18808 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

[CMS–4139–N] 

RIN 0938–AP62 

Medicare Program; Recognition of 

NAIC Model Standards for Regulation 

of Medicare Supplemental Insurance 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Notice. 

SUMMARY: This notice announces 

changes made by the Genetic 

Information Nondiscrimination Act of 

2008 (GINA) and the Medicare 

Improvements for Patients and 

Providers Act of 2008 (MIPPA) to 

section 1882 of the Social Security Act 

(the Act), which governs Medicare 

supplemental insurance. This notice 

also recognizes that the Model 

Regulation adopted by the National 

Association of Insurance Commissioners 

(NAIC) on September 24, 2008, is 

considered to be the applicable NAIC 

Model Regulation for purposes of 

section 1882 of the Act, subject to our 

clarifications that are set forth in this 

notice. 

DATES: Amendments made by GINA 

apply to issuers of Medigap policies for 

policy years beginning on or after May 

21, 2009. Each State shall have up to 

July 1, 2009 to conform its regulatory 

program to the statutory changes made 

by GINA, and the revisions to the NAIC 

Model Regulation that reflect GINA. 

Amendments made by MIPPA apply to 

Medigap policies with an effective date 

on or after June 1, 2010. Each State shall 

have up to September 24, 2009 to 

conform its regulatory program to the 

statutory changes made by MIPPA and 

the revisions to the NAIC model law 

and regulations that reflect MIPPA. 

FOR FURTHER INFORMATION CONTACT: Jay 

Dobbs, (410) 786–1182 or Adam Shaw, 

(410) 786–1091. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. The Medicare Program 

The Medicare program was 

established by the Congress in 1965 

with the enactment of title XVIII of the 

Social Security Act (the Act). The 

program provides payment for certain 

medical expenses for persons 65 years 

of age or older, certain disabled 

individuals, and persons with end-stage 

renal disease. 

Medicare has three types of benefits: 

The ‘‘hospital insurance program’’ (Part 

A) covers inpatient care. The 

‘‘supplementary medical insurance 

program’’ (Part B) covers a wide range 

of medical services, including 

physicians’ services and outpatient 

hospital services, as well as equipment 

and supplies, such as prosthetic 

devices. The ‘‘Voluntary prescription 

drug benefit program’’ (Part D) covers 

outpatient prescription drugs not 

otherwise covered by Part B. 

Beneficiaries can get their Part A and 

B benefits in two ways. Under ‘‘Original 

Medicare,’’ beneficiaries get their Part A 

and Part B benefits directly from the 

Federal government. Beneficiaries can 

also choose to get their Part A and B 

benefits through private health plans, 

such as HMOs, that contract with 

Medicare. Most of these contracts are 

under Part C of Medicare, the Medicare 

Advantage Program. 

While Medicare provides extensive 

benefits, it is not designed to cover the 

total cost of medical care for Medicare 

beneficiaries. Under Original Medicare, 

even if the items or services are covered 

by Medicare, beneficiaries are 

responsible for various deductible, 

coinsurance, and in some cases 

copayment amounts. In addition, there 

are medical expenses that are not 

covered by Medicare at all. 

1. Deductibles 

Under Original Medicare, a 

beneficiary with Part A is responsible 

for the Part A inpatient hospital 

deductible for each ‘‘benefit period.’’ A 

benefit period is the period beginning 

on the first day of hospitalization and 

extending until the beneficiary has not 

been an inpatient of a hospital or skilled 

nursing facility for 60 consecutive days. 

The inpatient hospital deductible is 

updated annually in accordance with a 

statutory formula. The inpatient 

hospital deductible for calendar year 

(CY) 2008 is $1,024. For CY 2009, it is 

$1,068. 

A beneficiary with Part B is 

responsible for the Part B deductible for 

each calendar year. The deductible is 

indexed to the increase in the average 

cost of Part B services for aged 

beneficiaries. The Part B deductible is 

$135.00 for CY 2008 and CY 2009. 

2. Coinsurance 

As noted above, beneficiaries are 

generally responsible for paying 

coinsurance for covered items and 

services. For example, the coinsurance 

applicable to physicians’ services under 

Part B is generally 20 percent of the 

Medicare-approved amount for the 

service. If a physician or certain other 

suppliers accept assignment, the 

beneficiary is only responsible for the 

coinsurance amount. When 

beneficiaries receive covered services 

from physicians or other suppliers who 

do not accept assignment of their 

Medicare claims, the beneficiaries may 

also be responsible for some amounts in 

excess of the Medicare approved 

amount (‘‘excess charges’’). 

3. Noncovered Services 

Some items and services are not 

covered under either Part A or Part B; 

for example, custodial nursing home 

care, most dental care, eyeglasses, and 

most prescription drugs. 

Because Original Medicare covers 

many health care services and supplies, 

but beneficiaries are responsible for the 

out-of-pocket expenses described above, 

most people choose to get some type of 

additional coverage to pay some of the 

costs not covered by Original Medicare. 

For people who do not have coverage 

from a current or previous employer 

that performs this function, the most 

common coverage is Medicare 

supplemental insurance. Some 

beneficiaries may also try to defray 

some expenses with hospital indemnity 

insurance, nursing home or long term 

care insurance, or specified disease (for 

example, cancer) insurance. 

B. Medicare Supplemental Insurance 

A Medicare supplemental (Medigap) 

policy is a health insurance policy sold 

by private insurance companies 

specifically to fill ‘‘gaps’’ in Original 

Medicare coverage. A Medigap policy 

typically provides coverage for some or 

all of the deductible and coinsurance 

amounts applicable to Medicare-covered 

services, and sometimes covers items 

and services that are not covered by 

Medicare. 

Section 1882 of the Act sets forth 

requirements and standards that govern 

the sale of Medigap policies. It 

incorporates by reference, as part of the 

statutory requirements, certain 

minimum standards established by the 

National Association of Insurance 

Commissioners (NAIC). These minimum 

standards, known as the ‘‘NAIC Model 

Standards,’’ are found in the ‘‘Model 

Regulation to Implement the NAIC 

Medicare Supplement Insurance 

Minimum Standards Model Act’’ (NAIC 

Model), initially adopted by the NAIC 

on June 6, 1979, and revised to reflect 

subsequent legislative changes. 

Under current provisions of section 

1882 of the Act, Medigap policies 

generally may not be sold unless they 

conform to one of 14 standardized 

benefit packages that have been defined 

and designated by the NAIC. The ten 

original standardized plans were created 

pursuant to the Omnibus Budget 


tjames on PRODPC75 with NOTICES2
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18809 

Reconciliation Act of 1990 (OBRA–90), 

and designated ‘‘A’’ through ‘‘J’’. The 

Balanced Budget Act of 1997 (BBA) 

authorized plans ‘‘F’’ and ‘‘J’’ to have 

high deductible options that are counted 

as separate plans, and the Medicare 

Modernization Act of 2003 (MMA) 

created new plans ‘‘K’’ and ‘‘L’’, 

bringing the total to 14. Three States 

(Massachusetts, Minnesota, and 

Wisconsin) are permitted by statute to 

have different standardized Medigap 

plans and are sometimes referred to in 

this context as the ‘‘waiver’’ States. 

There are also policies issued before the 

OBRA–90 requirements became 

applicable in 1992 (‘‘prestandardized 

policies’’) that are still in effect. 

Effective January 1, 2006, Medigap 

policies can no longer be sold with a 

prescription drug benefit. Three of the 

10 original standardized Medigap plans, 

‘‘H’’, ‘‘I’’, and ‘‘J,’’ as well as some 

Medigap policies in the waiver States 

may still contain coverage for outpatient 

prescription drugs if the policies were 

sold before January 1, 2006. In addition, 

some pre-standardized plans cover 

drugs. If a beneficiary holding one of 

these policies enrolls in Medicare Part 

D prescription drug coverage, the 

prescription drug coverage is removed 

from the individual’s Medigap policy. 

Section 1882(b)(1) of the Act also 

provides that Medigap policies issued in 

a State are deemed to meet the Federal 

requirements if the State’s program 

regulating Medicare supplemental 

policies provides for the application of 

standards at least as stringent as those 

contained in the NAIC Model 

Regulation, and if the State 

requirements are equal to or more 

stringent than those set forth in section 

1882 of the Act. 

States must amend their regulatory 

programs to implement all new Federal 

statutory requirements and applicable 

changes to the NAIC Model Standards. 

Thus, States will now be required to 

implement the statutory changes made 

by GINA and MIPPA, and the changes 

to the NAIC Model Standards made to 

comport with the requirements of GINA 

and MIPPA. The revised NAIC Model 

Standards are attached to this notice. 

While States generally cannot modify 

the standardized benefit packages set 

out in the NAIC Model, with respect to 

other provisions, States retain the 

authority to enact regulatory provisions 

that are more stringent than those that 

are incorporated in the NAIC Model 

Standards or in the statutory 

requirements (see section 1882(b)(1)(A) 

of the Act). States that have received a 

waiver under section 1882(p)(6) of the 

Act may continue to authorize the sale 

of policies that contain different benefits 

than the 14 standardized benefit 

packages. However, those States are also 

required to amend their regulatory 

programs to implement the new Federal 

statutory requirements and changes to 

the NAIC Model Standards as a result of 

GINA and MIPPA. 

II. Legislative Changes Affecting 

Medigap Policies and Clarification 

A. Genetic Information 

Nondiscrimination Act of 2008 (GINA) 

GINA was enacted on May 21, 2008 

(Pub. L. 110–233). Title I of GINA 

amends the Employee Retirement 

Income Security Act of 1974 (ERISA), 

the Public Health Service Act (PHS Act), 

the Internal Revenue Code of 1986 

(Code), and the Social Security Act 

(SSA) to prohibit discrimination in 

health care coverage based on genetic 

information. Section 104 of GINA 

applies to Medicare supplemental 

(Medigap) coverage. The new 

requirements were added to section 

1882 of the Act in new subsections 

(s)(2)(E), (s)(2)(F), and (x). 

In the Medigap market, GINA 

prohibits issuers from denying or 

conditioning the issuance or 

effectiveness of a policy (including the 

imposition of any exclusion of benefits 

based on a preexisting condition) or 

discriminating in the pricing of the 

policy (including the adjustment of 

premium rates) based on an individual’s 

genetic information. However, if 

otherwise permitted under title XVIII of 

the Act, the issuer can still impose such 

limitations based on a manifested 

disease of an individual who is covered 

under the policy. 

GINA also generally prohibits 

Medigap issuers from requesting or 

requiring an individual or family 

member of an individual to undergo a 

genetic test. There are two exceptions. 

First, issuers are not precluded from 

obtaining and using the results of a 

genetic test to make a determination 

regarding payment, but they may only 

use the minimum amount of 

information necessary. 

Second, a health insurance issuer in 

the Medigap market may request (but 

not require) an individual or family 

member to undergo a genetic test solely 

for research purposes, if specific 

conditions are met. 

Medigap issuers are prohibited from 

requesting, requiring, or purchasing 

genetic information for underwriting 

purposes (as defined in GINA, see 

below) or prior to an individual’s 

enrollment under a policy. Furthermore, 

an exception to the prohibition on 

requesting, requiring, or purchasing 

genetic information is included for 

genetic information which is obtained 

incidental to the request, requirement, 

or purchase of other information 

concerning an individual, provided it is 

not used for underwriting purposes. 

GINA defines genetic information 

with respect to any individual as 

information about that individual’s 

genetic tests, the genetic tests of family 

members of the individual, and the 

manifestation of a disease or disorder in 

family members of the individual. The 

term genetic information also includes 

an individual’s request for, or receipt of, 

genetic services, or participation in 

clinical research that includes genetic 

services, but does not include 

information about the sex or age of any 

individual. 

Genetic services are further defined as 

a genetic test, genetic counseling (which 

includes obtaining, interpreting, or 

assessing genetic information), or 

genetic education. A genetic test is 

defined as an analysis of human DNA, 

RNA, chromosomes, proteins, or 

metabolites that detects genotypes, 

mutations, or chromosomal changes. 

The term does not include an analysis 

of proteins or metabolites that does not 

detect genotypes, mutations, or 

chromosomal changes, or an analysis of 

proteins or metabolites that is directly 

related to a manifested disease, 

disorder, or pathological condition that 

a health care professional with 

appropriate training and expertise could 

reasonably detect. 

The term ‘‘family member’’ is defined 

to include first-degree through fourthdegree relatives of an individual. 

Underwriting purposes are defined to 

include rules for, or determination of, 

eligibility for benefits, computation of 

premiums, application of pre-existing 

condition exclusions, and other 

activities related to the creation, 

renewal, or replacement of a policy. The 

statute also clarifies that references to 

genetic information concerning an 

individual include the genetic 

information of a fetus carried by a 

pregnant woman and of an embryo 

legally held by an individual utilizing 

an assisted reproductive technology. 

The provisions of GINA are effective 

with respect to health insurance issuers 

in the Medigap market for policy years 

beginning on or after May 21, 2009. 

States generally must incorporate the 

GINA provisions into their regulatory 

programs no later than July 1, 2009. The 

GINA requirements are enumerated in 

Section 24 of the new September 24, 

2008 Model regulation. 


tjames on PRODPC75 with NOTICES2
18810 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 

B. Medicare Improvements for Patients 

and Providers Act of 2008 (MIPPA) 

MIPPA was enacted on July 15, 2008 

(Pub. L. 110–275). Section 104(a) of 

MIPAA requires the Secretary of HHS to 

provide for implementation of the 

changes in the NAIC Model #651 

(Model Regulation to Implement the 

NAIC Medicare Supplement Insurance 

Minimum Standards Model Act) 

approved by the NAIC on March 11, 

2007. The changes, outlined below in 

subsection C, are effective for Medigap 

policies with effective dates on or after 

June 1, 2010. The States have until 

September 24, 2009 (one year past the 

date the changes to the Model were 

adopted by the NAIC) to conform their 

regulatory programs to the changes to 

the Model made pursuant to MIPPA. 

Section 104(b) of MIPAA amended 

section 1882(o) of the Act to require 

issuers of Medigap policies to make 

available at least Medicare 

supplemental policies with benefit 

packages classified as ‘‘C’’ or ‘‘F’’ if they 

wish to offer other Medigap plans in 

addition to the core benefit plan ‘‘A’’. 

Finally, section 104(c) of MIPPA 

provides a clarification that policies that 

cover out-of-pocket costs under 

Medicare Advantage Plans (established 

under Medicare Part C) must comply 

with the requirements of section 1882(o) 

of the Act. These two provisions were 

reflected in the Model adopted by the 

NAIC on September 24, 2008. 

C. Changes to the NAIC Model #651 

(Model Regulation To Implement the 

NAIC Medicare Supplement Insurance 

Minimum Standards Model Act) 

Approved by the NAIC on March 11, 

2007 

Responding to a statement in the 

conference report for the MMA 

regarding the benefits of modernizing 

the Medigap market, the NAIC 

formulated a task force consisting of 

State regulators, consumer advocates, 

industry representatives, and CMS staff 

to draft changes to the Medigap 

standardized plan structure with the 

intent of streamlining and updating the 

benefits in the plans. The changes 

drafted by the task force were approved 

by the NAIC on March 11, 2007, and 

were authorized by MIPPA as indicated 

above. The new Model (with the 

approved changes) was adopted by the 

NAIC on September 24, 2008. The 

changes apply to Medigap plans with 

policy years beginning on or after June 

1, 2010. 

The following are the changes to the 

standardized Medigap plans: 

• Added Hospice coverage as a Basic 

‘‘Core’’ benefit to all plans, as similar 

coverage was added as a basic benefit in 

plans ‘‘K’’ and ‘‘L’’. 

• Deleted coverage for Preventive and AtHome Recovery. The NAIC concluded that 

Medicare Part B has changed to cover many 

more preventive benefits, and the usefulness 

of this benefit in a Medigap policy was 

significantly reduced, covering only part of 

an annual physical after Medicare covered 

the beneficiaries’ initial physical. The NAIC 

also concluded that the At-Home Recovery 

benefit was confusing and difficult to 

understand and administer, and changes to 

Medicare had made this benefit less 

meaningful. 

• Created a new plan D, which is identical 

to the current plan D except that the AtHome Recovery benefit was deleted. 

• Created a new plan G, which is identical 

to the current plan G except that the 80% 

Medicare Part B Excess charge benefit would 

be replaced by a 100% Medicare Part B 

Excess charge benefit, and the At-Home 

Recovery benefit was deleted. 

• Eliminated the current ‘‘E’’, ‘‘H’’, ‘‘I’’ and 

‘‘J’’ plans as they duplicated existing Plans. 

• Created a new plan ‘‘M’’, which 

duplicates plan D but with a 50% 

coinsurance on the Part A deductible. 

• Created a new plan ‘‘N’’ which 

duplicates plan D with the Part B coinsurance being paid at 100%, less a $20 copay per physician visit and a co-pay of $50 

per emergency room visit, unless the 

beneficiary was admitted to the hospital. 

As a result of these changes, the new 

Model has two sets of standardized 

plans: Sections 8 and 9 of the Model 

outline the current benefits for 

standardized plans with an effective 

date of coverage prior to June 1, 2010 

(we will refer to these as the ‘‘1990 

standardized plans’’); and Section 8.1 

and 9.1 spell out the benefits for the 

standardized plans with an effective 

date for coverage on or after June 1, 

2010 (referred to as the ‘‘2010 

standardized plans’’). 

