I
104TH CONGRESS
2D SESSION
H. R. 4047
To amend title XVIII of the Social Security Act to provide additional
consumer protections for Medicare supplemental insurance.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 11, 1996
Mrs. JOHNSON of Connecticut (for herself, Mr. DINGELL, Mr. GREENWOOD,
Mr. STARK, Mr. SHAW, Mr. CARDIN, Mr. SAXTON, Mr. PALLONE, Mr.
DEFAZIO, Mr. MCDERMOTT, Mr. KLECZKA, Mr. LEWIS of Georgia, Mr.
MATSUI, Mr. DURBIN, Mr. RAHALL, Mr. ACKERMAN, Mr. ANDREWS, and
Mr. HILLIARD) introduced the following bill; which was referred to the
Committee on Commerce
A BILL
To amend title XVIII of the Social Security Act to provide
additional consumer protections for Medicare supple-
mental insurance.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Medigap Amendments
of 1996’’.
SEC. 2. MEDIGAP AMENDMENTS.
(a) GUARANTEEING ISSUE WITHOUT PREEXISTING
CONDITIONS
FOR CONTINUOUSLY COVERED INDIVID-
UALS.—Section 1882(s) of the Social Security Act (42
U.S.C. 1395ss(s)) is amended—
(1) in paragraph (3), by striking ‘‘paragraphs
(1) and (2)’’ and inserting ‘‘this subsection’’,
(2) by redesignating paragraph (3) as para-
graph (4), and
(3) by inserting after paragraph (2) the follow-
ing new paragraph:
‘‘(3)(A) The issuer of a Medicare supplemental pol-
icy—
‘‘(i) may not deny or condition the issuance or
effectiveness of a Medicare supplemental policy de-
scribed in subparagraph (C);
‘‘(ii) may not discriminate in the pricing of the
policy on the basis of the individual’s health status,
medical condition (including both physical and men-
tal illnesses), claims experience, receipt of health
care, medical history, genetic information, evidence
of insurability (including conditions arising out of
acts of domestic violence), or disability; and
‘‘(iii) may not impose an exclusion of benefits
based on a pre-existing condition,
in the case of an individual described in subparagraph (B)
who seeks to enroll under the policy not later than 63 days
after the date of the termination of enrollment described
in such subparagraph.
‘‘(B) An individual described in this subparagraph is
an individual described in any of the following clauses:
‘‘(i) The individual is enrolled with an eligible
organization under a contract under section 1876 or
with an organization under an agreement under sec-
tion 1833(a)(1)(A) and such enrollment ceases ei-
ther because the individual moves outside the service
area of the organization under the contract or agree-
ment or because of the termination or nonrenewal of
the contract or agreement.
‘‘(ii) The individual is enrolled with an organi-
zation under a policy described in subsection (t) and
such enrollment ceases either because the individual
moves outside the service area of the organization
under the policy, because of the bankruptcy or insol-
vency of the insurer, or because the insurer closes
the block of business to new enrollment.
‘‘(iii) The individual is covered under a medi-
care supplemental policy and such coverage is termi-
nated because of the bankruptcy or insolvency of the
insurer issuing the policy, because the insurer closes
the block of business to new enrollment, or because
the individual changes residence so that the individ-
ual no longer resides in a State in which the issuer
of the policy is licensed.
‘‘(iv) The individual is enrolled under an em-
ployee welfare benefit plan that provides health ben-
efits that supplement the benefits under this title
and the plan terminates or ceases to provide (or sig-
nificantly reduces) such supplemental health benefits
to the individual.
‘‘(v)(I) The individual is enrolled with an eligi-
ble organization under a contract under section
1876 or with an organization under an agreement
under section 1833(a)(1)(A) and such enrollment is
terminated by the enrollee during the first 12
months of such enrollment, but only if the individual
never was previously enrolled with an eligible organi-
zation under a contract under section 1876 or with
an organization under an agreement under section
1833(a)(1)(A).
‘‘(II) The individual is enrolled under a policy
described in subsection (t) and such enrollment is
terminated during the first 12 months of such en-
rollment, but only if the individual never was pre-
viously enrolled under such a policy under such sub-
section.
‘‘(C)(i) Subject to clause (ii), a medicare supple-
mental policy described in this subparagraph, with respect
to an individual described in subparagraph (B), is a policy
the benefits under which are comparable or lesser in rela-
tion to the benefits under the enrollment described in sub-
paragraph (B) (or, in the case of an individual described
in clause (ii), under the most recent medicare supple-
mental policy described in clause (ii)(II)).
‘‘(ii) An individual described in this clause is an indi-
vidual who—
‘‘(I) is described in subparagraph (B)(v), and
‘‘(II) was enrolled in a medicare supplemental
policy within the 63 day period before the enrollment
described in such subparagraph.
‘‘(iii) As a condition for approval of a State regu-
latory program under subsection (b)(1) and for purposes
of applying clause (i) to policies to be issued in the State,
the regulatory program shall provide for the method of
determining whether policy benefits are comparable or
lesser in relation to other benefits. With respect to a State
without such an approved program, the Secretary shall es-
tablish such method.
