Section VI - Medicare Supplement Policies (Medigap)

Marketing and Selling of Medigap Policies - Compensation

The first-year commission on the sale of a Medicare supplement policy must be no more than 200% of the renewal commission on that sale. Renewals must be paid for 5 years. When a Medicare supplement is replaced, the first-year commission may not exceed the amount of the renewal commission.

Statutes and Regulations - General Statutes

Chapter 58, Article 54

Minimum Requirements - Required Disclosures - Filing Requirements for Advertising

Every insurer providing Medicare supplement insurance or benefits in the state must provide a copy of any Medicare supplement advertisement intended for use in the state to the Commissioner for review or approval.

Marketing and Selling of Medigap Policies - Premiums

Premiums may be based on either an insured's attained age or an insured's age at issue. >Attained age start lower but increase each year >Issue age start higher but remain level throughout the life of the policy

Minimum Requirements - Outline of Coverage

Insurers must provide all applicants for Medicare supplement insurance with an outline of coverage at the time of application. Unless the policy is being sold by direct response, other insurers must also obtain a written acknowledgement of receipt from the applicant. The language and format of the outline of coverage is prescribed by law.

Pre-existing Conditions

Medicare supplement policies may not exclude coverage for any pre-existing conditions that were diagnosed or treated more than 6 months prior to the effective date of coverage. After a medicare supplement policy has been in effect for 6 months, pre-existing conditions must be covered by the policy. If a Medicare supplement policy or certificate contains any limitations with respect to pre-existing conditions, those limitations must appear as a separate paragraph of the policy and be labeled as "Pre-existing Conditions Limitations."

Renewability - Guaranteed Renewable and Non-cancellable

Medicare supplement policies must be guaranteed renewable. The policy cannot be canceled or non-renewed for any reason other than: >Nonpayment of premium or >Material misrepresentation An issuer cannot cancel or non-renew a Medigap policy solely on the basis of the beneficiary's health status. A policy may not be written to terminate spousal coverage solely because of deteriorating health, or upon the insured's death, or any other event, except for nonpayment of premiums.

Minimum Requirements - Required Disclosures - Standards for Benefit Payment

Medicare supplement policies or certificates may not provide for the payment of benefits based on standards described as "usual and customary," "reasonable and customary" or words of similar import. Losses resulting from accident must be paid on the same basis as losses resulting from sickness. A policy that pays benefits according to the cost sharing percentages of Medicare must automatically change to coincide with any changes in the Medicare laws.

Marketing and Selling of Medigap Policies - Guaranteed Issue - Open Enrollment

Open Enrollment Period for Medigap policies that begins on the first day of the month that a person becomes eligible for Medicare Part B and lasts for 6 months. Medicare beneficiaries who apply for Medigap Coverage during the Open Enrollment period must be issued a policy. For individuals who enroll in Part B during the Part B initial enrollment period, the Medigap Open Enrollment periods starts on the first day of the month that they turn age 65.

Statutes and Regulations - Rules and Regulations

Ref: 11 NCAC: See NAIC Model 651

Minimum Requirements - Required Disclosures - Buyer's Guide

"A Guide to Health Insurance for People with Medicare" developed jointly by the NAIC and CMS. Insurers who sell hospital or medical expense coverage to persons eligible for Medicare must provide applicants for Medigap coverage or other health coverage with the buyer's guide. Except for direct response insurers, the Guide must be delivered at the time of application and a written acknowledgement of its receipt must be obtained by the issuer. Direct response issuers must deliver the Guide to the applicant upon request but not later than at the time the policy is delivered.

Standardized Medicare Supplement Plans - Core Benefits

>Payment of the Medicare Part A coinsurance and hospital costs (days 61 to 90, 60 lifetime reserve days, and an additional 365 days). >Payment of the hospice coinsurance for out-patient drugs and inpatient respite care. The beneficiary must meet Medicare's requirements, including a doctor's certification of a terminal illness. >Payment of the reasonable cost of the first 3 pints of blood, or their equivalent, under Medicare Parts A and B. >Payment of the beneficiary's portion of the 20% Part B coinsurance of Medicare-eligible expenses for medical services (doctor bills, hospital or home health care, and specified higher payments for certain services under the prospective payment system--after the part B deductible has been met). Plans generally must cover core benefits at 100%, but Plans K and L cover core benefits at a lower percentage

Marketing and Selling of Medigap Policies - Premiums - Attained Age

All types of solicitation materials must clearly indicate that fact (based on attained age), meaning that those premiums will increase each year. An illustration disclosure notice must state the dollar amount of the premium increase for the insured over a period of not less than 10 policy years, and display the insured's life expectancy at the beginning of the period. The illustration disclosure notice must state that premiums for other Medicare supplement policies that are based on an insured's issue age do not increase as the insured ages. The notice must include a statement that premiums on other Medicare supplement policies that are based on the insured's age at issue age should be compared to policies with premiums based on attained age.