D. Clarification-Upon Exhaustive 

Benefit 

Section 8.B. of the revised NAIC 

Model describes the standards for basic 

benefits common to plans ‘‘A’’ through 

‘‘J’’. Section 8.D.(1) describes the 

standards for benefits common to plans 

‘‘K’’ through ‘‘L’’. Section 8.B.(3) and 

section 8.D.(1)(c) describe what is 

commonly referred to as the ‘‘upon 

exhaustion’’ benefit. Medicare provides 

inpatient hospital benefits for up to 90 

days in a benefit period, plus any of the 

60 ‘‘lifetime reserve days’’ that have not 

already been used. After a beneficiary 

exhausts this coverage, including the 

lifetime reserve days, all Medigap 

policies cover 100 percent of Medicare 

Part A eligible expenses for 

hospitalization paid at the applicable 

prospective payment system (PPS) rate 

or other appropriate Medicare standard 

of payment, subject to a lifetime 

maximum benefit of 365 days. We note 

that the last sentence of section 8.B.(3) 

and of section 8.D.(1)(c) is not part of 

the benefit description of the ‘‘upon 

exhaustion’’ benefit. Therefore, a State’s 

failure to include this language in its 

regulatory program does not affect the 

State’s compliance with Federal 

Medigap standards and requirements. 

Similarly, section 17.D(4) of the Model 

sets forth all the outlines of coverage for 

plans ‘‘A’’ through ‘‘K’’. Each outline 

contains, at the bottom of its first page, 

a ‘‘Notice’’ to prospective purchasers. 

The final sentence of this notice is not 

part of the benefit description, and 

therefore a State’s failure to include this 

language in the outlines of coverage 

does not affect the State’s compliance 

with Federal Medigap standards and 

requirements. 

III. Standardized Benefit Packages 

The following is a list of the 

standardized Medigap benefit packages, 

with a cross-reference to the sections of 

the attached NAIC Model where the 

packages are described in detail. The 

Model Regulation, adopted by the NAIC 

on September 24, 2008, is reprinted at 

the end of this notice. The NAIC has 

granted permission for the NAIC Model 

Regulation to be published and 

reproduced. Under 1 CFR 2.6, there is 

no restriction on the republication of 

material as it appears in the Federal 

Register. 

1990 Standardized Plans With an 

Effective Date of Coverage Prior to June 

1, 2010. 

• Plan ‘‘A’’ (Core Benefit Plan) (NAIC 

Model Section 9.E.(1)) 

• Plan ‘‘B’’ (NAIC Model Section 

9.E.(2)) 

• Plan ‘‘C’’ (NAIC Model Section 

9.E.(3)) 

• Plan ‘‘D’’ (NAIC Model Section 

9.E.(4)) 

• Plan ‘‘E’’ (NAIC Model Section 

9.E.(5)) 

• Plan ‘‘F’’ (NAIC Model Section 

9.E.(6)) 

• Plan ‘‘F’’ High Deductible (NAIC 

Model Section 9.E.(7)) 

• Plan ‘‘G’’ (NAIC Model Section 

9.E.(8)) 

• Plan ‘‘H’’ (NAIC Model Section 

9.E.(9)) 

• Plan ‘‘I’’ (NAIC Model Section 

9.E.(10)) 

• Plan ‘‘J’’ (NAIC Model Section 

9.E.(11)) 

• Plan ‘‘J’’ High Deductible (NAIC 

Model Section 9.E.(12)) 

• Plan ‘‘K’’ (NAIC Model Section 

9.F.(1)) 

• Plan ‘‘L’’ (NAIC Model Section 

9.F.(2)) 


tjames on PRODPC75 with NOTICES2
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18811 

2010 Standardized Plans With an 

Effective Date of Coverage On or After 

June 1, 2010. 

• Plan ‘‘A’’ (Core Benefit Plan) (NAIC 

Model Section 9.1.E.(1)) 

• Plan ‘‘B’’ (NAIC Model Section 

9.1.E.(2)) 

• Plan ‘‘C’’ (NAIC Model Section 

9.1.E.(3)) 

• Plan ‘‘D’’ (NAIC Model Section 

9.1.E.(4)) 

• Plan ‘‘F’’ (NAIC Model Section 

9.1.E.(5)) 

• Plan ‘‘F’’ High Deductible (NAIC 

Model Section 9.1.E.(6)) 

• Plan ‘‘G’’ (NAIC Model Section 

9.1.E.(7)) 

• Plan ‘‘K’’ (NAIC Model Section 

9.1.E.(8)) 

• Plan ‘‘L’’ (NAIC Model Section 

9.1.E.(9)) 

• Plan ‘‘M’’ (NAIC Model Section 

9.1.E.(10)) 

• Plan ‘‘N’’ High Deductible (NAIC 

Model Section 9.1.E.(11)) 

Authority: Sections 1882(s)(2)(E), 

1882(s)(2)(F) and 1882(x) of the Social 

Security Act (42 U.S.C. 1395ss(s)(x)), Section 

104 of Public Law 110–275. 

(Catalog of Federal Domestic Assistance 

Program No. 93.774, Medicare— 

Supplementary Medical Insurance Program) 

Dated: March 9, 2009. 

Charlene Frizzera, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: March 25, 2009. 

Charles E. Johnson, 

Acting Secretary. 

Revisions to Model 651 

As adopted by the NAIC, September 24, 

2008. 

MODEL REGULATION TO 

IMPLEMENT THE NAIC MEDICARE 

SUPPLEMENT INSURANCE MINIMUM 

STANDARDS MODEL ACT 

Table of Contents 

Section 1. Purpose 

Section 2. Authority 

Section 3. Applicability and Scope 

Section 4. Definitions 

Section 5. Policy Definitions and Terms 

Section 6. Policy Provisions 

Section 7. Minimum Benefit Standards for 

Pre-Standardized Medicare Supplement 

Benefit Plan Policies or Certificates Issued 

for Delivery Prior to [insert effective date 

adopted by state] 

Section 8. Benefit Standards for 1990 

Standardized Medicare Supplement 

Benefit Plan Policies or Certificates Issued 

for Delivery After [insert effective date 

adopted by state] and Prior to June 1, 2010 

Section 8.1 Benefit Standards for 2010 

Standardized Medicare Supplement 

Benefit Plan Policies or Certificates Issued 

for Delivery on or After June 1, 2010 

Section 9. Standard Medicare Supplement 

Benefit Plans for 1990 Standardized 

Medicare Supplement Benefit Plan Policies 

or Certificates Issued for Delivery After 

[insert effective date adopted by state] and 

Prior to June 1, 2010 

Section 9.1 Standard Medicare Supplement 

Benefit Plans for 2010 Standardized 

Medicare Supplement Benefit Plan Policies 

or Certificates Issued for Delivery on or 

After June 1, 2010 

Section 10. Medicare Select Policies and 

Certificates 

Section 11. Open Enrollment 

Section 12. Guaranteed Issue for Eligible 

Persons 

Section 13. Standards for Claims Payment 

Section 14. Loss Ratio Standards and Refund 

or Credit of Premium 

Section 15. Filing and Approval of Policies 

and Certificates and Premium Rates 

Section 16. Permitted Compensation 

Arrangements 

Section 17. Required Disclosure Provisions 

Section 18. Requirements for Application 

Forms and Replacement Coverage 

Section 19. Filing Requirements for 

Advertising 

Section 20. Standards for Marketing 

Section 21. Appropriateness of 

Recommended Purchase and Excessive 

Insurance 

Section 22. Reporting of Multiple Policies 

Section 23. Prohibition Against Preexisting 

Conditions, Waiting Periods, Elimination 

Periods and Probationary Periods in 

Replacement Policies or Certificates 

Section 24. Prohibition Against Use of 

Genetic Information and Requests for 

Genetic Testing 

Section 25. Separability 

Section 26. Effective Date 

Appendix A Reporting Form for Calculation 

of Loss Ratios 

Appendix B Form for Reporting Duplicate 

Policies 

Appendix C Disclosure Statements 

Section 1. Purpose 

The purpose of this regulation is to 

provide for the reasonable 

standardization of coverage and 

simplification of terms and benefits of 

Medicare supplement policies; to 

facilitate public understanding and 

comparison of such policies; to 

eliminate provisions contained in such 

policies which may be misleading or 

confusing in connection with the 

purchase of such policies or with the 

settlement of claims; and to provide for 

full disclosures in the sale of accident 

and sickness insurance coverages to 

persons eligible for Medicare. 

Section 2. Authority 

This regulation is issued pursuant to 

the authority vested in the 

commissioner under [cite appropriate 

section of state law providing authority 

for minimum benefit standards 

regulations or the NAIC Medicare 

Supplement Insurance Minimum 

Standards Model Act]. 

Editor’s Note: Wherever the term 

‘‘commissioner’’ appears, the title of the chief 

insurance regulatory official of the state 

should be inserted. 

Section 3. Applicability and Scope 

A. Except as otherwise specifically 

provided in Sections 7, 13, 14, 17 and 

22, this regulation shall apply to: 

(1) All Medicare supplement policies 

delivered or issued for delivery in this 

state on or after the effective date of this 

regulation; and 

(2) All certificates issued under group 

Medicare supplement policies, which 

certificates have been delivered or 

issued for delivery in this state. 

B. This regulation shall not apply to 

a policy or 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. 

Section 4. Definitions 

For purposes of this regulation: 

A. ‘‘Applicant’’ means: 

(1) In the case of an individual 

Medicare supplement policy, the person 

who seeks to contract for insurance 

benefits, and 

(2) In the case of a group Medicare 

supplement policy, the proposed 

certificate holder. 

B. ‘‘Bankruptcy’’ means when 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. ‘‘Certificate’’ means any certificate 

delivered or issued for delivery in this 

state under a group Medicare 

supplement policy. 

D. ‘‘Certificate form’’ means the form 

on which the certificate is delivered or 

issued for delivery by the issuer. 

E. ‘‘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 sixtythree (63) days. 

F.(1) ‘‘Creditable coverage’’ means, 

with respect to an individual, coverage 

of the individual provided under any of 

the following: 

(a) A group health plan; 

(b) Health insurance coverage; 

(c) Part A or Part B of Title XVIII of 

the Social Security Act (Medicare); 

(d) Title XIX of the Social Security 

Act (Medicaid), other than coverage 

consisting solely of benefits under 

section 1928; 

(e) Chapter 55 of Title 10 United 

States Code (CHAMPUS); 


tjames on PRODPC75 with NOTICES2
18812 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 

(f) A medical care program of the 

Indian Health Service or of a tribal 

organization; 

(g) A state health benefits risk pool; 

(h) A health plan offered under 

chapter 89 of Title 5 United States Code 

(Federal Employees Health Benefits 

Program); 

(i) A public health plan as defined in 

federal regulation; and 

(j) A health benefit plan under Section 

5(e) of the Peace Corps Act (22 United 

States Code 2504(e)). 

(2) ‘‘Creditable coverage’’ shall not 

include one or more, or any 

combination of, the following: 

(a) Coverage only for accident 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 on-site medical 

clinics; and 

(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 of insurance 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; and 

(c) Such other similar, limited 

benefits as are specified in federal 

regulations. 

(4) ‘‘Creditable coverage’’ shall not 

include the following benefits if offered 

as independent, non-coordinated 

benefits: 

(a) Coverage only for a specified 

disease or illness; and 

(b) Hospital indemnity or other fixed 

indemnity insurance. 

(5) ‘‘Creditable coverage’’ shall not 

include the following if it is offered as 

a separate policy, certificate or contract 

of insurance: 

(a) Medicare supplemental health 

insurance as defined under section 

1882(g)(1) of the Social Security Act; 

(b) Coverage supplemental to the 

coverage provided under chapter 55 of 

title 10, United States Code; and 

(c) Similar supplemental coverage 

provided to coverage under a group 

health plan. 

Drafting Note: The Health Insurance 

Portability and Accountability Act of 1996 

(HIPAA) specifically addresses separate, noncoordinated benefits in the group market at 

PHSA § 2721(d)(2) and the individual market 

at § 2791(c)(3). HIPAA also references 

excepted benefits at PHSA §§ 2701(c)(1), 

2721(d), 2763(b) and 2791(c). In addition, 

creditable coverage has been addressed in an 

interim final rule (62 FR at 16960–16962 

(April 8, 1997)) issued by the Secretary 

pursuant to HIPAA, and may be addressed in 

subsequent regulations. 

G. ‘‘Employee welfare benefit plan’’ 

means a plan, fund or program of 

employee benefits as defined in 29 

U.S.C. Section 1002 (Employee 

Retirement Income Security Act). 

H. ‘‘Insolvency’’ means when an 

issuer, licensed to transact the business 

of insurance 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. 

Drafting Note: If the state law definition of 

insolvency differs from the above definition, 

please insert the state law definition. 

I. ‘‘Issuer’’ includes insurance 

companies, fraternal benefit societies, 

health care service plans, health 

maintenance organizations, and any 

other entity delivering or issuing for 

delivery in this state Medicare 

supplement policies or certificates. 

J. ‘‘Medicare’’ means the ‘‘Health 

Insurance for the Aged Act,’’ Title XVIII 

of the Social Security Amendments of 

1965, as then constituted or later 

amended. 

K. ‘‘Medicare Advantage plan’’ means 

a plan of coverage for health benefits 

under Medicare Part C as defined in 

[refer to definition of Medicare 

Advantage plan in 42 U.S.C. 1395w– 

28(b)(1)], and includes: 

(1) Coordinated care plans that 

provide health care services, including 

but not limited to health maintenance 

organization plans (with or without a 

point-of-service option), plans offered 

by provider-sponsored organizations, 

and preferred provider organization 

plans; 

(2) Medical savings account plans 

coupled with a contribution into a 

Medicare Advantage plan medical 

savings account; and 

(3) Medicare Advantage private feefor-service plans. 

Drafting Note: The Medicare Prescription 

Drug, Improvement and Modernization Act 

of 2003 (MMA) redesignates ‘‘Medicare + 

Choice’’ as ‘‘Medicare Advantage’’ effective 

January 1, 2004. 

L. ‘‘Medicare supplement policy’’ 

means a group or individual policy of 

[accident and sickness] insurance or a 

subscriber contract [of hospital and 

medical service associations or health 

maintenance organizations], other than 

a policy issued pursuant to a contract 

under Section 1876 of the federal Social 

Security Act (42 U.S.C. Section 1395 et 

seq.) or an issued policy under a 

demonstration project specified in 42 

U.S.C. 1395ss(g)(1), which 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. ‘‘Medicare supplement 

policy’’ does not include Medicare 

Advantage plans established under 

Medicare Part C, Outpatient 

Prescription Drug plans established 

under Medicare Part D, or any Health 

Care Prepayment Plan (HCPP) that 

provides benefits pursuant to an 

agreement under § 1833(a)(1)(A) of the 

Social Security Act. 

Drafting Note: Under § 104(c) of the 

Medicare Improvements for Patients and 

Providers Act of 2008 (MIPPA), policies that 

are advertised, marketed or designed 

primarily to cover out-of-pocket costs under 

Medicare Advantage Plans (established under 

Medicare Part C) must comply with the 

Medicare supplement requirements of 

§ 1882(o) of the Social Security Act. 

M. ‘‘Pre-Standardized Medicare 

supplement benefit plan,’’ ‘‘PreStandardized benefit plan’’ or ‘‘PreStandardized plan’’ means a group or 

individual policy of Medicare 

supplement insurance issued prior to 

[insert effective date on which the state 

made its revisions to conform to the 

Omnibus Budget Reconciliation Act of 

1990]. 

N. ‘‘1990 Standardized Medicare 

supplement benefit plan,’’ ‘‘1990 

Standardized benefit plan’’ or ‘‘1990 

plan’’ means a group or individual 

policy of Medicare supplement 

insurance issued on or after [insert 

effective date of 1990 plan] and prior to 

June 1, 2010 and includes Medicare 

supplement insurance policies and 

certificates renewed on or after that date 

which are not replaced by the issuer at 

the request of the insured. 

O. ‘‘2010 Standardized Medicare 

supplement benefit plan,’’ ‘‘2010 

Standardized benefit plan’’ or ‘‘2010 

plan’’ means a group or individual 

policy of Medicare supplement 

insurance issued on or after June 1, 

2010. 

P. ‘‘Policy form’’ means the form on 

which the policy is delivered or issued 

for delivery by the issuer. 


tjames on PRODPC75 with NOTICES2
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18813 

Q. ‘‘Secretary’’ means the Secretary of 

the United States Department of Health 

and Human Services. 

Section 5. Policy Definitions and Terms 

No policy or certificate may be 

advertised, solicited or issued for 

delivery in this state as a Medicare 

supplement policy or certificate unless 

the policy or certificate contains 

definitions or terms that conform to the 

requirements of this section. 

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 

similar words of description or 

characterization. 

(1) 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 insured person which 

is the direct result of an accident, 

independent of disease or bodily 

infirmity or any other cause, and occurs 

while insurance coverage is in force.’’ 

(2) 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, or 

motor vehicle no-fault plan, unless 

prohibited by law. 

B. ‘‘Benefit period’’ or ‘‘Medicare 

benefit period’’ shall not be defined 

more restrictively than as defined in the 

Medicare program. 

C. ‘‘Convalescent nursing home,’’ 

‘‘extended care facility,’’ or ‘‘skilled 

nursing facility’’ shall not be defined 

more restrictively than as defined in the 

Medicare program. 

D. ‘‘Health care expenses’’ means, for 

purposes of Section 14, expenses of 

health maintenance organizations 

associated with the delivery of health 

care services, which expenses are 

analogous to incurred losses of insurers. 

