67078 federal register /vol. 63, no. 233/friday, december ......federal register/vol. 63, no....

67078 Federal Register / Vol. 63, No. 233 / Friday, December 4, 1998 / Notices

in significant changes in the useddevice’s safety or performancespecifications, or intended use. Publiccomment and input were solicitedconcerning alternative regulatoryapproaches the agency might considerin applying regulatory controls upon theactivities of ‘‘refurbishers,’’ ‘‘as-isremarketers,’’ and ‘‘servicers,’’ or othertypes of used-device processorsidentified following comments. As aconsequence of these agency actions,the guidance in CPG 7124.28 concerningthe applicability of registration, listing,and other statutory and regulatoryrequirements to ‘‘reconditioners/rebuilders’’ of used devices is obsoleteand no longer represents current agencythinking. Pending FDA’s issuance of arule or guidance setting forth theagency’s current position on thesematters, FDA is revoking, rather thanrevising CPG 7124.28 in its entirety inorder to eliminate obsolete guidance,minimize confusion, and reduceattendant industry burdens.

Dated: October 23, 1998.D.B. Burlington,Director, Center for Devices and RadiologicalHealth.[FR Doc. 98–32249 Filed 12–3–98; 8:45 am]BILLING CODE 4160–01–F

DEPARTMENT OF HEALTH ANDHUMAN SERVICES

Health Care Financing Administration

[HCFA–2025–N]

RIN 0938–AJ07

Medicare Program; Recognition ofNAIC Model Standards for Regulationof Medicare Supplemental Insurance

AGENCY: Health Care FinancingAdministration (HCFA), HHS.ACTION: Notice.

SUMMARY: This notice describes changesmade by the Balanced Budget Act of1997 to section 1882 of the SocialSecurity Act, which governs Medicaresupplemental insurance. It alsorecognizes that the Model Regulationadopted by the National Association ofInsurance Commissioners (NAIC) onApril 29, 1998, as corrected andclarified by HCFA, is considered to bethe applicable NAIC Model Regulationfor purposes of section 1882 of theSocial Security Act. The changes madeby HCFA (1) correct a drafting error insection 12.B(2) of the Model that isinconsistent with Federal law, and (2)add a clarification that copayments forhospital outpatient department servicesunder Part B of Medicare must be

covered under the ‘‘core benefits’’ of aMedicare supplemental insurancepolicy in the same manner ascoinsurance for those services. Finally,this notice prints as an addendum thefull text of the NAIC Model Regulation,as corrected and clarified by HCFA.DATES: Medicare supplementalinsurance policies issued in any Statemust conform to the requirements ofsection 1882(s)(3) of the Social SecurityAct as of July 1, 1998, and to thestandards contained in the revised NAICModel Regulation as of the date theState adopts the revised standards,which generally must be no later thanApril 29, 1999.FOR FURTHER INFORMATION CONTACT:Terese Klitenic (410) 786–1565.SUPPLEMENTARY INFORMATION:

Copies: To order copies of the FederalRegister containing this document, sendyour request to: New Orders,Superintendent of Documents, P.O. Box371954, Pittsburgh, PA 15250–7954.Specify the date of the issue requestedand enclose a check or money orderpayable to the Superintendent ofDocuments, or enclose your Visa orMaster Card number and expirationdate. Credit card orders can also beplaced by calling the order desk at (202)512–1800 or by faxing to (202) 512–2250. The cost for each copy is $8. Asan alternative, you can view andphotocopy the Federal Registerdocument at most libraries designatedas Federal Depository Libraries and atmany other public and academiclibraries throughout the country thatreceive the Federal Register.

This Federal Register document isalso available from the Federal Registeronline database through GPO Access, aservice of the U.S. Government PrintingOffice. Free public access is available ona Wide Area Information Server (WAIS)through the Internet and viaasynchronous dial-in. Internet users canaccess the database by using the WorldWide Web; the Superintendent ofDocuments home page address is http://www.access.gpo.gov/su——docs/, byusing local WAIS client software, or bytelnet to swais.access.gpo.gov, thenlogin as guest (no password required).Dial-in users should usecommunications software and modemto call 202–512–1661; type swais, thenlogin as guest (no password required).