Minimum Requirements - Required Disclosures - Notice on Other Health Insurance Policies

Any accident and sickness insurance policy or certificate, other than a Medicare supplement policy or disability income policy, issued to persons eligible for Medicare must contain a notice that the policy is not a Medicare supplement policy or certificate. The notice must either be printed or attached to the first page of the outline of coverage or to the first page of the policy or certificate.

Minimum Requirements - Required Disclosures - Signature Requirement on Riders or Endorsements

Any riders or endorsements that reduce or eliminate coverage must be signed by the insured, unless: >They were requested in writing by the insured or >Are being implemented to avoid duplication of benefits with Medicare Any riders or endorsements that increase benefits but also require a premium increase must be signed by the insured. The insured's signature of acceptance is not required if the benefit increase is required by law.

Marketing and Selling of Medigap Policies - Guaranteed Issue - Upon leaving employer group plans

If individuals delay signing up for Part B because they have employer group health coverage, their Open Enrollment period begins on the first day of the month that they lose their employer group health coverage.

Eligibility

Individual must have both Part A and Part B of Medicare. It is illegal to sell a Medigap policy to an individual who has a Medicare Advantage plan. Private plans that are designed to supplement Medicare by supplying coverage for gaps in Medicare benefits such as deductibles and coinsurance amounts.

Marketing and Selling of Medigap Policies - Guaranteed Issue - Upon leaving Medicare Advantage programs

Medicare beneficiaries who join a Medicare Advantage plan for the first time, but switch back to Original Medicare within 12 months of joining have a special right to buy a Medigap policy within 63 days of the date their Medicare Advantage coverage ends.

Renewability

Medicare supplement policies and certificates must include a renewal or continuation provision. The provision must appear on the first page of the policy under an appropriate caption. It must state notify the insured if the issuer has reserved the right to change premiums and must disclose any automatic renewal premium increases based on insured's age.

Minimum Requirements - Loss Ratios

Medicare supplement policies must return, in the aggregate, at least a certain percentage of premiums to beneficiaries in the form of benefits. The law does not require each beneficiary to get back a certain percentage of his/her premium in the form of benefits, but for a given class of Medicare supplement policies sold by an insurer, the total payout of benefits on those policies must equal at least a certain percentage of the premium collected on those policies (loss ratio). >65% for individual policies >75% for group policies

Minimum Requirements - Required Disclosures - Free Look

Medicare supplement policy must prominently contain an unconditional 30-day free look provision printed on or attached to its first page

Minimum Requirements - Required Disclosures - Notice of Changes

No later than 30 days prior to the annual effective date of any Medicare benefit changes, an issuer must notify its policyholders and certificate holders of modifications it has made to Medicare supplement insurance policies or certificates. Notice must: >Include a description of revisions to the Medicare program and a description of each modification made to the coverage provided under the Medicare supplement policy or certificate >Inform each policyholder or certificate holder as to when any premium adjustment is to be made due to changes in Medicare >Be in outline form and in clear and simple term >Not contain or be accompanied by any solicitation

Standardized Medicare Supplement Plans - Optional Benefits

Skilled Nursing Facility Care - payment of the beneficiary's coinsurance amount from the 21st day through the 100th day (not custodial care) Foreign Travel Emergency Care - payment of 80% of the billed charges for foreign emergency care that Medicare would have covered if it was provided in the USA. Care must begin during the insured's first 60 days outside of the USA. The calendar year deductible is $250. The lifetime maximum benefit is $50,000. Part A Deductible - payment of the Part A per-benefit-period deductible for inpatient hospital stays Part B Deductible - payment of the Part B annual deductible that beneficiaries must meet before Medicare beings paying Part B benefits Part B Excess Doctor Charges - Payment of 100% of any excess fees, which are limited to 15% above the Medicare-approved amount (if most of the beneficiary's doctors take Medicare assignment, this benefit may not be needed)

Standardized Medicare Supplement Plans

The Omnibus Budget Reconciliation Act of 1990 (OBRA) is a law that requires all Medicare supplement benefits to be standardized. Core Benefits - all plans must include Optional Benefits - included in some plans but not others