E. ‘‘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. 

F. ‘‘Medicare’’ shall be defined in the 

policy and certificate. Medicare may be 

substantially defined as ‘‘The Health 

Insurance for the Aged Act, Title XVIII 

of the Social Security Amendments of 

1965 as Then Constituted or Later 

Amended,’’ or ‘‘Title I, Part I of Public 

Law 89–97, as Enacted by the EightyNinth Congress of the United States of 

America and popularly known as the 

Health Insurance for the Aged Act, as 

then constituted and any later 

amendments or substitutes thereof,’’ or 

words of similar import. 

G. ‘‘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. 

H. ‘‘Physician’’ shall not be defined 

more restrictively than as defined in the 

Medicare program. 

I. ‘‘Sickness’’ shall not be defined to 

be more restrictive than the following: 

‘‘Sickness means illness or disease of an 

insured person which first manifests 

itself after the effective date of insurance 

and while the insurance is in force.’’ 

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. 

Section 6. Policy Provisions 

A. Except for permitted preexisting 

condition clauses as described in 

Section 7A(1), Section 8A(1), and 

Section 8.1A(1) of this regulation, no 

policy or certificate may be advertised, 

solicited or issued for delivery in this 

state as a Medicare supplement policy if 

the policy or certificate contains 

limitations or exclusions on coverage 

that are more restrictive than those of 

Medicare. 

B. No Medicare supplement policy or 

certificate may use waivers to exclude, 

limit or reduce coverage or benefits for 

specifically named or described 

preexisting diseases or physical 

conditions. 

C. No Medicare supplement policy or 

certificate in force in the state shall 

contain benefits that duplicate benefits 

provided by Medicare. 

D. (1) Subject to Sections 7A(4), (5) 

and (7), and 8A(4) and (5) of this 

regulation, a Medicare supplement 

policy with benefits for outpatient 

prescription drugs in existence prior to 

January 1, 2006 shall be renewed for 

current policyholders who do not enroll 

in Part D at the option of the 

policyholder. 

(2) A Medicare supplement policy 

with benefits for outpatient prescription 

drugs shall not be issued after December 

31, 2005. 

(3) After December 31, 2005, a 

Medicare supplement policy with 

benefits for outpatient prescription 

drugs may not be renewed after the 

policyholder enrolls in Medicare Part D 

unless: 

(a) The policy is modified to eliminate 

outpatient prescription coverage for 

expenses of outpatient prescription 

drugs incurred after the effective date of 

the individual’s coverage under a Part D 

plan and; 

(b) Premiums are adjusted to reflect 

the elimination of outpatient 

prescription drug coverage at the time of 

Medicare Part D enrollment, accounting 

for any claims paid, if applicable. 

Drafting Note: After December 31, 2005, 

MMA prohibits issuers of Medicare 

supplement policies from renewing 

outpatient prescription drug benefits for both 

pre-standardized and standardized Medicare 

supplement policyholders who enroll in 

Medicare Part D. Before May 15, 2006, these 

beneficiaries have two options: Retain their 

current plan with outpatient prescription 

drug coverage removed and premiums 

adjusted appropriately; or enroll in a 

different policy as guaranteed for 

beneficiaries affected by these changes 

mandated by MMA and outlined in Section 

12, ‘‘Guaranteed Issue for Eligible Persons.’’ 

After May 15, 2006 however, these 

beneficiaries will only retain a right to keep 

their original policies, stripped of outpatient 

prescription drug coverage, and lose the right 

to guaranteed issue of the plans described in 

Section 12. 

Section 7. Minimum Benefit Standards 

for Pre-Standardized Medicare 

Supplement Benefit Plan Policies or 

Certificates Issued for Delivery Prior to 

[insert effective date adopted by state] 

No policy or certificate may be 

advertised, solicited or issued for 

delivery in this state as a Medicare 

supplement policy or certificate unless 

it meets or exceeds the following 

minimum standards. These are 

minimum standards and do not 

preclude the inclusion of other 

provisions or benefits which are not 

inconsistent with these standards. 

Drafting Note: This section has been 

retained for transitional purposes. The 

purpose of this section is to govern all 

policies issued prior to the date a state makes 

its revisions to conform to the Omnibus 

Budget Reconciliation Act of 1990 (Pub. L. 

101–508). 

A. General Standards. The following 

standards apply to Medicare 

supplement policies and certificates and 

are in addition to all other requirements 

of this regulation. 

(1) A Medicare supplement policy or 

certificate shall not exclude or limit 

benefits for losses incurred more than 

six (6) months from the effective date of 

coverage because it involved a 

preexisting condition. The policy or 

certificate 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 

(6) months before the effective date of 

coverage. 


tjames on PRODPC75 with NOTICES2
18814 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 

Drafting Note: States that have adopted the 

NAIC Individual Accident and Sickness 

Insurance Minimum Standards Model Act 

should recognize a conflict between Section 

6B of that Act and this subsection. It may be 

necessary to include additional language in 

the Minimum Standards Model Act that 

recognizes the applicability of this 

preexisting condition rule to Medicare 

supplement policies and certificates. 

(2) A Medicare supplement policy or 

certificate shall not indemnify against 

losses resulting from sickness on a 

different basis than losses resulting from 

accidents. 

(3) A Medicare supplement policy or 

certificate 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, co-payment, or coinsurance 

amounts. Premiums may be modified to 

correspond with such changes. 

Drafting Note: This provision was prepared 

so that premium changes can be made based 

upon the changes in policy benefits that will 

be necessary because of changes in Medicare 

benefits. States may wish to redraft this 

provision so as to coincide with their 

particular authority. 

(4) A ‘‘non-cancellable,’’ ‘‘guaranteed 

renewable,’’ or ‘‘non-cancellable and 

guaranteed renewable’’ Medicare 

supplement policy shall not: 

(a) Provide for termination of coverage 

of a spouse solely because of the 

occurrence of an event specified for 

termination of coverage of the insured, 

other than the nonpayment of premium; 

or 

(b) Be cancelled or non-renewed by 

the issuer solely on the grounds of 

deterioration of health. 

(5)(a) Except as authorized by the 

commissioner of this state, an issuer 

shall neither cancel nor non-renew a 

Medicare supplement policy or 

certificate for any reason other than 

nonpayment of premium or material 

misrepresentation. 

(b) If a group Medicare supplement 

insurance policy is terminated by the 

group policyholder and not replaced as 

provided in Paragraph (5)(d), the issuer 

shall offer certificate holders an 

individual Medicare supplement policy. 

The issuer shall offer the certificate 

holder at least the following choices: 

(i) An individual Medicare 

supplement policy currently offered by 

the issuer having comparable benefits to 

those contained in the terminated group 

Medicare supplement policy; and 

(ii) An individual Medicare 

supplement policy which provides only 

such benefits as are required to meet the 

minimum standards as defined in 

Section 8.1B of this regulation. 

Drafting Note: Group contracts in force 

prior to the effective date of the Omnibus 

Budget Reconciliation Act (OBRA) of 1990 

may have existing contractual obligations to 

continue benefits contained in the group 

contract. This section is not intended to 

impair such obligations. 

(c) If membership in a group is 

terminated, the issuer shall: 

(i) Offer the certificate holder the 

conversion opportunities described in 

Subparagraph (b); or 

(ii) At the option of the group 

policyholder, offer the certificate holder 

continuation of coverage under the 

group policy. 

(d) If a group Medicare supplement 

policy is replaced by another group 

Medicare supplement policy purchased 

by the same policyholder, the issuer of 

the replacement policy shall offer 

coverage to all persons covered under 

the old group policy on its date of 

termination. Coverage under the new 

group policy shall not result in any 

exclusion for preexisting conditions that 

would have been covered under the 

group policy being replaced. 

Drafting Note: Rate increases otherwise 

authorized by law are not prohibited by this 

Paragraph (5). 

(6) Termination of a Medicare 

supplement policy or certificate shall be 

without prejudice to any continuous 

loss which commenced while the policy 

was in force, but the extension of 

benefits beyond the period during 

which the policy was in force may be 

predicated upon the continuous total 

disability of the insured, limited to the 

duration of the policy benefit period, if 

any, or to payment of the maximum 

benefits. Receipt of Medicare Part D 

benefits will not be considered in 

determining a continuous loss. 

(7) If a Medicare supplement policy 

eliminates an outpatient prescription 

drug benefit as a result of requirements 

imposed by the Medicare Prescription 

Drug, Improvement, and Modernization 

Act of 2003, the modified policy shall 

be deemed to satisfy the guaranteed 

renewal requirements of this subsection. 

B. Minimum Benefit Standards. 

(1) Coverage of Part A Medicare 

eligible expenses for hospitalization to 

the extent not covered by Medicare from 

the 61st day through the 90th day in any 

Medicare benefit period; 

(2) Coverage for either all or none of 

the Medicare Part A inpatient hospital 

deductible amount; 

(3) Coverage of Part A Medicare 

eligible expenses incurred as daily 

hospital charges during use of 

Medicare’s lifetime hospital inpatient 

reserve days; 

(4) Upon exhaustion of all Medicare 

hospital inpatient coverage including 

the lifetime reserve days, coverage of 

ninety percent (90%) of all Medicare 

Part A eligible expenses for 

hospitalization not covered by Medicare 

subject to a lifetime maximum benefit of 

an additional 365 days; 

(5) Coverage under Medicare Part A 

for the reasonable cost of the first three 

(3) pints of blood (or equivalent 

quantities of packed red blood cells, as 

defined under federal regulations) 

unless replaced in accordance with 

federal regulations or already paid for 

under Part B; 

(6) Coverage for the coinsurance 

amount, or in the case of hospital 

outpatient department services paid 

under a prospective payment system, 

the co-payment amount, of Medicare 

eligible expenses under Part B 

regardless of hospital confinement, 

subject to a maximum calendar year outof-pocket amount equal to the Medicare 

Part B deductible [$100]; 

(7) Effective January 1, 1990, coverage 

under Medicare Part B for the 

reasonable cost of the first three (3) 

pints of blood (or equivalent quantities 

of packed red blood cells, as defined 

under federal regulations), unless 

replaced in accordance with federal 

regulations or already paid for under 

Part A, subject to the Medicare 

deductible amount. 

Section 8. Benefit Standards for 1990 

Standardized Medicare Supplement 

Benefit Plan Policies or Certificates 

Issued or Delivered on or After [insert 

effective date adopted by state] and 

Prior to June 1, 2010 

The following standards are 

applicable to all Medicare supplement 

policies or certificates delivered or 

issued for delivery in this state on or 

after [insert effective date] and prior to 

June 1, 2010. No policy or certificate 

may be advertised, solicited, delivered 

or issued for delivery in this state as a 

Medicare supplement policy or 

certificate unless it complies with these 

benefit standards. 

Drafting Note: This Section has been 

retained for transitional purposes. The 

purpose of this section is to govern policies 

issued subsequent to the adoption of 1990 

Standardized benefit plans and prior to June 

1, 2010. Standards for 2010 Standardized 

benefit plans issued for effective dates on or 

after June 1, 2010 are included in Section 8.1 

of this regulation. 

A. General Standards. The following 

standards apply to Medicare 

supplement policies and certificates and 

are in addition to all other requirements 

of this regulation. 

(1) A Medicare supplement policy or 

certificate shall not exclude or limit 

benefits for losses incurred more than 


tjames on PRODPC75 with NOTICES2
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18815 

six (6) months from the effective date of 

coverage because it involved a 

preexisting condition. The policy or 

certificate may 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 

(6) months before the effective date of 

coverage. 

Drafting Note: States that have adopted the 

NAIC Individual Accident and Sickness 

Insurance Minimum Standards Model Act 

should recognize a conflict between Section 

6B of that Act and this subsection. It may be 

necessary to include additional language in 

the Minimum Standards Model Act that 

recognizes the applicability of this 

preexisting condition rule to Medicare 

supplement policies and certificates. 

(2) A Medicare supplement policy or 

certificate shall not indemnify against 

losses resulting from sickness on a 

different basis than losses resulting from 

accidents. 

(3) A Medicare supplement policy or 

certificate 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, co-payment, or coinsurance 

amounts. Premiums may be modified to 

correspond with such changes. 

Drafting Note: This provision was prepared 

so that premium changes can be made based 

on the changes in policy benefits that will be 

necessary because of changes in Medicare 

benefits. States may wish to redraft this 

provision to conform to their particular 

authority. 

(4) No Medicare supplement policy or 

certificate shall provide for termination 

of coverage of a spouse solely because 

of the occurrence of an event specified 

for termination of coverage of the 

insured, other than the nonpayment of 

premium. 

(5) Each Medicare supplement policy 

shall be guaranteed renewable. 

(a) The issuer shall not cancel or nonrenew the policy solely on the ground 

of health status of the individual. 

(b) The issuer shall not cancel or nonrenew the policy for any reason other 

than nonpayment of premium or 

material misrepresentation. 

(c) If the Medicare supplement policy 

is terminated by the group policyholder 

and is not replaced as provided under 

Section 8A(5)(e), the issuer shall offer 

certificate holders an individual 

Medicare supplement policy which (at 

the option of the certificate holder) 

(i) Provides for continuation of the 

benefits contained in the group policy, 

or 

(ii) Provides for benefits that 

otherwise meet the requirements of this 

subsection. 

(d) If an individual is a certificate 

holder in a group Medicare supplement 

policy and the individual terminates 

membership in the group, the issuer 

shall 

(i) Offer the certificate holder the 

conversion opportunity described in 

Section 8A(5)(c), or 

(ii) At the option of the group 

policyholder, offer the certificate holder 

continuation of coverage under the 

group policy. 

(e) If a group Medicare supplement 

policy is replaced by another group 

Medicare supplement policy purchased 

by the same policyholder, the issuer of 

the replacement policy shall offer 

coverage to all persons covered under 

the old group policy on its date of 

termination. Coverage under the new 

policy shall not result in any exclusion 

for preexisting conditions that would 

have been covered under the group 

policy being replaced. 

(f) If a Medicare supplement policy 

eliminates an outpatient prescription 

drug benefit as a result of requirements 

imposed by the Medicare Prescription 

Drug, Improvement and Modernization 

Act of 2003, the modified policy shall 

be deemed to satisfy the guaranteed 

renewal requirements of this paragraph. 

Drafting Note: Rate increases otherwise 

authorized by law are not prohibited by this 

Paragraph (5). 

(6) Termination of a Medicare 

supplement policy or certificate shall be 

without prejudice to any continuous 

loss which commenced while the policy 

was in force, but the extension of 

benefits beyond the period during 

which the policy was in force may be 

conditioned upon the continuous total 

disability of the insured, limited to the 

duration of the policy benefit period, if 

any, or payment of the maximum 

benefits. Receipt of Medicare Part D 

benefits will not be considered in 

determining a continuous loss. 

(7)(a) A Medicare supplement policy 

or certificate shall provide that benefits 

and premiums under the policy or 

certificate shall be suspended at the 

request of the policyholder or certificate 

holder for the period (not to exceed 

twenty-four (24) months) in which the 

policyholder or certificate holder has 

applied for and is determined to be 

entitled to medical assistance under 

Title XIX of the Social Security Act, but 

only if the policyholder or certificate 

holder notifies the issuer of the policy 

or certificate within ninety (90) days 

after the date the individual becomes 

entitled to assistance. 

(b) If suspension occurs and if the 

policyholder or certificate holder loses 

entitlement to medical assistance, the 

policy or certificate shall be 

automatically reinstituted (effective as 

of the date of termination of 

entitlement) as of the termination of 

entitlement if the policyholder or 

certificate holder provides notice of loss 

of entitlement within ninety (90) days 

after the date of loss and pays the 

premium attributable to the period, 

effective as of the date of termination of 

entitlement. 

(c) Each Medicare supplement policy 

shall provide that benefits and 

premiums under the policy shall be 

suspended (for any period that may be 

provided by federal regulation) at the 

request of the policyholder if the 

policyholder 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 if the 

policyholder or certificate holder loses 

coverage under the group health plan, 

the policy shall be automatically 

reinstituted (effective as of the date of 

loss of coverage) if the policyholder 

provides notice of loss of coverage 

within ninety (90) days after the date of 

the loss. 

Drafting Note: The Ticket to Work and 

Work Incentives Improvement Act failed to 

provide for payment of the policy premiums 

in order to reinstitute coverage retroactively. 

States should consider adding the following 

language at the end of the last sentence in 

Subparagraph (c): ‘‘and pays the premium 

attributable to the period, effective as of the 

date of termination of enrollment in the 

group health plan.’’ This addition will clarify 

that issuers are entitled to collect the 

premium in this situation, as they are under 

Subparagraph (b). Also, the Ticket to Work 

and Work Incentives Improvement Act of 

1999 does not specify the period of time that 

a policy may be suspended under Section 

8A(7)(c). In the event that the Centers for 

Medicare & Medicaid Services (CMS) 

provides states with guidance on this issue, 

the phrase ‘‘for any period that may be 

provided by federal law’’ has been inserted 

into this provision in parentheses so that any 

time period prescribed is incorporated by 

reference. 

(d) Reinstitution of coverages as 

described in Subparagraphs (b) and (c): 

(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 policy provided coverage 

for outpatient prescription drugs, 

reinstitution of the policy for Medicare 


tjames on PRODPC75 with NOTICES2
18816 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 

Part D enrollees shall be without 

coverage for outpatient prescription 

drugs and shall otherwise provide 

substantially equivalent coverage to the 

coverage in effect before the date of 

suspension; and 

(iii) Shall provide for classification of 

premiums on terms at least as favorable 

to the policyholder or certificate holder 

as the premium classification terms that 

would have applied to the policyholder 

or certificate holder had the coverage 

not been suspended. 