‘‘(D) At the time of an event described in subpara-
graph (B) because of which an individual ceases enroll-
ment or loses coverage or benefits under a contract or
agreement, policy, or plan, the organization that offers the
contract or agreement, the insurer offering the policy, or
the administrator of the plan, respectively, shall notify the
individual of the rights of the individual, and obligations
of issuers of medicare supplemental policies, under sub-
paragraph (A).’’.
(b) LIMITATION ON IMPOSITION OF PREEXISTING
CONDITION EXCLUSION DURING INITIAL OPEN ENROLL-
MENT PERIOD.—Section 1882(s)(2)(B) of such Act (42
U.S.C. 1395ss(s)(2)(B)) is amended to read as follows:
‘‘(B) In the case of a policy issued during the 6-
month period described in subparagraph (A), the policy
may not exclude benefits based on a pre-existing condi-
tion.’’.
(c) CLARIFYING THE NONDISCRIMINATION REQUIRE-
MENTS DURING
THE 6-MONTH INITIAL ENROLLMENT
PERIOD.—Section 1882(s)(2)(A) of such Act (42 U.S.C.
1395ss(s)(2)(A)) is amended to read as follows:
‘‘(2)(A)(i) In the case of an individual described in
clause (ii), the issuer of a medicare supplemental policy—
‘‘(I) may not deny or condition the issuance or
effectiveness of a medicare supplemental policy, and
‘‘(II) may not discriminate in the pricing of the
policy on the basis of the individual’s health status,
medical condition (including both physical and men-
tal illnesses), claims experience, receipt of health
care, medical history, genetic information, evidence
of insurability (including conditions arising out of
acts of domestic violence), or disability.
‘‘(ii) An individual described in this clause is an indi-
vidual for whom an application is submitted before the end
of the 6-month period beginning with the first month as
of the first day on which the individual is 65 years of age
or older and is enrolled for benefits under part B.’’.
(d) EXTENDING 6-MONTH INITIAL ENROLLMENT
PERIOD TO NON-ELDERLY MEDICARE BENEFICIARIES.—
Section 1882(s)(2)(A)(ii) of such Act (42 U.S.C.
1395ss(s)(2)(A)), as amended by subsection (c), is amend-
ed by striking ‘‘is submitted’’ and all that follows and in-
serting the following: ‘‘is submitted—
‘‘(I) before the end of the 6-month period be-
ginning with the first month as of the first day on
which the individual is 65 years of age or older and
is enrolled for benefits under part B; and
‘‘(II) for each time the individual becomes eligi-
ble for benefits under part A pursuant to section
226(b) or 226A and is enrolled for benefits under
part B, before the end of the 6-month period begin-
ning with the first month as of the first day on
which the individual is so eligible and so enrolled.’’.
(e) EFFECTIVE DATES.—
(1) GUARANTEED
ISSUE.—The amendment
made by subsection (a) shall take effect on July 1,
1997.
(2) LIMIT ON PREEXISTING CONDITION EXCLU-
SIONS.—The amendment made by subsection (b)
shall apply to policies issued on or after July 1,
1997.
(3) CLARIFICATION
OF
NONDISCRIMINATION
REQUIREMENTS.—The amendment made by sub-
section (c) shall apply to policies issued on or after
July 1, 1997.
(4) EXTENSION OF ENROLLMENT PERIOD TO
DISABLED INDIVIDUALS.—
(A) IN GENERAL.—The amendment made
by subsection (d) shall take effect on July 1,
1997.
(B) TRANSITION RULE.—In the case of an
individual who first became eligible for benefits
under part A of title XVIII of the Social Secu-
rity Act pursuant to section 226(b) or 226A of
such Act and enrolled for benefits under part B
of such title before July 1, 1997, the 6-month
period described in section 1882(s)(2)(A) of
such Act shall begin on July 1, 1997. Before
July 1, 1997, the Secretary of Health and
Human Services shall notify any individual de-
scribed in the previous sentence of their rights
in connection with medicare supplemental poli-
cies under section 1882 of such Act, by reason
of the amendment made by subsection (d).
(f) TRANSITION PROVISIONS.—
(1) IN GENERAL.—If the Secretary of Health
and Human Services identifies a State as requiring
a change to its statutes or regulations to conform its
regulatory program to the changes made by this sec-
tion, the State regulatory program shall not be con-
sidered to be out of compliance with the require-
ments of section 1882 of the Social Security Act due
solely to failure to make such change until the date
specified in paragraph (4).