I. Background

A. The Medicare ProgramThe Medicare program was

established by Congress in 1965 withthe enactment of title XVIII of the SocialSecurity Act (the Act). The programprovides payment for certain medical

services for persons 65 years of age orolder, disabled beneficiaries, andpersons with end-stage renal disease.The Medicare program consists of twoseparate but complementary insuranceprograms, a hospital insurance program(Part A), which covers servicesfurnished by hospitals, skilled nursingfacilities, home health agencies andhospices; and a supplementary medicalinsurance program (Part B), whichcovers a wide range of medical servicesand supplies, including physicians’services, outpatient hospital services,outpatient physical and occupationaltherapy services, and home healthservices. Part B also covers certain drugsand biologicals that cannot be self-administered, diagnostic x-ray andlaboratory tests, purchase or rental ofdurable medical equipment, ambulanceservices, prosthetic devices, and certainmedical supplies.

While the Medicare program providesextensive hospital insurance benefitsand supplementary medical insurance,it was not designed to cover the totalcost of medical care for Medicarebeneficiaries. Amounts payable underboth Parts A and B are reduced bycertain deductible and coinsuranceamounts for which the beneficiary isresponsible.

In 1998, the Part A inpatient hospitaldeductible is $764 ($768 for 1999) foreach ‘‘benefit period’’ (the periodbeginning on the first day ofhospitalization and extending until thebeneficiary is no longer an inpatient ofa hospital or skilled nursing facility for60 consecutive days).

The Part B deductible is $100 forcalendar years 1998 and 1999.Beneficiaries are also responsible forpaying certain coinsurance amounts forcovered items and services. Forexample, the coinsurance applicable tophysicians’ services under Part B isgenerally 20 percent of the Medicare-approved amount for the service. Whenbeneficiaries receive covered servicesfrom physicians who do not acceptassignment of their Medicare claims, thebeneficiaries may also be required topay amounts in excess of the Medicareapproved amount (‘‘excess charges’’), upto a limit established under the Act.

There are a number of items andservices that are not covered undereither Part A or Part B; for example,custodial nursing home care, mostdental care, eyeglasses, and mostprescription drugs are not covered.Beneficiaries must pay the full cost ofthese items and services out-of-pocketor may purchase additional privateinsurance to help pay the costs.

Because Medicare does not cover thetotal cost of providing medical care, a

67079Federal Register / Vol. 63, No. 233 / Friday, December 4, 1998 / Notices

substantial number of Medicarebeneficiaries have some type of privatehealth coverage. This coverage mayinclude Medicare supplementalinsurance, employer group health plans,hospital indemnity insurance, nursinghome or long term care insurance, andspecified disease insurance.

B. Medicare Supplemental InsuranceMedicare supplemental insurance

policies, also known as ‘‘Medigap’’policies, are designed to fill specificgaps in the original Medicare ‘‘fee-for-service’’ benefit structure. (They are notneeded, and would not be usable, ifMedicare benefits are obtained throughan HMO or other type of managed carearrangement.) Medigap policiestypically provide coverage for some orall of the deductible and coinsuranceamounts applicable to Medicare-coveredservices, and sometimes cover items orservices that are not covered byMedicare.

Section 1882 of the Act prohibits thesale of Medigap policies that do notconform to Federal statutoryrequirements. The statute alsoincorporates by reference, as part of thestatutory requirements, certainminimum standards established by theNational Association of InsuranceCommissioners (NAIC). These minimumstandards, known as the ‘‘NAIC ModelStandards,’’ are found in the ‘‘NAICModel Regulation to Implement theIndividual Accident and SicknessInsurance Minimum Standards Act,’’initially adopted by the NAIC on June6, 1979. See section 1882(g)(2)(A) of theAct. In particular, the Model Standards,as revised in 1992 under the OmnibusBudget Reconciliation Act of 1990,prescribed 10 benefit packages. Undersection 1882, Medigap policiesgenerally may not be sold unless theyconform to one of the 10 benefitpackages, which are designated as plans‘‘A’’ through ‘‘J.’’

Section 1882(b)(1) of the Act alsoprovided that Medigap policies issuedin a State would be deemed to meet theFederal requirements if the State’sprogram regulating Medicaresupplemental policies provided for theapplication of standards at least asstringent as those contained in the NAICModel Regulation, and requirementsequal to or more stringent than those setforth in section 1882 of the Act.