(8) If an issuer makes a written offer 

to the Medicare Supplement 

policyholders or certificate holders of 

one or more of its plans, to exchange 

during a specified period from his or her 

[1990 Standardized plan] (as described 

in Section 9 of this regulation) to a 

[2010 Standardized plan] (as described 

in Section 9.1 of this regulation), the 

offer and subsequent exchange shall 

comply with the following 

requirements: 

(a) An issuer need not provide 

justification to the [commissioner] if the 

insured replaces a [1990 Standardized] 

policy or certificate with an issue age 

rated [2010 Standardized] policy or 

certificate at the insured’s original issue 

age [and duration]. If an insured’s policy 

or certificate to be replaced is priced on 

an issue age rate schedule at the time of 

such offer, the rate charged to the 

insured for the new exchanged policy 

shall recognize the policy reserve 

buildup, due to the pre-funding 

inherent in the use of an issue age rate 

basis, for the benefit of the insured. The 

method proposed to be used by an 

issuer must be filed with the 

commissioner [—according to the state’s 

rate filing procedure —]. 

(b) The rating class of the new policy 

or certificate shall be the class closest to 

the insured’s class of the replaced 

coverage. 

(c) An issuer may not apply new preexisting condition limitations or a new 

incontestability period to the new 

policy for those benefits contained in 

the exchanged [1990 Standardized] 

policy or certificate of the insured, but 

may apply pre-existing condition 

limitations of no more than six (6) 

months to any added benefits contained 

in the new [2010 Standardized] policy 

or certificate not contained in the 

exchanged policy. 

(d) The new policy or certificate shall 

be offered to all policyholders or 

certificate holders within a given plan, 

except where the offer or issue would be 

in violation of state or federal law. 

Drafting Note: The options an issuer may 

offer its policyholders or certificate holders 

may be (a) to only selected existing Plans or 

(b) to only certain new Plans for a particular 

existing Plan. For example, an exchange of a 

new Plan F for an old Plan F is an acceptable 

option. An offer to only policyholders with 

existing Plans with no reduction in benefits 

is also acceptable. 

B. Standards for Basic (Core) Benefits 

Common to Benefit Plans A to J. Every 

issuer shall make available a policy or 

certificate including only the following 

basic ‘‘core’’ package of benefits to each 

prospective insured. An issuer may 

make available to prospective insureds 

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 through the 90th day 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 

one hundred percent (100%) of the 

Medicare Part A eligible expenses for 

hospitalization paid at the applicable 

prospective payment system (PPS) 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 insured for any balance; 

Drafting Note: The issuer is required to pay 

whatever amount Medicare would have paid 

as if Medicare was covering the 

hospitalization. The ‘‘or other appropriate 

Medicare standard of payment’’ provision 

means the manner in which Medicare would 

have paid. The issuer stands in the place of 

Medicare, and so the provider must accept 

the issuer’s payment as payment in full. The 

Outline of Coverage specifies that the 

beneficiary will pay ‘‘$0,’’ and the provider 

cannot balance bill the insured. 

(4) Coverage under Medicare Parts A 

and B for the reasonable cost of the first 

three (3) 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 department services paid 

under a prospective payment system, 

the co-payment amount, of Medicare 

eligible expenses under Part B 

regardless of hospital confinement, 

subject to the Medicare Part B 

deductible; 

Drafting Note: In all cases involving 

hospital outpatient department services paid 

under a prospective payment system, the 

issuer is required to pay the co-payment 

amount established by CMS, which will be 

either the amount established for the 

Ambulatory Payment Classification (APC) 

group, or a provider-elected reduced copayment amount. 

C. Standards for Additional Benefits. 

The following additional benefits shall 

be included in Medicare Supplement 

Benefit Plans ‘‘B’’ through ‘‘J’’ only as 

provided by Section 9 of this regulation. 

(1) Medicare Part A Deductible: 

Coverage for all of the Medicare Part A 

inpatient hospital deductible amount 

per benefit period. 

(2) Skilled Nursing Facility Care: 

Coverage for the actual billed charges up 

to the coinsurance amount from the 21st 

day through the 100th day in a Medicare 

benefit period for post-hospital skilled 

nursing facility care eligible under 

Medicare Part A. 

(3) Medicare Part B Deductible: 

Coverage for all of the Medicare Part B 

deductible amount per calendar year 

regardless of hospital confinement. 

(4) Eighty Percent (80%) of the 

Medicare Part B Excess Charges: 

Coverage for eighty percent (80%) 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) One Hundred Percent (100%) 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) Basic Outpatient Prescription Drug 

Benefit: Coverage for fifty percent (50%) 

of outpatient prescription drug charges, 

after a $250 calendar year deductible, to 

a maximum of $1,250 in benefits 

received by the insured per calendar 

year, to the extent not covered by 

Medicare. The outpatient prescription 

drug benefit may be included for sale or 

issuance in a Medicare supplement 

policy until January 1, 2006. 

(7) Extended Outpatient Prescription 

Drug Benefit: Coverage for fifty percent 

(50%) of outpatient prescription drug 

charges, after a $250 calendar year 

deductible to a maximum of $3,000 in 

benefits received by the insured per 

calendar year, to the extent not covered 

by Medicare. The outpatient 

prescription drug benefit may be 

included for sale or issuance in a 

Medicare supplement policy until 

January 1, 2006. 

(8) Medically Necessary Emergency 

Care in a Foreign Country: Coverage to 

the extent not covered by Medicare for 


tjames on PRODPC75 with NOTICES2
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18817 

eighty percent (80%) 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 sixty (60) consecutive days of each 

trip outside the United States, subject to 

a calendar year deductible of $250, and 

a lifetime maximum benefit of $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)(a) Preventive Medical Care 

Benefit: Coverage for the following 

preventive health services not covered 

by Medicare: 

(i) 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; 

(ii) Preventive screening tests or 

preventive services, the selection and 

frequency of which is determined to be 

medically appropriate by the attending 

physician. 

(b) Reimbursement shall be for the 

actual charges up to one hundred 

percent (100%) of the Medicareapproved amount for each service, as if 

Medicare were to cover the service as 

identified in American Medical 

Association Current Procedural 

Terminology (AMA CPT) codes, to a 

maximum of $120 annually under this 

benefit. This benefit shall not include 

payment for any procedure covered by 

Medicare. 

(10) 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, 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 limit on 

the duration of the visit, except each 

consecutive four (4) hours in a twentyfour-hour period of services provided by 

a care provider is one visit. 

(b) Coverage Requirements and 

Limitations. 

(i) At-home recovery services 

provided must be primarily services 

which assist in activities of daily living. 

(ii) The insured’s attending physician 

must 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: 

(I) No more than the number and type 

of at-home recovery visits certified as 

necessary by the insured’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 $40 

per visit; 

(III) $1,600 per calendar year; 

(IV) Seven (7) 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 this section; 

(VII) At-home recovery visits while 

the insured is covered under the policy 

or certificate and not otherwise 

excluded; 

(VIII) At-home recovery visits 

received during the period the insured 

is receiving Medicare approved home 

care services or no more than eight (8) 

weeks after the service date of the last 

Medicare approved home health care 

visit. 

(c) Coverage is excluded for: 

(i) Home care visits paid for by 

Medicare or other government 

programs; and 

(ii) Care provided by family members, 

unpaid volunteers or providers who are 

not care providers. 

Drafting Note: The Omnibus Budget 

Reconciliation Act 1990, 42 U.S.C. 

1395ss(p)(7), does not prohibit the issuers of 

Medicare supplement policies, through an 

arrangement with a vendor for discounts 

from the vendor, from making available 

discounts from the vendor to the 

policyholder or certificate holder for the 

purchase of items or services not covered 

under its Medicare supplement policies (for 

example: discounts on hearing aids or 

eyeglasses). 

Drafting Note: The NAIC discussed 

including inflation protection for at-home 

recovery benefits, and preventive care 

benefits. However, because of the lack of an 

appropriate mechanism for indexing these 

benefits, NAIC has not included indexing at 

this point in time. However, NAIC is 

committed to evaluating the effectiveness of 

these benefits without inflation protection, 

and will revisit the issue. NAIC has 

determined that OBRA does not authorize 

NAIC to delegate the authority for indexing 

these benefits to a federal agency without an 

amendment to federal law. 

D. Standards for Plans K and L. 

(1) Standardized Medicare 

supplement benefit plan ‘‘K’’ shall 

consist of the following: 

(a) Coverage of one hundred percent 

(100%) of the Part A hospital 

coinsurance amount for each day used 

from the 61st through the 90th day in 

any Medicare benefit period; 

(b) Coverage of one hundred percent 

(100%) of the Part A hospital 

coinsurance amount for each Medicare 

lifetime inpatient reserve day used from 

the 91st through the 150th day in any 

Medicare benefit period; 

(c) Upon exhaustion of the Medicare 

hospital inpatient coverage, including 

the lifetime reserve days, coverage of 

one hundred percent (100%) of the 

Medicare Part A eligible expenses for 

hospitalization paid at the applicable 

prospective payment system (PPS) 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 insured for any balance; 

(d) Medicare Part A Deductible: 

Coverage for fifty percent (50%) of the 

Medicare Part A inpatient hospital 

deductible amount per benefit period 

until the out-of-pocket limitation is met 

as described in Subparagraph (j); 

(e) Skilled Nursing Facility Care: 

Coverage for fifty percent (50%) of the 

coinsurance amount for each day used 

from the 21st day through the 100th day 

in a Medicare benefit period for posthospital skilled nursing facility care 

eligible under Medicare Part A until the 

out-of-pocket limitation is met as 

described in Subparagraph (j); 

(f) Hospice Care: Coverage for fifty 

percent (50%) of cost sharing for all Part 

A Medicare eligible expenses and 

respite care until the out-of-pocket 

limitation is met as described in 

Subparagraph (j); 

(g) Coverage for fifty percent (50%), 

under Medicare Part A or B, of the 

reasonable cost of the first three (3) 

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 


tjames on PRODPC75 with NOTICES2
18818 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 

limitation is met as described in 

Subparagraph (j); 

(h) Except for coverage provided in 

Subparagraph (i) below, coverage for 

fifty percent (50%) of the cost sharing 

otherwise applicable under Medicare 

Part B after the policyholder pays the 

Part B deductible until the out-of-pocket 

limitation is met as described in 

Subparagraph (j) below; 

(i) Coverage of one hundred percent 

(100%) of the cost sharing for Medicare 

Part B preventive services after the 

policyholder pays the Part B deductible; 

and 

(j) Coverage of one hundred percent 

(100%) 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 $4000 in 2006, indexed 

each year by the appropriate inflation 

adjustment specified by the Secretary of 

the U.S. Department of Health and 

Human Services. 

(2) Standardized Medicare 

supplement benefit plan ‘‘L’’ shall 

consist of the following: 

(a) The benefits described in 

Paragraphs (1)(a), (b), (c) and (i); 

(b) The benefit described in 

Paragraphs (1)(d), (e), (f), (g) and (h), but 

substituting seventy-five percent (75%) 

for fifty percent (50%); and 

(c) The benefit described in Paragraph 

(1)(j), but substituting $2000 for $4000. 

Section 8.1 Benefit Standards for 2010 

Standardized Medicare Supplement 

Benefit Plan Policies or Certificates 

Issued for Delivery on or After June 1, 

2010 

The following standards are 

applicable to all Medicare supplement 

policies or certificates delivered or 

issued for delivery in this state on or 

after June 1, 2010. No policy or 

certificate may be advertised, solicited, 

delivered, or issued for delivery in this 

state as a Medicare supplement policy 

or certificate unless it complies with 

these benefit standards. No issuer may 

offer any [1990 Standardized Medicare 

supplement benefit plan] for sale on or 

after June 1, 2010. Benefit standards 

applicable to Medicare supplement 

policies and certificates issued before 

June 1, 2010 remain subject to the 

requirements of [—insert proper 

citation—]. 

Drafting Note: Each state should insert the 

proper citation(s) to its statutes or rules that 

govern Medicare supplement insurance 

policies and certificates issued prior to the 

June 1, 2010 effective date of 2010 

Standardized benefit plan standards found in 

Sections 8.1 and 9.1 of this regulation. It is 

recommended that each state’s applicable 

statutes or rules for Medicare supplement 

policies and certificates issued prior to June 

1, 2010 be retained and that this section of 

the regulation be adopted in its entirety as a 

new section to govern policies issued on and 

after June 1, 2010. 

A. General Standards. The following 

standards apply to Medicare 

supplement policies and certificates and 

are in addition to all other requirements 

of this regulation. 

(1) A Medicare supplement policy or 

certificate shall not exclude or limit 

benefits for losses incurred more than 

six (6) months from the effective date of 

coverage because it involved a 

preexisting condition. The policy or 

certificate may 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 

(6) months before the effective date of 

coverage. 

Drafting Note: States that have adopted the 

NAIC Individual Accident and Sickness 

Insurance Minimum Standards Model Act 

should recognize a conflict between Section 

6B of that Act and this Subsection. It may be 

necessary to include additional language in 

the Minimum Standards Model Act that 

recognizes the applicability of this 

preexisting condition rule to Medicare 

supplement policies and certificates. 

(2) A Medicare supplement policy or 

certificate shall not indemnify against 

losses resulting from sickness on a 

different basis than losses resulting from 

accidents. 

(3) A Medicare supplement policy or 

certificate 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, co-payment, or coinsurance 

amounts. Premiums may be modified to 

correspond with such changes. 

Drafting Note: This provision was prepared 

so that premium changes can be made based 

on the changes in policy benefits that will be 

necessary because of changes in Medicare 

benefits. States may wish to redraft this 

provision to conform to their particular 

authority. 

(4) No Medicare supplement policy or 

certificate shall provide for termination 

of coverage of a spouse solely because 

of the occurrence of an event specified 

for termination of coverage of the 

insured, other than the nonpayment of 

premium. 

(5) Each Medicare supplement policy 

shall be guaranteed renewable. 

(a) The issuer shall not cancel or nonrenew the policy solely on the ground 

of health status of the individual. 

(b) The issuer shall not cancel or nonrenew the policy for any reason other 

than nonpayment of premium or 

material misrepresentation. 

(c) If the Medicare supplement policy 

is terminated by the group policyholder 

and is not replaced as provided under 

Section 8.1A(5)(e) of this regulation, the 

issuer shall offer certificate holders an 

individual Medicare supplement policy 

which (at the option of the certificate 

holder): 

(i) Provides for continuation of the 

benefits contained in the group policy; 

or 

(ii) Provides for benefits that 

otherwise meet the requirements of this 

Subsection. 

(d) If an individual is a certificate 

holder in a group Medicare supplement 

policy and the individual terminates 

membership in the group, the issuer 

shall: 

(i) Offer the certificate holder the 

conversion opportunity described in 

Section 8.1A(5)(c) of this regulation; or 

(ii) At the option of the group 

policyholder, offer the certificate holder 

continuation of coverage under the 

group policy. 

(e) If a group Medicare supplement 

policy is replaced by another group 

Medicare supplement policy purchased 

by the same policyholder, the issuer of 

the replacement policy shall offer 

coverage to all persons covered under 

the old group policy on its date of 

termination. Coverage under the new 

policy shall not result in any exclusion 

for preexisting conditions that would 

have been covered under the group 

policy being replaced. 

Drafting Note: Rate increases otherwise 

authorized by law are not prohibited by this 

Paragraph (5). 

(6) Termination of a Medicare 

supplement policy or certificate shall be 

without prejudice to any continuous 

loss which commenced while the policy 

was in force, but the extension of 

benefits beyond the period during 

which the policy was in force may be 

conditioned upon the continuous total 

disability of the insured, limited to the 

duration of the policy benefit period, if 

any, or payment of the maximum 

benefits. Receipt of Medicare Part D 

benefits will not be considered in 

determining a continuous loss. 

(7)(a) A Medicare supplement policy 

or certificate shall provide that benefits 

and premiums under the policy or 

certificate shall be suspended at the 

request of the policyholder or certificate 

holder for the period (not to exceed 

twenty-four (24) months) in which the 

policyholder or certificate holder has 

applied for and is determined to be 

entitled to medical assistance under 

Title XIX of the Social Security Act, but 


tjames on PRODPC75 with NOTICES2
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18819 

only if the policyholder or certificate 

holder notifies the issuer of the policy 

or certificate within ninety (90) days 

after the date the individual becomes 

entitled to assistance. 

(b) If suspension occurs and if the 

policyholder or certificate holder loses 

entitlement to medical assistance, the 

policy or certificate shall be 

automatically reinstituted (effective as 

of the date of termination of 

entitlement) as of the termination of 

entitlement if the policyholder or 

certificate holder provides notice of loss 

of entitlement within ninety (90) days 

after the date of loss and pays the 

premium attributable to the period, 

effective as of the date of termination of 

entitlement. 

(c) Each Medicare supplement policy 

shall provide that benefits and 

premiums under the policy shall be 

suspended (for any period that may be 

provided by federal regulation) at the 

request of the policyholder if the 

policyholder 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 if the 

policyholder or certificate holder loses 

coverage under the group health plan, 

the policy shall be automatically 

reinstituted (effective as of the date of 

loss of coverage) if the policyholder 

provides notice of loss of coverage 

within ninety (90) days after the date of 

the loss. 

