15.14 Insurance for Senior Citizens and Special Needs Individuals

Medicare Supplements

A Medicare Supplement policy is an individual or group accident and sickness insurance policy, or a subscriber contract issued by a Health Insuring Corporation (HIC), that is advertised, marketed, or designed primarily to supplement Medicare by reimbursing hospital, medical, or surgical expenses incurred by individuals eligible for Medicare.

Open Enrollment

A 6-month Medicare Supplement open enrollment period begins on the first day of the month in which an individual is both age 65 or older and enrolled in Medicare Part B. During this open enrollment period, an insurer may not deny coverage, impose conditions, or charge higher premiums for a Medicare Supplement policy based on the applicant’s health status, medical condition, claims history, or prior receipt of health care services.

If an applicant is eligible, submits an application, and has maintained at least 6 months of continuous creditable coverage as of the application date, the insurer may not impose a pre-existing condition exclusion. If the applicant has less than 6 months of creditable coverage, the pre-existing condition exclusion period must be reduced by the amount of time the applicant had prior creditable coverage.

Example: An individual applying for a Medicare Supplement policy has 4 months of prior creditable coverage. In this case, any pre-existing condition exclusion may apply only during the first 2 months of the new Medicare Supplement policy.

Insurers may not engage in any act or practice that is intended to restrict, discourage, or otherwise prevent individuals who are eligible for open enrollment from purchasing any Medicare Supplement policy or certificate offered in this state.

Guaranteed Issue

Individuals who qualify during certain enrollment periods established by regulation may not be denied coverage or subjected to pre-existing condition exclusions or limitations. Eligible individuals include those who have lost existing coverage under an employee welfare benefit plan, a Medicare Advantage Plan, or a Program of All-Inclusive Care for the Elderly (PACE) plan.

Guaranteed issue rights are available for a period of 63 days following the termination of existing coverage.

Regulations and Required Provisions

Medicare Supplement policies and certificates are subject to the following requirements:

• Pre-existing conditions may not be excluded for more than 6 months after the effective date of coverage
  • A pre-existing condition may not be defined more restrictively than a condition for which medical advice was given, or treatment was recommended or received from a physician within the 6 months preceding the effective date of coverage
  • Any pre-existing condition limitation must appear in a separate paragraph of the policy and be clearly labeled “Pre-existing Condition Limitations”
• Benefits for losses resulting from sickness may not be provided on a different basis than benefits for losses resulting from accidents
• Benefits may not be based on standards described as “usual and customary,” “reasonable and customary,” or similar terminology
• Benefits intended to cover Medicare cost-sharing amounts must automatically adjust to reflect changes in Medicare deductibles, copayments, or coinsurance amounts
  • Premiums may also be adjusted to correspond with those changes
• Policies may not include benefits that duplicate benefits already provided by Medicare

Renewal, Termination, and Conversion

Every Medicare Supplement policy must be guaranteed renewable.

An insurer may not cancel or refuse to renew a Medicare Supplement policy under the following circumstances:

• Coverage may not be canceled solely because of the insured’s health condition
• A policy may not be canceled or nonrenewed for any reason other than nonpayment of premium or material misrepresentation
• A spouse’s coverage may not terminate solely because an event causes termination of the insured’s coverage, except for nonpayment of premium

Additional continuation and replacement protections include the following:

• If a group Medicare Supplement policy is terminated by the group policyholder and not replaced, the insurer must offer individual Medicare Supplement coverage to certificate holders
• If an individual terminates membership in a group covered under a Medicare Supplement policy, the insurer must offer the individual either conversion to an individual Medicare Supplement policy or continuation of coverage
• If one group Medicare Supplement policy is replaced by another group Medicare Supplement policy purchased by the same policyholder, the replacing insurer must offer coverage to all individuals covered under the prior policy on the date it terminated
• The new coverage may not impose pre-existing condition exclusions for conditions that were covered under the policy being replaced

Termination of a Medicare Supplement policy or certificate does not affect benefits for a continuous loss that began while the policy was in force. However, continuation of benefits beyond the policy period may be conditioned upon:

• The insured remaining continuously and totally disabled, subject to the policy’s benefit period; or
• Payment of the maximum policy benefits

Note: Receipt of Medicare Part D prescription drug benefits is not considered when determining whether a continuous loss exists.