States must amend their regulatoryprograms to implement all of the newFederal statutory requirements, andapplicable changes to the Modelstandards. However, States maintain theauthority to enact provisions that aremore stringent than those that areincorporated in the NAIC Model

Regulation or in the statutoryrequirements. See section 1882(b)(1)(A)of the Act. States that have received awaiver under section 1882(p)(6) maycontinue to authorize the sale of policiesthat contain different benefits than the10 standardized benefit packages.Massachusetts, Minnesota, andWisconsin have received waivers;however, the three waiver States muststill make the Balanced Budget Act of1997 (BBA) conforming amendments. Inparticular, these States are subject to thestatutory guaranteed issue requirementswith respect to all Medicarebeneficiaries who meet the criteria insection 1882(s)(3) for guaranteed issue.The only difference in the waiver Statesis that section 1882(3)(C)(iv) specifiesthat the statutory references to benefitpackages (that is, in most cases, benefitpackages designated ‘‘A’’, ‘‘B’’, ‘‘C’’ or‘‘F’’) are deemed to be references tocomparable benefit packages offered inthe State with the waiver.

As provided in section 1882(p)(4)(B)of the Act, any State may continue toapprove the addition of new orinnovative benefits to an otherwiseapproved standardized plan.

Under section 1882(p)(5) of the Act,while a State must approve the corePlan ‘‘A’’ for sale in the State, it does nothave to permit any or all of the othernine plans to be sold in the State.Therefore, the State need not permit thesale of each type of standardized plan,so long as the core plan is offered.Moreover, a State need not approve thesale of high deductible Plans ‘‘F’’ and‘‘J’’ simply because it also permits saleof the standard deductible versions ofeither of these two plans.

In addition, section 1882(d) makes itunlawful in some circumstances forMedigap and certain other healthinsurance policies to be sold to aMedicare beneficiary if the sale resultsin duplicate coverage.

Section 1882(g)(1) of the Act definesMedicare supplemental policies. Thisdefinition excludes policies offered byan employer to employees or formeremployees and policies or plans offeredby a labor organization to members orformer members. HMOs, and othermanaged care plans that contract withMedicare under section 1876 of the Actor under a demonstration authority, aswell as Medicare+Choice plans offeredby organizations that contract underPart C of Medicare (see followingdiscussion) are also excluded from thedefinition of a Medicare supplementalpolicy.

II. Legislative ChangesBBA created a new Part C of

Medicare, commonly known as

Medicare+Choice. This allows Medicareeligible individuals to avail themselvesof a wide range of managed careoptions. Under the newMedicare+Choice program, everyindividual entitled to Medicare Part Aand enrolled under Part B, except forindividuals with end-stage renaldisease, may elect to receive benefitsthrough either the existing Medicare fee-for-service program or a Part CMedicare+Choice plan. However,individuals choosing Medicare+Choicewill not require the protections affordedunder Medigap policies because theirneeds will be met under theMedicare+Choice program. Regulationsfor the new Part C Medicare+Choiceprogram were published in a separatedocument on June 26, 1998 (63 FR52610).

Section 4003(a)(1) of the BBAamended section 1882(d)(3)(A)(i) of theAct to provide that it is unlawful for aMedigap policy to be sold or issued toan individual who has elected to beenrolled in a Medicare+Choice planwhen the seller has knowledge that thepolicy duplicates health benefits towhich the individual is already entitledunder Medicare+Choice or underanother Medigap policy.

Section 4003(a)(3) of BBA also statesthat a Medicare+Choice plan isexcluded from the definition of aMedicare supplemental policy.

Section 4031 of the BBA amendedsection 1882(s) of the Act, whichgoverns guaranteed issue of Medigappolicies. When an individual seeks toenroll in a specified Medigap policywithin 63 days of the events describedbelow, the issuer may not (1) deny orcondition the issuance of a Medigappolicy that is offered or available; (2)discriminate in the pricing of such apolicy because of health status, claimsexperience, receipt of health care, ormedical condition; or (3) impose apreexisting condition exclusion.

Involuntary Terminations of CoverageFor the following four classes of

individuals, the specific policies subjectto the guaranteed issue requirements areMedigap plans ‘‘A’’, ‘‘B’’, ‘‘C’’, or ‘‘F’’:

(a) Individuals enrolled under anemployee welfare benefit plan thatprovides health benefits thatsupplement Medicare, if the planterminates or ceases to provide all thosebenefits.

(b) Persons enrolled with aMedicare+Choice organization under aMedicare+Choice plan whoseenrollment is discontinued under thefollowing circumstances: (1) theorganization’s or plan’s certification isterminated, or the organization has


discontinued providing the plan in thearea where the person resides; (2) theindividual is no longer eligible toremain in the plan because of a changein circumstances, including a moveoutside of the entity’s service area, butnot including nonpayment of premiumsor disruptive behavior; or (3) theindividual demonstrates that theorganization substantially violated amaterial contract provision or materiallymisrepresented the plan’s provisions inmarketing the plan to the individual.