Drafting Note: The Ticket to Work and 

Work Incentives Improvement Act failed to 

provide for payment of the policy premiums 

in order to reinstitute coverage retroactively. 

States should consider adding the following 

language at the end of the last sentence in 

Subparagraph (c): ‘‘and pays the premium 

attributable to the period, effective as of the 

date of termination of enrollment in the 

group health plan.’’ This addition will clarify 

that issuers are entitled to collect the 

premium in this situation, as they are under 

Subparagraph (b). Also, the Ticket to Work 

and Work Incentives Improvement Act of 

1999 does not specify the period of time that 

a policy may be suspended under Section 

8A(7)(c). In the period that may event that 

the Centers for Medicare & Medicaid Services 

(CMS) provides states with guidance on this 

issue, the phrase ‘‘for any be provided by 

federal law’’ has been inserted into this 

provision in parentheses so that any time 

period prescribed is incorporated by 

reference. 

(d) Reinstitution of coverages as 

described in Subparagraphs (b) and (c): 

(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; and 

(iii) Shall provide for classification of 

premiums on terms at least as favorable 

to the policyholder or certificate holder 

as the premium classification terms that 

would have applied to the policyholder 

or certificate holder had the coverage 

not been suspended. 

B. Standards for Basic (Core) Benefits 

Common to Medicare Supplement 

Insurance Benefit Plans A, B, C, D, F, F 

with High Deductible, G, M and N. 

Every issuer of Medicare supplement 

insurance benefit plans shall make 

available a policy or certificate 

including only the following basic 

‘‘core’’ package of benefits to each 

prospective insured. An issuer may 

make available to prospective insureds 

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 through the 90th day 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 

one hundred percent (100%) of the 

Medicare Part A eligible expenses for 

hospitalization paid at the applicable 

prospective payment system (PPS) 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 insured for any balance; 

Drafting Note: The issuer is required to pay 

whatever amount Medicare would have paid 

as if Medicare was covering the 

hospitalization. The ‘‘or other appropriate 

Medicare standard of payment’’ provision 

means the manner in which Medicare would 

have paid. The issuer stands in the place of 

Medicare, and so the provider must accept 

the issuer’s payment as payment in full. The 

Outline of Coverage specifies that the 

beneficiary will pay ‘‘$0,’’ and the provider 

cannot balance bill the insured. 

(4) Coverage under Medicare Parts A 

and B for the reasonable cost of the first 

three (3) 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 department services paid 

under a prospective payment system, 

the co-payment amount, of Medicare 

eligible expenses under Part B 

regardless of hospital confinement, 

subject to the Medicare Part B 

deductible; 

(6) Hospice Care: Coverage of cost 

sharing for all Part A Medicare eligible 

hospice care and respite care expenses. 

Drafting Note: In all cases involving 

hospital outpatient department services paid 

under a prospective payment system, the 

issuer is required to pay the co-payment 

amount established by CMS, which will be 

either the amount established for the 

Ambulatory Payment Classification (APC) 

group, or a provider-elected reduced copayment amount. 

C. Standards for Additional Benefits. 

The following additional benefits shall 

be included in Medicare supplement 

benefit Plans B, C, D, F, F with High 

Deductible, G, M, and N as provided by 

Section 9.1 of this regulation. 

Drafting Note: Benefits for Plans K and L 

are set by The Medicare Prescription Drug, 

Improvement and Modernization. Act of 

2003, and can be found in Sections 9.1E(8) 

and (9) of this regulation. 

(1) Medicare Part A Deductible: 

Coverage for one hundred percent 

(100%) of the Medicare Part A inpatient 

hospital deductible amount per benefit 

period. 

(2) Medicare Part A Deductible: 

Coverage for fifty percent (50%) of the 

Medicare Part A inpatient hospital 

deductible amount per benefit period. 

(3) Skilled Nursing Facility Care: 

Coverage for the actual billed charges up 

to the coinsurance amount from the 21st 

day through the 100th day in a Medicare 

benefit period for post-hospital skilled 

nursing facility care eligible under 

Medicare Part A. 

(4) Medicare Part B Deductible: 

Coverage for one hundred percent 

(100%) of the Medicare Part B 

deductible amount per calendar year 

regardless of hospital confinement. 

(5) One Hundred Percent (100%) of 

the Medicare Part B Excess Charges: 

Coverage for all of the difference 

between the actual Medicare Part B 

charges as billed, not to exceed any 

charge limitation established by the 

Medicare program or state law, and the 

Medicare-approved Part B charge. 

(6) Medically Necessary Emergency 

Care in a Foreign Country: Coverage to 

the extent not covered by Medicare for 

eighty percent (80%) 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 


tjames on PRODPC75 with NOTICES2
18820 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 

States and which care began during the 

first sixty (60) consecutive days of each 

trip outside the United States, subject to 

a calendar year deductible of $250, and 

a lifetime maximum benefit of $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. 

Drafting Note: The Omnibus Budget 

Reconciliation Act 1990, 42 U.S.C. 

1395ss(p)(7), does not prohibit the issuers of 

Medicare supplement policies, through an 

arrangement with a vendor for discounts 

from the vendor, from making available 

discounts from the vendor to the 

policyholder or certificate holder for the 

purchase of items or services not covered 

under its Medicare supplement policies (for 

example: discounts on hearing aids or 

eyeglasses). 

Drafting Note: The descriptions of Plans K 

and L are contained in Section 9.1E(8) and 

(9) of this regulation. 

Section 9. Standard Medicare 

Supplement Benefit Plans for 1990 

Standardized Medicare Supplement 

Benefit Plan Policies or Certificates 

Issued for Delivery on or After [insert 

effective date adopted by state] and 

Prior to June 1, 2010 

Drafting Note: This section has been 

retained for transitional purposes. The 

purpose of this Section is to govern policies 

issued subsequent to the adoption of 1990 

Standardized benefit plans and prior to June 

1, 2010. Standards for 2010 Standardized 

benefit plans issued for effective dates on or 

after June 1, 2010 are included in Section 9.1 

of this regulation. 

A. An issuer shall make available to 

each prospective policyholder and 

certificate holder a policy form or 

certificate form containing only the 

basic core benefits, as defined in Section 

8B of this regulation. 

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 in 

Section 9G and in Section 10 of this 

regulation. 

C. Benefit plans shall be uniform in 

structure, language, designation and 

format to the standard benefit plans ‘‘A’’ 

through ‘‘L’’ listed in this subsection 

and conform to the definitions in 

Section 4 of this regulation. Each benefit 

shall be structured in accordance with 

the format provided in Sections 8B and 

8C, or 8D and list the benefits in the 

order shown in this subsection. 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 

Subsection C, other designations to the 

extent permitted by law. 

Drafting Note: It is anticipated that if a 

state determines that it will authorize the sale 

of only some of these benefit plans, the letter 

codes used in this regulation will be 

preserved. The Guide to Health Insurance for 

People with Medicare published jointly by 

the NAIC and CMS will contain a chart 

comparing the possible combinations. In 

order for consumers to compare specific 

policy choices, it will be important that a 

uniform ‘‘naming’’ system be used. Thus, if 

only plans ‘‘A,’’ ‘‘B,’’ ‘‘D,’’ ‘‘F (including F 

with a high deductible)’’ and ‘‘H’’ (for 

example) are authorized in a state, these 

plans should retain these alphabetical 

designations. However, an issuer may use, in 

addition to these alphabetical designations, 

other designations as provided in Section 9D 

of this regulation. 

E. Make-up of benefit plans: 

(1) Standardized Medicare 

supplement benefit plan ‘‘A’’ shall be 

limited to the basic (core) benefits 

common to all benefit plans, as defined 

in Section 8B of this regulation. 

(2) Standardized Medicare 

supplement benefit plan ‘‘B’’ shall 

include only the following: The core 

benefit as defined in Section 8B of this 

regulation, plus the Medicare Part A 

deductible as defined in Section 8C(1). 

(3) Standardized Medicare 

supplement benefit plan ‘‘C’’ shall 

include only the following: The core 

benefit as defined in Section 8B of this 

regulation, 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 Sections 

8C(1), (2), (3) and (8) respectively. 

(4) Standardized Medicare 

supplement benefit plan ‘‘D’’ shall 

include only the following: The core 

benefit (as defined in Section 8B of this 

regulation), plus the Medicare Part A 

deductible, skilled nursing facility care, 

medically necessary emergency care in 

an foreign country and the at-home 

recovery benefit as defined in Sections 

8C(1), (2), (8) and (10) respectively. 

(5) Standardized Medicare 

supplement benefit plan ‘‘E’’ shall 

include only the following: The core 

benefit as defined in Section 8B of this 

regulation, 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 Sections 

8C(1), (2), (8) and (9) respectively. 

(6) Standardized Medicare 

supplement benefit plan ‘‘F’’ shall 

include only the following: The core 

benefit as defined in Section 8B of this 

regulation, plus the Medicare Part A 

deductible, the skilled nursing facility 

care, the Part B deductible, one hundred 

percent (100 percent) of the Medicare 

Part B excess charges, and medically 

necessary emergency care in a foreign 

country as defined in Sections 8C(1), 

(2), (3), (5) and (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 as defined in 

Section 8B of this regulation, plus the 

Medicare Part A deductible, skilled 

nursing facility care, the Medicare Part 

B deductible, one hundred percent 

(100%) of the Medicare Part B excess 

charges, and medically necessary 

emergency care in a foreign country as 

defined in Sections 8C(1), (2), (3), (5) 

and (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 $1500 for 1998 and 

1999, and shall be based on the calendar 

year. It shall be adjusted annually 

thereafter by the Secretary to reflect the 

change in the Consumer Price Index for 

all urban consumers for the twelvemonth period ending with August of the 

preceding year, and rounded to the 

nearest multiple of $10. 

(8) Standardized Medicare 

supplement benefit plan ‘‘G’’ shall 

include only the following: The core 

benefit as defined in Section 8B of this 

regulation, plus the Medicare Part A 

deductible, skilled nursing facility care, 

eighty percent (80%) of the Medicare 

Part B excess charges, medically 

necessary emergency care in a foreign 

country, and the at-home recovery 

benefit as defined in Sections 8C(1), (2), 

(4), (8) and (10) respectively. 

(9) Standardized Medicare 

supplement benefit plan ‘‘H’’ shall 

consist of only the following: The core 

benefit as defined in Section 8B of this 

regulation, plus the Medicare Part A 

deductible, skilled nursing facility care, 

basic prescription drug benefit and 

medically necessary emergency care in 

a foreign country as defined in Sections 

8C(1), (2), (6) and (8) respectively. The 

outpatient prescription drug benefit 

shall not be included in a Medicare 

supplement policy sold after December 

31, 2005. 

(10) Standardized Medicare 

supplement benefit plan ‘‘I’’ shall 

consist of only the following: The core 


tjames on PRODPC75 with NOTICES2
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18821 

benefit as defined in Section 8B of this 

regulation, plus the Medicare Part A 

deductible, skilled nursing facility care, 

one hundred percent (100%) of the 

Medicare Part B excess charges, basic 

prescription drug benefit, medically 

necessary emergency care in a foreign 

country and at-home recovery benefit as 

defined in Sections 8C(1), (2), (5), (6), 

(8) and (10) respectively. The outpatient 

prescription drug benefit shall not be 

included in a Medicare supplement 

policy sold after December 31, 2005. 

(11) Standardized Medicare 

supplement benefit plan ‘‘J’’ shall 

consist of only the following: The core 

benefit as defined in Section 8B of this 

regulation, plus the Medicare Part A 

deductible, skilled nursing facility care, 

Medicare Part B deductible, one 

hundred percent (100%) of the 

Medicare Part B excess charges, 

extended prescription drug benefit, 

medically necessary emergency care in 

a foreign country, preventive medical 

care and at-home recovery benefit as 

defined in Sections 8C(1), (2), (3), (5), 

(7), (8), (9) and (10) respectively. The 

outpatient prescription drug benefit 

shall not be included in a Medicare 

supplement policy sold after December 

31, 2005. 

(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 as defined in 

Section 8B of this regulation, plus the 

Medicare Part A deductible, skilled 

nursing facility care, Medicare Part B 

deductible, one hundred percent (100%) 

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 Sections 

8C(1), (2), (3), (5), (7), (8), (9) and (10) 

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 $1500 for 

1998 and 1999, and shall be based on 

a calendar year. It shall be adjusted 

annually thereafter by the Secretary to 

reflect the change in the Consumer Price 

Index for all urban consumers for the 

twelve-month period ending with 

August of the preceding year, and 

rounded to the nearest multiple of $10. 

The outpatient prescription drug benefit 

shall not be included in a Medicare 

supplement policy sold after December 

31, 2005. 

F. Make-up of two Medicare 

supplement plans mandated by The 

Medicare Prescription Drug, 

Improvement and Modernization Act of 

2003 (MMA); 

(1) Standardized Medicare 

supplement benefit plan ‘‘K’’ shall 

consist of only those benefits described 

in Section 8D(1). 

(2) Standardized Medicare 

supplement benefit plan ‘‘L’’ shall 

consist of only those benefits described 

in Section 8D(2). 

G. New or Innovative Benefits: An 

issuer may, with the prior approval of 

the commissioner, offer policies or 

certificates with new or innovative 

benefits in addition to the benefits 

provided in a policy or certificate that 

otherwise complies with the applicable 

standards. The new or innovative 

benefits may include benefits that are 

appropriate to Medicare supplement 

insurance, new or innovative, not 

otherwise available, cost-effective, and 

offered in a manner that is consistent 

with the goal of simplification of 

Medicare supplement policies. After 

December 31, 2005, the innovative 

benefit shall not include an outpatient 

prescription drug benefit. 

Drafting Note: Use of new or innovative 

benefits may be appropriate to add coverage 

or access if they offer uniquely different or 

significantly expanded coverage. 

Drafting Note A state may determine by 

statute or regulation which of the above 

benefit plans may be sold in that state. The 

core benefit plan must be made available by 

all issuers. Therefore, the core benefit plan 

must be one of the authorized benefit plans 

adopted by a state. In no event, however, may 

a state authorize the sale of more than 10 

standardized Medicare supplement benefit 

plans (that is, 9 plus the core policy), plus 

the two (2) high deductible plans, and the 

two (2) benefit plans K and L, mandated by 

MMA at the same time. Further, the modified 

versions of plans H, I, J as required by MMA 

after December 31, 2005 will not count as 

additional plans toward the limitations on 

the total number of plans discussed above. 

Drafting Note: The Omnibus Budget 

Reconciliation Act of 1990 preempts state 

mandated benefits in Medicare supplement 

policies or certificates, except for those states 

which have been granted a waiver for nonstandardized plans. 

Drafting Note: After December 31, 2005, 

MMA prohibits Medicare supplement issuers 

from offering policies with outpatient 

prescription drug coverage, and from 

renewing outpatient prescription drug 

coverage for insureds enrolled in Medicare 

Part D. Consequently, plans with an 

outpatient prescription drug benefit will not 

be offered to new enrollees after that time. 

Drafting Note: Pursuant to the enactment 

of MMA, two new benefit packages, called K 

and L, were added to plans A through J. The 

two new packages have higher co-payments 

and coinsurance contributions from the 

Medicare beneficiary. 

Section 9.1 Standard Medicare 

Supplement Benefit Plans for 2010 

Standardized Medicare Supplement 

Benefit Plan Policies or Certificates 

Issued for Delivery on or After June 1, 

2010 

The following standards are 

applicable to all Medicare supplement 

policies or certificates delivered or 

issued for delivery in this state on or 

after June 1, 2010. No policy or 

certificate may be advertised, solicited, 

delivered or issued for delivery in this 

state as a Medicare supplement policy 

or certificate unless it complies with 

these benefit plan standards. Benefit 

plan standards applicable to Medicare 

supplement policies and certificates 

issued before June 1, 2010 remain 

subject to the requirements of [ -insert 

proper citation- ]. 

Drafting Note. Each state should insert the 

proper citation(s) to its statutes or rules that 

govern Medicare supplement insurance 

policies and certificates issued prior to the 

June 1, 2010 effective date of the 2010 

Standardized benefit plan standards found in 

Sections 8.1 and 9.1 of this regulation. It is 

recommended that each state’s applicable 

statutes or rules for Medicare supplement 

benefit plans for policies and certificates 

issued prior to June 1, 2010 be retained and 

that this section of the Model be adopted in 

its entirety as a new section to govern 

policies and certificates issued on and after 

June 1, 2010. (The benefit plan standards of 

the Medicare Supplement Model Regulation 

for policies issued prior to June 1, 2010 are 

found in Section 9 of this regulation.) 

A. (1) An issuer shall make available 

to each prospective policyholder and 

certificate holder a policy form or 

certificate form containing only the 

basic (core) benefits, as defined in 

Section 8.1B of this regulation. 

(2) If an issuer makes available any of 

the additional benefits described in 

Section 8.1C, or offers standardized 

benefit Plans K or L (as described in 

Sections 9.1E(8) and (9) of this 

regulation), then the issuer shall make 

available to each prospective 

policyholder and certificate holder, in 

addition to a policy form or certificate 

form with only the basic (core) benefits 

as described in subsection A(1) above, a 

policy form or certificate form 

containing either standardized benefit 

Plan C (as described in Section 9.1E(3) 

of this regulation) or standardized 

benefit Plan F (as described in 9.1E(5) 

of this regulation). 


tjames on PRODPC75 with NOTICES2
18822 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 

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 in 

Section 9.1F and in Section 10 of this 

regulation. 

