting, which means knowingly making any misleading
representation or incomplete or fraudulent comparison of any
coverages or issuers for the purpose of inducing or tending to
induce, any person to lapse, forfeit, surrender, terminate, retain,
pledge, assign, borrow on, or convert any coverage or to take out
coverage with another plan or insurer.
(2) High pressure tactics, which means employing any method of
marketing having the effect of or tending to induce the purchase of
coverage through force, fright, threat, whether explicit or implied,
or undue pressure to purchase or recommend the purchase of coverage.
(3) Cold lead advertising, which means making use directly or
indirectly of any method of marketing that fails to disclose in a
conspicuous manner that a purpose of the method of marketing is the
solicitation of coverage and that contact will be made by a health
care service plan or its representative.
(c) The terms "Medicare supplement," "Medigap," "Medicare
Wrap-Around" and words of similar import shall not be used unless the
contract is issued in compliance with this article.
1358.21. (a) In recommending the purchase or replacement of any
Medicare supplement coverage, an issuer or its representative shall
make reasonable efforts to determine the appropriateness of a
recommended purchase or replacement.
(b) Any sale of a Medicare supplement contract that will provide
an individual more than one Medicare supplement policy or
certificate, or contract, is prohibited.
(c) An issuer shall not issue a Medicare supplement contract to an
individual enrolled in Medicare Part C unless the effective date of
the coverage is after the termination date of the individual's
coverage under Medicare Part C.
1358.22. (a) On or before March 1 of each year, an issuer shall
report the following information for every individual resident of
this state for which the issuer has in force more than one Medicare
supplement contract:
(1) Contract number.
(2) Date of issuance.
(b) The items set forth above shall be grouped by enrollee.
1358.225. (a) Every issuer shall, by June 30 of each year, file
with the director a list of its Medicare supplement contracts offered
or issued or outstanding in this state as of the end of the previous
calendar year.
(b) The list shall identify the filing issuer by name and address,
shall identify each type of contract it offers by name and form
number, if one is used, and shall differentiate between contracts
filed with and approved by the director in years prior to the
previous calendar year, and those filed and approved in the previous
calendar year.
(c) The list shall specifically identify all of the following:
(1) Contracts that are issued and outstanding in this state but
are no longer offered for sale.
(2) Contracts that, for any reason, were not filed and approved by
the director.
(3) Contracts for which the director's approval was withdrawn
within the previous calendar year.
(d) The director shall, on or before the first day of September
of each year provide the secretary with a list identifying each
contract by name and address and the information required to be
submitted by this section.
1358.23. (a) If a Medicare supplement contract replaces another
Medicare supplement policy or certificate, or contract, the replacing
issuer shall waive any time periods applicable to preexisting
conditions, waiting periods, elimination periods, and probationary
periods in the new Medicare supplement contract for similar benefits
to the extent that time was spent under the original policy or
certificate, or contract.
(b) If a Medicare supplement contract replaces another Medicare
supplement policy or certificate, or contract, that has been in
effect for at least six months, the replacing contract shall not
provide any time period applicable to preexisting conditions, waiting
periods, elimination periods and probationary periods for benefits
similar to those contained in the original policy or certificate, or
contract.
Disclaimer: These codes may not be the most recent version. California may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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