Reasonable Benefits in Relation to Premiums Charged

Medicare Supplement policies must provide benefits that are reasonable in relation to the premiums charged to policyholders. The Superintendent is responsible for establishing minimum loss ratio standards based on incurred claims experience and earned premiums, using accepted actuarial principles and practices.

Suspension of Coverage

A Medicare Supplement policy must allow the policyholder to request suspension of both policy benefits and premium payments for up to 24 months if the policyholder becomes eligible for medical assistance. The request for suspension must be made within 90 days after becoming eligible for such assistance.

If the policyholder loses eligibility for medical assistance during the suspension period, the Medicare Supplement policy must be automatically reinstated, provided the policyholder notifies the insurer within 90 days after the assistance ends and pays the required premium. The reinstated policy becomes effective on the date the medical assistance terminated.

Reinstatement of Coverage

• The reinstated policy may not impose any waiting period for pre-existing conditions
• Coverage resumed under the policy must be substantially equivalent to the coverage that was in effect before the suspension
• Premium classifications must be reinstated on terms that are at least as favorable as they would have been if the coverage had never been suspended

Any rider or endorsement added to a Medicare Supplement policy after the policy issue date, at reinstatement, or at renewal that reduces or eliminates benefits or coverage must be accepted in writing by the insured. However, signed acceptance is not required if the insurer:

• Provides a written request from the insured authorizing the change
• Exercises a specifically reserved right under the Medicare Supplement policy, other than the right to reduce or eliminate benefits or coverage
• Must reduce or eliminate benefits in order to avoid duplication of Medicare benefits

Minimum Benefit Standards

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) established new standards for Medicare Supplement policies issued or delivered to individuals who became newly eligible for Medicare on or after January 1, 2020.

Medicare Supplement Plan A provides the basic core benefits and may include only the following coverages:

• Coverage of Medicare Part A eligible hospital expenses not paid by Medicare for days 61 through 90 of a Medicare benefit period
• Coverage of Medicare Part A eligible hospital expenses not covered by Medicare for each lifetime inpatient reserve day used under Medicare
• After Medicare hospital inpatient coverage, including all lifetime reserve days, has been exhausted, coverage of 100% of Medicare Part A eligible hospitalization expenses paid at the applicable Prospective Payment System (PPS) rate or other approved Medicare payment standard, subject to a lifetime maximum of 365 additional days
• Coverage under Medicare Parts A and B for the reasonable cost of the first 3 pints of blood
• Coverage of the Medicare Part B coinsurance amount for Medicare-eligible expenses, regardless of hospital confinement, subject to the Medicare Part B deductible
• Coverage of all Medicare Part A hospice care and respite care cost-sharing amounts

Beginning January 1, 2020, Medicare Supplement plans sold to newly eligible Medicare beneficiaries may no longer cover the Medicare Part B deductible. As a result, only Plans A, B, D, G, High Deductible G, K, L, M, and N are available to newly eligible individuals. Individuals who purchased, or were eligible to purchase, Medicare Supplement Plans C or F before January 1, 2020 may keep their existing coverage under those plans.

Plan Benefits	A	B	D	G	K	L	M	N	C*	F*
Part A Coinsurance	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓
Hospital Costs (Up to 365 days)	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓
Part B Coinsurance or Copay	✓	✓	✓	✓	50%	75%	✓	✓	✓	✓
Blood (1st 3 pints)	✓	✓	✓	✓	50%	75%	✓	✓	✓	✓
Part A Hospice Care Coinsurance or Copay	✓	✓	✓	✓	50%	75%	✓	✓	✓	✓
Skilled Nursing Coinsurance			✓	✓	50%	75%	✓	✓	✓	✓
Part A Deductible		✓	✓	✓	50%	75%	50%	✓	✓	✓
Part B Deductible									✓	✓
Part B Excess Charges				✓						✓
Foreign Travel Emergency (Up to Plan Limits)			✓	✓			✓	✓	✓	✓

• Plans C and F are available only to individuals first eligible for Medicare before 2020.

Prohibitions Against Genetic Information

Genetic Information: Information related to an individual’s genetic tests, the genetic tests of family members, and the occurrence of a disease or disorder in family members. Genetic information also includes requests for or receipt of genetic services, as well as participation in clinical research involving genetic services. For a pregnant individual, genetic information includes the genetic information of the fetus. If reproductive technology is being used, it also includes the genetic information of any embryo legally held by the individual or a family member.

The term does not include information regarding an individual’s age or gender.

79-89 Insurance for Senior Citizens and Special Needs Individuals