C. Benefit plans shall be uniform in 

structure, language, designation and 

format to the standard benefit plans 

listed in this Subsection and conform to 

the definitions in Section 4 of this 

regulation. Each benefit shall be 

structured in accordance with the 

format provided in Sections 8.1B and 

8.1C of this regulation; or, in the case of 

plans K or L, in Sections 9.1E(8) or (9) 

of this regulation and list the benefits in 

the order shown. For purposes of this 

Section, ‘‘structure, language, and 

format’’ means style, arrangement and 

overall content of a benefit. 

D. In addition to the benefit plan 

designations required in Subsection C of 

this section, an issuer may use other 

designations to the extent permitted by 

law. 

Drafting Note: It is anticipated that if a 

state determines that it will authorize the sale 

of only some of these benefit plans, the letter 

codes used in this regulation will be 

preserved. The Guide to Health Insurance for 

People with Medicare published jointly by 

the NAIC and CMS will contain a chart 

comparing the possible combinations. In 

order for consumers to compare specific 

policy choices, it will be important that a 

uniform ‘‘naming’’ system be used. Thus, if 

only Plans A, B, D, F, F with High 

Deductible, and K (for example) are 

authorized in a state, these plans must retain 

their alphabetical designations. An issuer 

may use, in addition to these alphabetical 

designations, other designations as provided 

in Section 9.1D of this regulation. 

E. Make-up of 2010 Standardized 

Benefit Plans: 

(1) Standardized Medicare 

supplement benefit Plan A shall include 

only the following: The basic (core) 

benefits as defined in Section 8.1B of 

this regulation. 

(2) Standardized Medicare 

supplement benefit Plan B shall include 

only the following: The basic (core) 

benefit as defined in Section 8.1B of this 

regulation, plus one hundred percent 

(100%) of the Medicare Part A 

deductible as defined in Section 8.1C(1) 

of this regulation. 

(3) Standardized Medicare 

supplement benefit Plan C shall include 

only the following: The basic (core) 

benefit as defined in Section 8.1B of this 

regulation, plus one hundred percent 

(100%) of the Medicare Part A 

deductible, skilled nursing facility care, 

one hundred percent (100%) of the 

Medicare Part B deductible, and 

medically necessary emergency care in 

a foreign country as defined in Sections 

8.1C(1), (3), (4), and (6) of this 

regulation, respectively. 

(4) Standardized Medicare 

supplement benefit Plan D shall include 

only the following: The basic (core) 

benefit (as defined in Section 8.1B of 

this regulation), plus one hundred 

percent (100%) of the Medicare Part A 

deductible, skilled nursing facility care, 

and medically necessary emergency care 

in a foreign country as defined in 

Sections 8.1C(1), (3), and (6) of this 

regulation, respectively. 

(5) Standardized Medicare 

supplement [regular] Plan F shall 

include only the following: The basic 

(core) benefit as defined in Section 8.1B 

of this regulation, plus one hundred 

percent (100%) of the Medicare Part A 

deductible, the skilled nursing facility 

care, one hundred percent (100%) of the 

Medicare Part B deductible, one 

hundred percent (100%) of the 

Medicare Part B excess charges, and 

medically necessary emergency care in 

a foreign country as defined in Sections 

8.1C(1), (3), (4), (5), and (6), 

respectively. 

(6) Standardized Medicare 

supplement Plan F With High 

Deductible shall include only the 

following: one hundred percent (100%) 

of covered expenses following the 

payment of the annual deductible set 

forth in Subparagraph (b). 

(a) The basic (core) benefit as defined 

in Section 8.1B of this regulation, plus 

one hundred percent (100%) of the 

Medicare Part A deductible, skilled 

nursing facility care, one hundred 

percent (100%) of the Medicare Part B 

deductible, one hundred percent (100%) 

of the Medicare Part B excess charges, 

and medically necessary emergency care 

in a foreign country as defined in 

Sections 8.1C(1), (3), (4), (5), and (6) of 

this regulation, respectively. 

(b) The annual deductible in Plan F 

With High Deductible shall consist of 

out-of-pocket expenses, other than 

premiums, for services covered by 

[regular] Plan F, and shall be in addition 

to any other specific benefit deductibles. 

The basis for the deductible shall be 

$1,500 and shall be adjusted annually 

from 1999 by the Secretary of the U.S. 

Department of Health and Human 

Services to reflect the change in the 

Consumer Price Index for all urban 

consumers for the twelve-month period 

ending with August of the preceding 

year, and rounded to the nearest 

multiple of ten dollars ($10). 

(7) Standardized Medicare 

supplement benefit Plan G shall include 

only the following: The basic (core) 

benefit as defined in Section 8.1B of this 

regulation, plus one hundred percent 

(100%) of the Medicare Part A 

deductible, skilled nursing facility care, 

one hundred percent (100%) of the 

Medicare Part B excess charges, and 

medically necessary emergency care in 

a foreign country as defined in Sections 

8.1C(1), (3), (5), and (6), respectively. 

(8) Standardized Medicare 

supplement Plan K is mandated by The 

Medicare Prescription Drug, 

Improvement and Modernization Act of 

2003, and shall include only the 

following: 

(a) Part A Hospital Coinsurance 61st 

through 90th days: Coverage of one 

hundred percent (100%) of the Part A 

hospital coinsurance amount for each 

day used from the 61st through the 90th 

day in any Medicare benefit period; 

(b) Part A Hospital Coinsurance, 91st 

through 150th days: Coverage of one 

hundred percent (100%) of the Part A 

hospital coinsurance amount for each 

Medicare lifetime inpatient reserve day 

used from the 91st through the 150th 

day in any Medicare benefit period; 

(c) Part A Hospitalization After 150 

Days: Upon exhaustion of the Medicare 

hospital inpatient coverage, including 

the lifetime reserve days, coverage of 

one hundred percent (100%) of the 

Medicare Part A eligible expenses for 

hospitalization paid at the applicable 

prospective payment system (PPS) 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 insured for any balance; 

(d) Medicare Part A Deductible: 

Coverage for fifty percent (50%) of the 

Medicare Part A inpatient hospital 

deductible amount per benefit period 

until the out-of-pocket limitation is met 

as described in Subparagraph (j); 

(e) Skilled Nursing Facility Care: 

Coverage for fifty percent (50%) of the 

coinsurance amount for each day used 

from the 21st day through the 100th day 

in a Medicare benefit period for posthospital skilled nursing facility care 

eligible under Medicare Part A until the 

out-of-pocket limitation is met as 

described in Subparagraph (j); 

(f) Hospice Care: Coverage for fifty 

percent (50%) of cost sharing for all Part 

A Medicare eligible expenses and 

respite care until the out-of-pocket 

limitation is met as described in 

Subparagraph (j); 

(g) Blood: Coverage for fifty percent 

(50%), under Medicare Part A or B, of 

the reasonable cost of the first three (3) 

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 


tjames on PRODPC75 with NOTICES2
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18823 

limitation is met as described in 

Subparagraph (j); 

(h) Part B Cost Sharing: Except for 

coverage provided in Subparagraph (i), 

coverage for fifty percent (50%) of the 

cost sharing otherwise applicable under 

Medicare Part B after the policyholder 

pays the Part B deductible until the outof-pocket limitation is met as described 

in Subparagraph (j); 

(i) Part B Preventive Services: 

Coverage of one hundred percent 

(100%) of the cost sharing for Medicare 

Part B preventive services after the 

policyholder pays the Part B deductible; 

and 

(j) Cost Sharing After Out-of-Pocket 

Limits: Coverage of one hundred 

percent (100%) 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 $4000 in 2006, indexed 

each year by the appropriate inflation 

adjustment specified by the Secretary of 

the U.S. Department of Health and 

Human Services. 

(9) Standardized Medicare 

supplement Plan L is mandated by The 

Medicare Prescription Drug, 

Improvement and Modernization Act of 

2003, and shall include only the 

following: 

(a) The benefits described in 

Paragraphs 9.1E(8)(a), (b), (c) and (i); 

(b) The benefit described in 

Paragraphs 9.1E(8)(d), (e), (f), (g) and (h), 

but substituting seventy-five percent 

(75%) for fifty percent (50%); and 

(c) The benefit described in Paragraph 

9.1E(8)(j), but substituting $2000 for 

$4000. 

(10) Standardized Medicare 

supplement Plan M shall include only 

the following: The basic (core) benefit as 

defined in Section 8.1B of this 

regulation, plus fifty percent (50%) of 

the Medicare Part A deductible, skilled 

nursing facility care, and medically 

necessary emergency care in a foreign 

country as defined in Sections 8.1C(2), 

(3) and (6) of this regulation, 

respectively. 

(11) Standardized Medicare 

supplement Plan N shall include only 

the following: The basic (core) benefit as 

defined in Section 8.1B of this 

regulation, plus one hundred percent 

(100%) of the Medicare Part A 

deductible, skilled nursing facility care, 

and medically necessary emergency care 

in a foreign country as defined in 

Sections 8.1C(1), (3) and (6) of this 

regulation, respectively, with copayments in the following amounts: 

(a) the lesser of twenty dollars ($20) 

or the Medicare Part B coinsurance or 

co-payment for each covered health care 

provider office visit (including visits to 

medical specialists); and 

(b) the lesser of fifty dollars ($50) or 

the Medicare Part B coinsurance or copayment for each covered emergency 

room visit, however, this co-payment 

shall be waived if the insured is 

admitted to any hospital and the 

emergency visit is subsequently covered 

as a Medicare Part A expense. 

Drafting Note: The NAIC expects to 

periodically review the co-payment levels for 

Medicare supplement Plan N and make 

adjustments to this regulation as necessary. 

F. New or Innovative Benefits: An 

issuer may, with the prior approval of 

the [commissioner], offer policies or 

certificates with new or innovative 

benefits, in addition to the standardized 

benefits provided in a policy or 

certificate that otherwise complies with 

the applicable standards. The new or 

innovative benefits shall include only 

benefits that are appropriate to Medicare 

supplement insurance, are new or 

innovative, are not otherwise available, 

and are cost-effective. Approval of new 

or innovative benefits must not 

adversely impact the goal of Medicare 

supplement simplification. New or 

innovative benefits shall not include an 

outpatient prescription drug benefit. 

New or innovative benefits shall not be 

used to change or reduce benefits, 

including a change of any cost-sharing 

provision, in any standardized plan. 

Drafting Note: Recognizing the challenge 

in maintaining standardization while 

ensuring availability of new or innovative 

benefits, the drafters have included 

additional guidance to states in the NAIC 

Medicare Supplement Insurance Model 

Regulation Compliance Manual. This 

guidance includes a recommendation that 

states consider making publicly available all 

approved new or innovative benefits, and 

requests states to report the approval of all 

new or innovative benefits to the NAIC 

Senior Issues Task Force, who will maintain 

a record of these benefits for use by 

regulators and others. The Senior Issues Task 

Force will periodically review state approved 

benefits and consider whether to recommend 

that they be made part of standard benefit 

plan designs in this regulation. 

Drafting Note: A state may determine by 

statute or regulation which of the above 

benefit plans may be sold in that state. Plan 

A, which consists of the basic (core) benefits 

must be made available by all issuers. 

Therefore, Plan A must be one of the 

authorized benefit plans adopted by a state. 

If an issuer offers any benefit plan in addition 

to Plan A, then the issuer must also offer 

either Plan C or Plan F. Therefore, if any 

benefit plan is authorized by a state other 

than Plan A, then either Plan C or Plan F 

must be among the authorized benefit plans 

adopted by a state. Except where a new or 

innovative benefit is approved by the 

[commissioner] for sale in a state, a state may 

not authorize the sale of any Medicare 

supplement plan other than the standardized 

Medicare supplement benefit plans (that is, 

Plans A, B, C, D, F, F With High Deductible, 

G, K, L, M and N) set forth in this regulation. 

Drafting Note: The Omnibus Budget 

Reconciliation Act of 1990 preempts state 

mandated benefits in Medicare supplement 

policies or certificates, except for those states 

which have been granted a waiver for nonstandardized plans. 

Section 10. Medicare Select Policies 

and Certificates 

A. (1) This section shall apply to 

Medicare Select policies and 

certificates, as defined in this section. 

Drafting Note: This section should be 

adopted by all states approving Medicare 

Select policies. 

(2) No policy or certificate may be 

advertised as a Medicare Select policy 

or certificate 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 

insured under a Medicare Select policy 

or certificate 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 policy or certificate. 

(4) ‘‘Medicare Select policy’’ or 

‘‘Medicare Select certificate’’ mean 

respectively a Medicare supplement 

policy or certificate 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 insured 

under a Medicare Select policy. 

(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 

commissioner within which an issuer is 

authorized to offer a Medicare Select 

policy. 

C. The commissioner may authorize 

an issuer to offer a Medicare Select 

policy or certificate, pursuant to this 

section and Section 4358 of the 

Omnibus Budget Reconciliation Act 

(OBRA) of 1990 if the commissioner 

finds that the issuer has satisfied all of 

the requirements of this regulation. 


tjames on PRODPC75 with NOTICES2
18824 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 

D. A Medicare Select issuer shall not 

issue a Medicare Select policy or 

certificate in this state until its plan of 

operation has been approved by the 

commissioner. 

E. A Medicare Select issuer shall file 

a proposed plan of operation with the 

commissioner in a format prescribed by 

the commissioner. 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 that: 

(a) 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 after-hour care shall 

reflect usual practice in the local area. 

Geographic availability shall reflect the 

usual travel times within the 

community. 

(b) The number of network providers 

in the service area is sufficient, with 

respect to current and expected 

policyholders, either: 

(i) To deliver adequately all services 

that are subject to a restricted network 

provision; or 

(ii) To make appropriate referrals. 

(c) There are written agreements with 

network providers describing specific 

responsibilities. 

(d) Emergency care is available 

twenty-four (24) hours per day and 

seven (7) 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, there are written agreements with 

network providers prohibiting the 

providers from billing or otherwise 

seeking reimbursement from or recourse 

against any individual insured under a 

Medicare Select policy or certificate. 

This paragraph shall not apply to 

supplemental charges or coinsurance 

amounts as stated in the Medicare 

Select policy or certificate. 

(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: 

(a) The formal organizational 

structure; 

(b) The written criteria for selection, 

retention and removal of network 

providers; and 

(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 Subsection I. 

(7) Any other information requested 

by the commissioner. 

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 

commissioner prior to implementing the 

changes. Changes shall be considered 

approved by the commissioner after 

thirty (30) days unless specifically 

disapproved. 

(2) An updated list of network 

providers shall be filed with the 

commissioner at least quarterly. 

G. A Medicare Select policy or 

certificate 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 a condition; and 

(2) It is not reasonable to obtain 

services through a network provider. 

H. A Medicare Select policy or 

certificate shall provide payment for full 

coverage under the policy 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 policy or 

certificate 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 premiums of the Medicare 

Select policy or certificate with: 

(a) Other Medicare supplement 

policies or certificates offered by the 

issuer; and 

(b) Other Medicare Select policies or 

certificates. 

(2) A description (including address, 

phone 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. Except to the extent 

specified in the policy or certificate, 

expenses incurred when using out-ofnetwork providers do not count toward 

the out-of-pocket annual limit contained 

in plans K and L. 

(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 policyholder’s 

rights to purchase any other Medicare 

supplement policy or certificate 

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 

policy or certificate, 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 Subsection I of 

this section and that the applicant 

understands the restrictions of the 

Medicare Select policy or certificate. 

K. A Medicare Select issuer shall have 

and use procedures for hearing 

complaints and resolving written 

grievances from the subscribers. The 

procedures shall be aimed at mutual 

agreement for settlement and may 

include arbitration procedures. 

(1) The grievance procedure shall be 

described in the policy and certificates 

and in the outline of coverage. 

(2) At the time the policy or certificate 

is issued, the issuer shall provide 

detailed information to the policyholder 

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 

commissioner regarding its grievance 

procedure. The report shall be in a 

format prescribed by the commissioner 

and shall contain the number of 

grievances filed in the past year and a 

summary of the subject, nature and 

resolution of such grievances. 

L. At the time of initial purchase, a 

Medicare Select issuer shall make 

available to each applicant for a 

Medicare Select policy or certificate the 

opportunity to purchase any Medicare 

supplement policy or certificate 

otherwise offered by the issuer. 

M. (1) At the request of an individual 

insured under a Medicare Select policy 

or certificate, a Medicare Select issuer 

shall make available to the individual 

insured the opportunity to purchase a 

Medicare supplement policy or 

certificate offered by the issuer which 

has comparable or lesser benefits and 


tjames on PRODPC75 with NOTICES2
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18825 

which does not contain a restricted 

network provision. The issuer shall 

make the policies or certificates 

available without requiring evidence of 

insurability after the Medicare Select 

policy or certificate has been in force for 

six (6) months. 

(2) For the purposes of this 

subsection, a Medicare supplement 

policy or certificate will be considered 

to have comparable or lesser benefits 

unless it contains one or more 

significant benefits not included in the 

Medicare Select policy or certificate 

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 Part B 

excess charges. 

N. Medicare Select policies and 

certificates shall provide for 

continuation of coverage in the event 

the Secretary of Health and Human 

Services determines that Medicare 

Select policies and certificates 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 individual 

insured under a Medicare Select policy 

or certificate the opportunity to 

purchase any Medicare supplement 

policy or certificate offered by the issuer 

which has comparable or lesser benefits 

and which does not contain a restricted 

network provision. The issuer shall 

make the policies and certificates 

available without requiring evidence of 

insurability. 