(2) NAIC STANDARDS.—If, within 9 months
after the date of the enactment of this Act, the Na-
tional Association of Insurance Commissioners (in
this subsection referred to as the ‘‘NAIC’’) modifies
its NAIC Model Regulation relating to section 1882
of the Social Security Act (referred to in such sec-
tion as the 1991 NAIC Model Regulation, as modi-
fied pursuant to section 171(m)(2) of the Social Se-
curity Act Amendments of 1994 (Public Law 103–
432) 
and 
as 
modified 
pursuant 
to 
section
1882(d)(3)(A)(vi)(IV) of the Social Security Act, as
added by section 271(a) of the Health Care Port-
ability and Accountability Act of 1996 (Public Law
104–191) to conform to the amendments made by
this section, such revised regulation incorporating
the modifications shall be considered to be the appli-
cable NAIC model regulation (including the revised
NAIC model regulation and the 1991 NAIC Model
Regulation) for the purposes of such section.
(3) SECRETARY
STANDARDS.—If the NAIC
does not make the modifications described in para-
graph (2) within the period specified in such para-
graph, the Secretary of Health and Human Services
shall make the modifications described in such para-
graph and such revised regulation incorporating the
modifications shall be considered to be the appro-
priate Regulation for the purposes of such section.
(4) DATE SPECIFIED.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), the date specified in this paragraph
for a State is the earlier of—
(i) the date the State changes its stat-
utes or regulations to conform its regu-
latory program to the changes made by
this section, or
(ii) 1 year after the date the NAIC or
the Secretary first makes the modifications
under paragraph (2) or (3), respectively.
(B) ADDITIONAL LEGISLATIVE ACTION RE-
QUIRED.—In the case of a State which the Sec-
retary identifies as—
(i) requiring State legislation (other
than legislation appropriating funds) to
conform its regulatory program to the
changes made in this section, but
(ii) having a legislature which is not
scheduled to meet in 1998 in a legislative
session in which such legislation may be
considered,
the date specified in this paragraph is the first
day of the first calendar quarter beginning after
the close of the first legislative session of the
State legislature that begins on or after July 1,
1998. For purposes of the previous sentence, in
the case of a State that has a 2-year legislative
session, each year of such session shall be
deemed to be a separate regular session of the
State legislature.
SEC. 3. INFORMATION FOR MEDICARE BENEFICIARIES.
(a) GRANT PROGRAM.—
(1) IN GENERAL.—The Secretary of Health and
Human Services (in this section referred to as the
‘‘Secretary’’) is authorized to provide grants to—
(A) 
private, 
independent, 
non-profit
consumer organizations, and
(B) State agencies,
to conduct programs to prepare and make available
to medicare beneficiaries comprehensive and under-
standable information on enrollment in health plans
with a medicare managed care contract and in medi-
care supplemental policies in which they are eligible
to enroll. Nothing in this section shall be construed
as preventing the Secretary from making a grant to
an organization under this section to carry out ac-
tivities for which a grant may be made under section
4360 of the Omnibus Budget Reconciliation Act of
1990 (Public Law 101–508).
(2) CONSUMER SATISFACTION SURVEYS.—Any
eligible organization with a medicare managed care
contract or any issuer of a medicare supplemental
policy shall—
(A) conduct, in accordance with minimum
standards 
approved 
by 
the 
Secretary, 
a
consumer satisfaction survey of the enrollees
under such contract or such policy; and
(B) make the results of such survey avail-
able to Secretary and the State Insurance Com-
missioner of the State in which the enrollees are
so enrolled.
The Secretary shall make the results of such surveys
available to organizations which receive grants under
paragraph (1).
(3) INFORMATION.—
(A) 
CONTENTS.—The 
information 
de-
scribed in paragraph (1) shall include at least
a comparison of such contracts and policies, in-
cluding a comparison of the benefits provided,
quality and performance, the costs to enrollees,
the results of consumer satisfaction surveys on
such contracts and policies, as described in sub-
section (a)(2), and such additional information
as the Secretary may prescribe.
(B) INFORMATION STANDARDS.—The Sec-
retary shall develop standards and criteria to
ensure that the information provided to medi-
care beneficiaries under a grant under this sec-
tion is complete, accurate, and uniform.
(1) IN
GENERAL.—Each organization which
provides a medicare managed care contract or issues
a medicare supplemental policy (including a medi-
care select policy) shall pay to the Secretary its pro
rata share (as determined by the Secretary) of the
estimated costs to be incurred by the Secretary in
providing the grants described in subsection (a).
(2) LIMITATION.—The total amount required to
be paid under paragraph (1) shall not exceed
$35,000,000 in any fiscal year.
(3) APPLICATION OF PROCEEDS.—Amounts re-
ceived under paragraph (1) are hereby appropriated
to the Secretary to defray the costs described in
such paragraph and shall remain available until ex-
pended.
(c) DEFINITIONS.—In this section:
(1) MEDICARE
MANAGED
CARE
CONTRACT.—
The term ‘‘medicare managed care contract’’ means
a 
contract 
under 
section 
1876 
or 
section
1833(a)(1)(A) of the Social Security Act.
(2) MEDICARE
SUPPLEMENTAL
POLICY.—The
term ‘‘medicare supplemental policy’’ has the mean-
ing given such term in section 1882(g) of the Social
Security Act.
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