(2) For the purposes of this 

subsection, a Medicare supplement 

policy or certificate will be considered 

to have comparable or lesser benefits 

unless it contains one or more 

significant benefits not included in the 

Medicare Select policy or certificate 

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 Part B 

excess charges. 

O. A Medicare Select issuer 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. 

Section 11. Open Enrollment 

A. An issuer shall not deny or 

condition the issuance or effectiveness 

of any Medicare supplement policy or 

certificate available for sale in this state, 

nor discriminate in the pricing of a 

policy or certificate 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 policy or certificate 

that is submitted prior to or during the 

six (6) 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 policy and certificate 

currently available from an insurer shall 

be made available to all applicants who 

qualify under this subsection without 

regard to age. 

B. (1) If an applicant qualifies under 

Subsection A and submits an 

application during the time period 

referenced in Subsection A and, as of 

the date of application, has had a 

continuous period of creditable 

coverage of at least six (6) months, the 

issuer shall not exclude benefits based 

on a preexisting condition. 

(2) If the applicant qualifies under 

Subsection A and submits an 

application during the time period 

referenced in Subsection A and, as of 

the date of application, has had a 

continuous period of creditable 

coverage that is less than six (6) 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 Secretary 

shall specify the manner of the 

reduction under this subsection. 

Drafting Note: The Secretary has 

developed regulations pursuant to HIPAA 

regarding methods of counting creditable 

coverage, which govern the way the 

reduction is to be applied in Section 11B(2). 

C. Except as provided in Subsection B 

and Sections 12 and 23, Subsection A 

shall not be construed as preventing the 

exclusion of benefits under a policy, 

during the first six (6) months, based on 

a preexisting condition for which the 

policyholder or certificate holder 

received treatment or was otherwise 

diagnosed during the six (6) months 

before the coverage became effective. 

Section 12. Guaranteed Issue for 

Eligible Persons 

A. Guaranteed Issue. 

(1) Eligible persons are those 

individuals described in Subsection B 

who seek to enroll under the policy 

during the period specified in 

Subsection C, and who submit evidence 

of the date of termination, 

disenrollment, or Medicare Part D 

enrollment with the application for a 

Medicare supplement policy. 

(2) With respect to eligible persons, an 

issuer shall not deny or condition the 

issuance or effectiveness of a Medicare 

supplement policy described in 

Subsection E that is offered and is 

available for issuance to new enrollees 

by the issuer, shall not discriminate in 

the pricing of such a Medicare 

supplement policy because of health 

status, claims experience, receipt of 

health care, or medical condition, and 

shall not impose an exclusion of 

benefits based on a preexisting 

condition under such a Medicare 

supplement policy. 

B. Eligible Persons. 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 terminates, or 

the plan ceases to provide all such 

supplemental health benefits to the 

individual; 

Drafting Note: Paragraph (1) above uses the 

federal legislative language from the 

Balanced Budget Act of 1997 (Pub L. 105–33) 

that defines an eligible person as an 

individual with respect to whom an 

employee welfare benefit plan terminates, or 

ceases to provide ‘‘all’’ health benefits that 

supplement Medicare. There was protracted 

discussion among the drafters about the 

interpretation of ‘‘all’’ in this context: if the 

employer drops some supplemental benefits, 

but not all such benefits, from its welfare 

plan, should the individual be eligible for a 

guaranteed issue Medicare supplement 

product? This question may become crucial 

to certain individuals depending on the 

benefits dropped by the employer. Federal 

legislative history appears to indicate the 

intention that the word ‘‘all’’ be strictly 

construed so as to require termination or 

cessation of all supplemental health benefits. 

States, however, can provide greater 

protections to beneficiaries and may wish to 

include, as eligible persons, individuals who 

have lost ‘‘some or all’’ or ‘‘substantially all’’ 

of their supplemental health benefits, to 

encompass situations where a change is 

made in an employee welfare benefit plan 

that reduces the amount of supplemental 

health benefits available to the individual. 

States that consider alternative language are 

reminded to consider the impact of issues 

such as plan changes that result in adverse 

selection, duplicate coverage, triggering the 

requirement for plan administrator notice 

(see Section 12D) and other issues. 

(2) The individual is enrolled with a 

Medicare Advantage organization under 

a Medicare Advantage plan under part 

C of Medicare, and any of the following 

circumstances apply, or the individual 

is 65 years of age or older and is 

enrolled with a Program of All-Inclusive 

Care for the Elderly (PACE) provider 

under Section 1894 of the Social 


tjames on PRODPC75 with NOTICES2
18826 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 

Security Act, and there are 

circumstances similar to those described 

below that would permit 

discontinuance of the individual’s 

enrollment with such provider if such 

individual were enrolled in a Medicare 

Advantage plan: 

(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, but not including 

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 individual demonstrates, in 

accordance with guidelines established 

by the Secretary, that: 

(i) The organization offering the plan 

substantially violated a material 

provision of the organization’s contract 

under this part in relation to the 

individual, including the failure to 

provide an enrollee on a timely basis 

medically necessary care for which 

benefits are available under the plan or 

the failure to provide such covered care 

in accordance with applicable quality 

standards; or 

(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; or 

(e) The individual meets such other 

exceptional conditions as the Secretary 

may provide. 

(3)(a) The individual is enrolled with: 

(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); or 

(iv) An organization under a Medicare 

Select policy; and 

(b) The enrollment ceases under the 

same circumstances that would permit 

discontinuance of an individual’s 

election of coverage under Section 

12B(2). 

Drafting Note: Paragraph (3)(a)(iv) above is 

not required if there is a provision in state 

law or regulation that provides for the 

continuation or conversion of Medicare 

Select policies or certificates. 

(4) The individual is enrolled under a 

Medicare supplement policy and the 

enrollment ceases because: 

(a)(i) Of the insolvency of the issuer 

or bankruptcy of the non-issuer 

organization; or 

(ii) Of other involuntary termination 

of coverage or enrollment under the 

policy; 

(b) The issuer of the policy 

substantially violated a material 

provision of the policy; or 

(c) The issuer, or an agent or other 

entity acting on the issuer’s behalf, 

materially misrepresented the policy’s 

provisions in marketing the policy to 

the individual; 

Drafting Note: The reference to 

‘‘insolvency of the issuer’’ in Paragraph 4(a) 

above is not required if there is a provision 

in state law or regulation that provides for 

the continuation or conversion of Medicare 

supplement policies or certificates. 

(5)(a) The individual was enrolled 

under a Medicare supplement policy 

and terminates enrollment and 

subsequently enrolls, for the first time, 

with any Medicare Advantage 

organization under a Medicare 

Advantage plan under part C of 

Medicare, 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; and 

(b) The subsequent enrollment under 

subparagraph (a) is terminated by the 

enrollee during any period within the 

first twelve (12) months of such 

subsequent enrollment (during which 

the enrollee is permitted to terminate 

such subsequent enrollment under 

Section 1851(e) of the federal Social 

Security Act); or 

(6) The individual, upon first 

becoming eligible for benefits under part 

A of Medicare at age 65, enrolls in a 

Medicare Advantage plan under part C 

of Medicare, or with a PACE provider 

under Section 1894 of the Social 

Security Act, and disenrolls from the 

plan or program by not later than twelve 

(12) months after the effective date of 

enrollment. 

(7) The individual enrolls in a 

Medicare Part D plan during the initial 

enrollment period and, at the time of 

enrollment in Part D, was enrolled 

under a Medicare supplement policy 

that covers outpatient prescription 

drugs and the individual terminates 

enrollment in the Medicare supplement 

policy and submits evidence of 

enrollment in Medicare Part D along 

with the application for a policy 

described in Subsection E(4). 

Drafting Note: Federal law provides a 

guaranteed issue right to a Medicare 

supplement insurance product to individuals 

who enroll in Medicare Part B at age 65. 

States may wish to consider extending this 

right to other classes of individuals, such as 

those who postpone enrollment in Medicare 

Part B until after age 65 because they are 

working and are enrolled in a group health 

insurance plan. 

Drafting Note: Paragraph (7) does not 

preclude an individual from applying for a 

new Medigap policy without drug coverage 

while still enrolled in the policy with drug 

coverage. The issuer will terminate the drug 

policy when it issues the new policy without 

drug coverage. 

C. Guaranteed Issue Time Periods. 

(1) In the case of an individual 

described in Subsection B(1), the 

guaranteed issue period begins on the 

later of: (i) the date the individual 

receives a notice of termination or 

cessation of all supplemental health 

benefits (or, if a notice is not received, 

notice that a claim has been denied 

because of a termination or cessation); 

or (ii) the date that the applicable 

coverage terminates or ceases; and ends 

sixty-three (63) days thereafter; 

(2) In the case of an individual 

described in Subsection B(2), B(3), B(5) 

or B(6) whose enrollment is terminated 

involuntarily, the guaranteed issue 

period begins on the date that the 

individual receives a notice of 

termination and ends sixty-three (63) 

days after the date the applicable 

coverage is terminated; 

(3) In the case of an individual 

described in Subsection B(4)(a), the 

guaranteed issue period begins on the 

earlier of: (i) the date that the individual 

receives a notice of termination, a notice 

of the issuer’s bankruptcy or insolvency, 

or other such similar notice if any, and 

(ii) the date that the applicable coverage 

is terminated, and ends on the date that 

is sixty-three (63) days after the date the 

coverage is terminated; 

(4) In the case of an individual 

described in Subsection B(2), B(4)(b), 

B(4)(c), B(5) or B(6) who disenrolls 

voluntarily, the guaranteed issue period 

begins on the date that is sixty (60) days 

before the effective date of the 

disenrollment and ends on the date that 

is sixty-three (63) days after the effective 

date; 

(5) In the case of an individual 

described in Subsection B(7), the 


tjames on PRODPC75 with NOTICES2
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18827 

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 sixty-day 

period immediately preceding the initial 

Part D enrollment period and ends on 

the date that is sixty-three (63) days 

after the effective date of the 

individual’s coverage under Medicare 

Part D; and 

(6) In the case of an individual 

described in Subsection B but not 

described in the preceding provisions of 

this Subsection, the guaranteed issue 

period begins on the effective date of 

disenrollment and ends on the date that 

is sixty-three (63) days after the effective 

date. 

D. Extended Medigap Access for 

Interrupted Trial Periods. 

(1) In the case of an individual 

described in Subsection B(5) (or deemed 

to be so described, pursuant to this 

paragraph) whose enrollment with an 

organization or provider described in 

Subsection B(5)(a) is involuntarily 

terminated within the first twelve (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 Section 12B(5); 

(2) In the case of an individual 

described in Subsection B(6) (or deemed 

to be so described, pursuant to this 

paragraph) whose enrollment with a 

plan or in a program described in 

Subsection B(6) is involuntarily 

terminated within the first twelve (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 

Section 12B(6); and 

(3) For purposes of Subsections B(5) 

and B(6), no enrollment of an individual 

with an organization or provider 

described in Subsection B(5)(a), or with 

a plan or in a program described in 

Subsection B(6), may 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. Products to Which Eligible Persons 

Are Entitled. The Medicare supplement 

policy to which eligible persons are 

entitled under: 

(1) Section 12B(1), (2), (3) and (4) is 

a Medicare supplement policy which 

has a benefit package classified as Plan 

A, B, C, F (including F with a high 

deductible), K or L offered by any 

issuer. 

(2)(a) Subject to Subparagraph (b), 

Section 12B(5) is the same Medicare 

supplement policy in which the 

individual was most recently previously 

enrolled, if available from the same 

issuer, or, if not so available, a policy 

described in Paragraph (1); 

(b) After December 31, 2005, if the 

individual was most recently enrolled 

in a Medicare supplement policy with 

an outpatient prescription drug benefit, 

a Medicare supplement policy described 

in this subparagraph is: 

(i) The policy available from the same 

issuer but modified to remove 

outpatient prescription drug coverage; 

or 

(iii) At the election of the 

policyholder, an A, B, C, F (including F 

with a high deductible), K or L policy 

that is offered by any issuer; 

(3) Section 12B(6) shall include any 

Medicare supplement policy offered by 

any issuer; 

(4) Section 12B(7) is a Medicare 

supplement policy that has a benefit 

package classified as Plan A, B, C, F 

(including F with a high deductible), K 

or L, and that is offered and is available 

for issuance to new enrollees by the 

same issuer that issued the individual’s 

Medicare supplement policy with 

outpatient prescription drug coverage. 

Drafting Note: Under federal law, for states 

that have an alternative form of 

standardization under a federal waiver and 

offer benefit packages other than Plans A, B, 

C, D, F, F with High Deductible, G, K, L, M 

and N, the references to benefit packages 

above are deemed references to comparable 

benefit packages offered in that state. Those 

states should amend the language 

accordingly. 

F. Notification provisions. 

(1) At the time of an event described 

in Subsection B of this section because 

of 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 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 policies under 

Subsection A. Such notice shall be 

communicated contemporaneously with 

the notification of termination. 

(2) At the time of an event described 

in Subsection B of this section because 

of 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 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 policies under 

Section 12A. Such notice shall be 

communicated within ten working days 

of the issuer receiving notification of 

disenrollment. 

Drafting Note: States should ensure that 

educational and public information materials 

it develops related to Medicare include a 

thorough description of the rights outlined in 

Section 12F. 

Section 13. Standards for Claims 

Payment 

A. An issuer shall comply with 

section 1882(c)(3) of the Social Security 

Act (as enacted by section 4081(b)(2)(C) 

of the Omnibus Budget Reconciliation 

Act of 1987 (OBRA) 1987, Pub. L. No. 

100–203) by: 

(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 policy name, number and a 

central mailing address to which notices 

from a Medicare carrier may be sent; 

(5) Paying user fees for claim notices 

that are transmitted electronically or 

otherwise; and 

(6) Providing to the Secretary of 

Health and Human Services, 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 Subsection A above shall be 

certified on the Medicare supplement 

insurance experience reporting form. 

Section 14. Loss Ratio Standards and 

Refund or Credit of Premium 

A. Loss Ratio Standards. 

(1) (a) A Medicare Supplement policy 

form or certificate form shall not be 

delivered or issued for delivery unless 

the policy form or certificate form can 

be expected, as estimated for the entire 

period for which rates are computed to 

provide coverage, to return to 

policyholders and certificate holders in 

the form of aggregate benefits (not 

including anticipated refunds or credits) 

provided under the policy form or 

certificate form: 


tjames on PRODPC75 with NOTICES2
18828 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 

(i) At least seventy-five percent (75%) 

of the aggregate amount of premiums 

earned in the case of group policies; or 

(ii) At least sixty-five percent (65%) of 

the aggregate amount of premiums 

earned in the case of individual 

policies; 

(b) Calculated on the basis of incurred 

claims experience or incurred health 

care expenses where coverage is 

provided by a health maintenance 

organization on a service rather than 

reimbursement basis and earned 

premiums for the period and in 

accordance with accepted actuarial 

principles and practices. Incurred 

health care expenses where coverage is 

provided by a health maintenance 

organization shall not include: 

(i) Home office and overhead costs; 

(ii) Advertising costs; 

(iii) Commissions and other 

acquisition costs; 

(iv) Taxes; 

(v) Capital costs; 

(vi) Administrative costs; and 

(vii) Claims processing costs. 

(2) All filings of rates and rating 

schedules shall demonstrate that 

expected claims in relation to premiums 

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 

Subsection A(1) of this section and 

Subsection C(3) of Section 15 only, 

policies issued as a result of 

solicitations of individuals through the 

mails or by mass media advertising 

(including both print and broadcast 

advertising) shall be deemed to be 

individual policies. 

Drafting Note: Subsection A(3) replicates 

language contained in the Omnibus Budget 

Reconciliation Act of 1990 (Pub. L. No. 101– 

508). It allows direct mail group policies sold 

on an individual basis to meet the minimum 

loss ratio required of individual business 

(65%) rather than that required of group 

business (75%). The NAIC eliminated this 

concept from this regulation in 1987 (I 

Proceedings of the NAIC, pp. 651, 673 

(1988)). At that time, NAIC required direct 

mail group business to meet the same loss 

ratio requirement as other group business, 

regardless of whether the business was sold 

on an individual basis. The NAIC encourages 

states to apply the 75% loss ratio to all group 

business. Although NAIC is restricted from 

making revisions to its models that are not 

in conformance with OBRA 1990, states are 

free to impose more stringent requirements 

than OBRA. 

(4) For policies issued prior to [insert 

effective date from Section 26 of this 

model, the effective date of the states 

regulation implementing the 

requirements of OBRA 1990], expected 

claims in relation to premiums shall 

meet: 

(a) The originally filed anticipated 

loss ratio when combined with the 

actual experience since inception; 

(b) The appropriate loss ratio 

requirement from Subsection A(1)(a)(i) 

and (ii) when combined with actual 

experience beginning with [insert 

effective date of this revision] to date; 

and 

(c) The appropriate loss ratio 

requirement from Subsection A(1)(a)(i) 

and (ii) over the entire future period for 

which the rates are computed to provide 

coverage. 

Drafting Note: The appropriate loss ratio 

requirement from Subsection A(1)(a)(i) and 

(ii) for all group policies subject to an 

individual loss ratio standard when issued is 

65 percent. States may amend Section 13A(4) 

to permit or require aggregation of closed 

blocks of business upon approval of CMS. 

B. Refund or Credit Calculation. 

(1) An issuer shall collect and file 

with the commissioner by May 31 of 

each year the data contained in the 

applicable reporting form contained in 

Appendix A for each type 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 in a standard Medicare supplement 

benefit plan. For purposes of the refund 

or credit calculation, experience on 

policies issued within the reporting year 

shall be excluded. 

(3) For the purposes of this section, 

policies or certificates issued prior to 

[insert effective date from Section 26 of 

this model, the effective date of the 

states regulation implementing the 

requirements of OBRA 1990], the issuer 

shall make the refund or credit 

calculation separately for all individual 

policies (including all group policies 

subject to an individual loss ratio 

standard when issued) combined and all 

other group policies combined for 

experience after the [insert effective date 

of this amendment]. The first report 

shall be due by May 31, [insert (effective 

year + 2) of this amendment]. 

Drafting Note: Subsection B(3) implements 

the requirements of Section 171 of the Social 

Security Act Amendments of 1994 that 

require a refund or credit calculation for prestandardized Medicare supplement policies, 

but only for experience subsequent to the 

date the state amends its regulation. 

(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 a de minimis level. 

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 of Health and Human 

Services, but in no event shall it be less 

than the average rate of interest for 

thirteen-week Treasury notes. A refund 

or credit against premiums due shall be 

made by September 30 following the 

experience year upon which the refund 

or credit is based. 

C. Annual filing of Premium Rates. 

An issuer of Medicare supplement 

policies and certificates issued before or 

after the effective date of [insert citation 

to state’s regulation] in this state shall 

file annually its rates, rating schedule 

and supporting documentation 

including ratios of incurred losses to 

earned premiums by policy duration for 

approval by the commissioner in 

accordance with the filing requirements 

and procedures prescribed by the 

commissioner. 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 

rates are computed. The demonstration 

shall exclude active life reserves. An 

expected third-year loss ratio which is 

greater than or equal to the applicable 

percentage shall be demonstrated for 

policies or certificates in force less than 

three (3) years. As soon as practicable, 

but prior to the effective date of 

enhancements in Medicare benefits, 

every issuer of Medicare supplement 

policies or certificates in this state shall 

file with the commissioner, in 

accordance with the applicable filing 

procedures of this state: 

(1)(a) Appropriate premium 

adjustments necessary to produce loss 

ratios as anticipated for the current 

premium for the applicable policies or 

certificates. The supporting documents 

necessary to justify the adjustment shall 

accompany the filing. 

(b) An issuer shall make premium 

adjustments necessary to produce an 

expected loss ratio under the policy or 

certificate to conform to minimum loss 

ratio standards for Medicare supplement 

policies and which are expected to 

result in a loss ratio at least as great as 

that originally anticipated in the rates 

used to produce current premiums by 

the issuer for the Medicare supplement 

policies or certificates. No premium 

adjustment which would modify the 

loss ratio experience under the policy 


tjames on PRODPC75 with NOTICES2
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18829 

other than the adjustments described 

herein shall be made with respect to a 

policy at any time other than upon its 

renewal date or anniversary date. 

(c) If an issuer fails to make premium 

adjustments acceptable to the 

commissioner, the commissioner may 

order premium adjustments, refunds or 

premium credits deemed necessary to 

achieve the loss ratio required by this 

section. 

(2) Any appropriate riders, 

endorsements or policy forms needed to 

accomplish the Medicare supplement 

policy or certificate modifications 

necessary to eliminate benefit 

duplications with Medicare. The riders, 

endorsements or policy forms shall 

provide a clear description of the 

Medicare supplement benefits provided 

by the policy or certificate. 

D. Public Hearings. The commissioner 

may conduct a public hearing to gather 

information concerning a request by an 

issuer for an increase in a rate for a 

policy form or certificate form issued 

before or after the effective date of 

[insert citation to state’s regulation] 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 

commissioner. 

Drafting Note: This section does not in any 

way restrict a commissioner’s statutory 

authority, elsewhere granted, to approve or 

disapprove rates. 

Section 15. Filing and Approval of 

Policies and Certificates and Premium 

Rates 

A. An issuer shall not deliver or issue 

for delivery a policy or certificate to a 

resident of this state unless the policy 

form or certificate form has been filed 

with and approved by the commissioner 

in accordance with filing requirements 

and procedures prescribed by the 

commissioner. 

B. An issuer shall file any riders or 

amendments to policy or certificate 

forms to delete outpatient prescription 

drug benefits as required by the 

Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003 only with the commissioner in the 

state in which the policy or certificate 

was issued. 

C. An issuer shall not use or change 

premium rates for a Medicare 

supplement policy or certificate unless 

the rates, rating schedule and 

supporting documentation have been 

filed with and approved by the 

commissioner in accordance with the 

filing requirements and procedures 

prescribed by the commissioner. 

D. (1) Except as provided in Paragraph 

(2) of this subsection, an issuer shall not 

file for approval more than one form of 

a policy or certificate of each type for 

each standard Medicare supplement 

benefit plan. 

(2) An issuer may offer, with the 

approval of the commissioner, up to 

four (4) additional policy forms or 

certificate forms 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 policy, a 

group policy, an individual Medicare 

Select policy, or a group Medicare 

Select policy. 

Drafting Note: As a result of MMA, issuers 

now may have H, I, and J (including J with 

a high deductible) both with and without 

outpatient prescription drug coverage. The 

language in Subsection D is flexible enough 

to allow the issuer and regulator to 

incorporate this factor to allow for additional 

policy forms. 

Drafting Note: The filing of 2010 

Standardized plans policy forms to take the 

place of 1990 Standardized plans policy 

forms prior to the actual withdrawal of the 

1990 standardized plans policy forms should 

be permitted. 

E. (1) Except as provided in Paragraph 

(1)(a), an issuer shall continue to make 

available for purchase any policy form 

or certificate form issued after the 

effective date of this regulation that has 

been approved by the commissioner. A 

policy form or certificate form shall not 

be considered to be available for 

purchase unless the issuer has actively 

offered it for sale in the previous twelve 

(12) months. 

(a) An issuer may discontinue the 

availability of a policy form or 

certificate form if the issuer provides to 

the commissioner in writing its decision 

at least thirty (30) days prior to 

discontinuing the availability of the 

form of the policy or certificate. After 

receipt of the notice by the 

commissioner, the issuer shall no longer 

offer for sale the policy form or 

certificate form in this state. 

(b) An issuer that discontinues the 

availability of a policy form or 

certificate form pursuant to 

Subparagraph (a) shall not file for 

approval a new policy form or 

certificate form of the same type for the 

same standard Medicare supplement 

benefit plan as the discontinued form 

for a period of five (5) years after the 

issuer provides notice to the 

commissioner of the discontinuance. 

The period of discontinuance may be 

reduced if the commissioner 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 

subsection. 

(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 commissioner, 

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 

commissioner 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 policy forms or 

certificate forms of the same type in a 

standard Medicare supplement benefit 

plan shall be combined for purposes of 

the refund or credit calculation 

prescribed in [insert citation to Section 

14 of NAIC Medicare Supplement 

Insurance Model Regulation]. 

(2) Forms assumed under an 

assumption reinsurance agreement shall 

not be combined with the experience of 

other forms for purposes of the refund 

or credit calculation. 

Drafting Note: It has come to the attention 

of the NAIC that the use of attained age rating 

in the determination of rates in Medicare 

supplement policies may result in situations 

to which a regulatory response is desirable. 

States should assess their Medicare 

supplement marketplace to determine 

whether a regulatory response is needed. The 

following provisions may be included as a 

new subsection to Section 15. The first 

option prohibits insurers from attained age 

rating as a methodology for setting rates. The 

second option does not prohibit the use of 

attained age rating but requires Medicare 

supplement insurers who do use attained age 

rating as a rate setting methodology to apply 

the age component to its rates annually. The 

effective date of the regulation should 


tjames on PRODPC75 with NOTICES2
18830 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 

provide sufficient time for insurers to re-rate 

approved policy forms in accordance with 

Section 15A and for the insurance 

department to approve (according to its rate 

filing practices and procedures), such reratings prior to the effective date of the 

regulation. 

Option 1 

G. An issuer shall not present for 

filing or approval a rate structure for its 

Medicare supplement policies or 

certificates issued after the effective date 

of the amendment of this regulation 

based upon attained age rating as a 

structure or methodology. 

Option 2 

G. An issuer shall not present for 

filing or approval a rate structure for its 

Medicare supplement policies or 

certificates issued after the effective date 

of the amendment of this regulation 

based upon a structure or methodology 

with any groupings of attained ages 

greater than one year. The ratio between 

rates for successive ages shall increase 

smoothly as age increases. 

Drafting Note: State insurance regulators 

are encouraged to consider whether it is 

necessary to require issuers to file new forms 

where the only changes in the forms reflect 

year-to-year modifications in Medicare 

deductible and coinsurance amounts. 

Section 16. Permitted Compensation 

Arrangements 

A. An issuer or other entity may 

provide commission or other 

compensation to an agent or other 

representative for the sale of a Medicare 

supplement policy or certificate 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 policy or certificate in the 

second year or period. 

B. The commission or other 

compensation provided in subsequent 

(renewal) years must be the same as that 

provided in the second year or period 

and must be provided for no fewer than 

five (5) renewal years. 

C. No issuer or other entity shall 

provide compensation to its agents or 

other producers and no agent or 

producer shall receive compensation 

greater than the renewal compensation 

payable by the replacing issuer on 

renewal policies or certificates if an 

existing policy or certificate is replaced. 

D. For purposes of this section, 

‘‘compensation’’ includes pecuniary or 

non-pecuniary remuneration of any 

kind relating to the sale or renewal of 

the policy or certificate including but 

not limited to bonuses, gifts, prizes, 

awards and finders fees. 

Section 17. Required Disclosure 

Provisions 

A. General Rules. 

(1) Medicare supplement policies and 

certificates shall include a renewal or 

continuation provision. The language or 

specifications of the provision shall be 

consistent with the type of contract 

issued. The provision shall be 

appropriately captioned and shall 

appear on the first page of the policy, 

and shall include any reservation by the 

issuer of the right to change premiums 

and any automatic renewal premium 

increases based on the policyholder’s 

age. 

(2) Except for riders or endorsements 

by which the issuer effectuates a request 

made in writing by the insured, 

exercises a specifically reserved right 

under a Medicare supplement policy, or 

is required to reduce or eliminate 

benefits to avoid duplication of 

Medicare benefits, all riders or 

endorsements added to a Medicare 

supplement policy after date of issue or 

at reinstatement or renewal which 

reduce or eliminate benefits or coverage 

in the policy shall require a signed 

acceptance by the insured. After the 

date of policy or certificate issue, any 

rider or endorsement which increases 

benefits or coverage with a concomitant 

increase in premium during the policy 

term shall be agreed to in writing signed 

by the insured, unless the benefits are 

required by the minimum standards for 

Medicare supplement policies, or if the 

increased benefits or coverage is 

required by law. Where a separate 

additional premium is charged for 

benefits provided in connection with 

riders or endorsements, the premium 

charge shall be set forth in the policy. 

(3) Medicare supplement policies or 

certificates shall not provide for the 

payment of benefits based on standards 

described as ‘‘usual and customary,’’ 

‘‘reasonable and customary’’ or words of 

similar import. 

(4) If a Medicare supplement policy or 

certificate contains any limitations with 

respect to preexisting conditions, such 

limitations shall appear as a separate 

paragraph of the policy and be labeled 

as ‘‘Preexisting Condition Limitations.’’ 

(5) Medicare supplement policies and 

certificates shall have a notice 

prominently printed on the first page of 

the policy or certificate or attached 

thereto stating in substance that the 

policyholder or certificate holder shall 

have the right to return the policy or 

certificate within thirty (30) days of its 

delivery and to have the premium 

refunded if, after examination of the 

policy or certificate, the insured person 

is not satisfied for any reason. 

(6)(a) Issuers of accident and sickness 

policies or certificates which 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 CMS and in a type 

size no smaller than 12 point type. 

Delivery of the Guide shall be made 

whether or not the policies or 

certificates are advertised, solicited or 

issued as Medicare supplement policies 

or certificates as defined in this 

regulation. Except in the case of direct 

response issuers, delivery of the Guide 

shall be made to the applicant at the 

time of application and 

acknowledgement 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 policy is 

delivered. 

(b) For the purposes of this section, 

‘‘form’’ means the language, format, type 

size, type proportional spacing, bold 

character, and line spacing. 

B. Notice Requirements. 

(1) As soon as practicable, but no later 

than thirty (30) days prior to the annual 

effective date of any Medicare benefit 

changes, an issuer shall notify its 

policyholders and certificate holders of 

modifications it has made to Medicare 

supplement insurance policies or 

certificates in a format acceptable to the 

commissioner. The notice shall: 

(a) 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, and 

(b) Inform each policyholder or 

certificate holder as to when any 

premium adjustment is to be made due 

to changes in Medicare. 

(2) The notice of benefit modifications 

and any premium adjustments shall be 

in outline form and in clear and simple 

terms so as to facilitate comprehension. 

(3) The notices shall not contain or be 

accompanied by any solicitation. 

C. MMA Notice Requirements. Issuers 

shall comply with any notice 

requirements of the Medicare 

Prescription Drug, Improvement and 

Modernization Act of 2003. 

D. Outline of Coverage Requirements 

for Medicare Supplement Policies. 

(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 


tjames on PRODPC75 with NOTICES2
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18831 

acknowledgement of receipt of the 

outline from the applicant; and 

(2) If an outline of coverage is 

provided at the time of application and 

the Medicare supplement policy or 

certificate is issued on a basis which 

would require revision of the outline, a 

substitute outline of coverage properly 

describing the policy or certificate shall 

accompany the policy or certificate 

when it is delivered and contain the 

following statement, in no less than 

twelve (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.’’ 

(3) The outline of coverage provided 

to applicants pursuant to this section 

consists of four parts: a cover page, 

premium information, 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 twelve (12) point type. 

All plans shall be shown on the cover 

page, and the plans that are offered by 

the issuer shall be prominently 

identified. Premium information for 

plans that are offered shall be shown on 

the cover page or immediately following 

the cover page and shall be prominently 

displayed. The premium and mode shall 

be stated for all plans that are offered to 

the prospective applicant. All possible 

premiums for the prospective applicant 

shall be illustrated 

(4) The following items shall be 

included in the outline of coverage in 

the order prescribed below. 

BILLING CODE 4120–01–P 


tjames on PRODPC75 with NOTICES2
18832 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.000</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18833 


tjames on PRODPC75 with NOTICES2EN24AP09.001</GPH>
18834 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.002</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18835 


tjames on PRODPC75 with NOTICES2EN24AP09.003</GPH>
18836 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.004</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18837 


tjames on PRODPC75 with NOTICES2EN24AP09.005</GPH>
18838 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.006</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18839 


tjames on PRODPC75 with NOTICES2EN24AP09.007</GPH>
18840 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.008</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18841 


tjames on PRODPC75 with NOTICES2EN24AP09.009</GPH>
18842 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.010</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18843 


tjames on PRODPC75 with NOTICES2EN24AP09.011</GPH>
18844 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.012</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18845 


tjames on PRODPC75 with NOTICES2EN24AP09.013</GPH>
18846 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.014</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18847 


tjames on PRODPC75 with NOTICES2EN24AP09.015</GPH>
18848 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.016</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18849 


tjames on PRODPC75 with NOTICES2EN24AP09.017</GPH>
18850 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.018</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18851 


tjames on PRODPC75 with NOTICES2EN24AP09.019</GPH>
18852 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.020</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18853 


tjames on PRODPC75 with NOTICES2EN24AP09.021</GPH>
18854 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.022</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18855 


tjames on PRODPC75 with NOTICES2EN24AP09.023</GPH>
18856 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.024</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18857 


tjames on PRODPC75 with NOTICES2EN24AP09.025</GPH>
18858 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.026</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18859 


tjames on PRODPC75 with NOTICES2EN24AP09.027</GPH>
18860 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.028</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18861 


tjames on PRODPC75 with NOTICES2EN24AP09.029</GPH>
18862 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.030</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18863 


tjames on PRODPC75 with NOTICES2EN24AP09.031</GPH>
18864 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.032</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18865 


tjames on PRODPC75 with NOTICES2EN24AP09.033</GPH>
18866 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.034</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18867 


tjames on PRODPC75 with NOTICES2EN24AP09.035</GPH>
18868 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.036</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18869 


tjames on PRODPC75 with NOTICES2EN24AP09.037</GPH>
18870 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.038</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18871 


tjames on PRODPC75 with NOTICES2EN24AP09.039</GPH>
18872 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.040</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18873 


tjames on PRODPC75 with NOTICES2EN24AP09.041</GPH>
18874 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.042</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18875 


tjames on PRODPC75 with NOTICES2EN24AP09.043</GPH>
18876 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.044</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18877 


tjames on PRODPC75 with NOTICES2EN24AP09.045</GPH>
18878 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.046</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18879 


tjames on PRODPC75 with NOTICES2EN24AP09.047</GPH>
18880 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.048</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18881 


tjames on PRODPC75 with NOTICES2EN24AP09.049</GPH>
18882 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 


tjames on PRODPC75 with NOTICES2EN24AP09.050</GPH>
Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18883 

[FR Doc. E9–9272 Filed 4–23–09; 8:45 am] 

BILLING CODE 4120–01–C 


tjames on PRODPC75 with NOTICES2EN24AP09.051</GPH>