(c) Persons enrolled with an HMO orother organization that has a risk or costcontract under section 1876 of the Act;with a health care prepayment planunder section 1833 of the Act; with asimilar organization operating under ademonstration project authority; orunder a Medicare SELECT policy (a typeof Medigap policy in which anindividual’s choice of providers isrestricted in return for a lower Medigapinsurance premium). However, this onlyapplies if enrollment ceases for thereasons set forth in (b) above and, in thecase of a SELECT policy, there is noapplicable provision under State law forcontinuation of the coverage.

(d) Individuals enrolled under aMedigap policy if enrollment ceasesbecause of: (1) Bankruptcy or insolvencyof the issuer or because of otherinvoluntary termination of coverage andthere is no provision under applicableState law for the continuation of thecoverage; (2) the issuer of the policysubstantially violated a materialprovision of the policy; or (3) the issuematerially misrepresented the policy’sprovisions in marketing the policy tothe individual. See section 4031(a)(3) ofBBA.

Free Look at Managed CareFor the following class of individuals,

the specific policies subject to theguaranteed issue requirements are theMedicare supplemental policy underwhich the individual was most recentlyenrolled if it is still available, or if thispolicy is not available from the previousissuer, Medigap plans ‘‘A,’’ ‘‘B,’’ ‘‘C,’’ or‘‘F.’’ The following criteria must be metfor the individual to qualify forguaranteed issue under this category:The individual (1) was covered under aMedigap policy; (2) subsequentlyterminated the policy and enrolled witha Medicare+Choice organization, withan HMO or other organization that hasa contract under section 1876 of the Act,with a similar organization operatingunder a demonstration project authority,or purchased a Medicare SELECTpolicy; and (3) terminates enrollment inthe Medicare+Choice or otherorganization, or the Medicare SELECT

policy, described in (2) within 12months after enrolling. However, thisprovision applies only if the individualhad never previously been enrolled withany organization or policy mentioned in(2) above.

For the five classes of Medicarebeneficiaries described above, theguaranteed issue requirements protect‘‘individuals’’ whose previous coveragehas been terminated. Before theenactment of the BBA, beneficiaries hadonly one opportunity to purchase aMedigap policy on a ‘‘guaranteed issue’’basis. This opportunity was onlyavailable to beneficiaries who were age65 or over, and was available during the6-month period following the date thatthey were both age 65 or over andenrolled in Medicare Part B. There wasno guaranteed open enrollmentprovision for individuals under age 65.However, in contrast to both the generalopen enrollment provision of section1882(s)(2)(A) and the new guaranteedissue provision in section1882(s)(3)(B)(vi) (discussed below),which specifically state that theprotected ‘‘individual’’ must be at leastage 65, the guaranteed issue provisionsin section 1882(s)(3)(B) (i) through (v)do not contain an age restriction.Therefore, the latter provisions apply bytheir terms both to individuals eligiblefor Medicare based on age, and thosewhose eligibility is based on disabilityor ESRD. All of these individuals whomeet the requirements set forth in theBBA qualify for its guaranteed issueprotections with respect to policies thatare offered and available to newenrollees. (In some situations policiesmay not be available to beneficiariesunder 65. In other situations, a policydesignated ‘‘B’’, ‘‘C,’’ or ‘‘F’’ may not beavailable in a particular State.)

There is one additional class ofbeneficiaries who are entitled by theBBA amendments to a guaranteed issueMedigap policy. An individual whoupon first becoming eligible forMedicare at age 65 enrolls in aMedicare+Choice plan, and laterdisenrolls from the plan within 12months of the effective date of thatenrollment, is entitled to guaranteedissue of any Medigap plan ‘‘A’’ through‘‘J’’ under the same conditions describedabove (including that the individualmust apply for the Medigap policywithin 63 days of dropping theMedicare+Choice coverage, and may notbe subject to a preexisting conditionexclusion, or be subject to pricediscrimination based on health status).

Preexisting Condition ExclusionSection 4031(b) of the BBA also limits

the application of a preexisting

condition exclusion for Medigappolicies during the initial 6-monthopen-enrollment period for agedbeneficiaries. Such an exclusion cannotbe imposed on an individual who, onthe date of application, had acontinuous period of at least 6 monthsof health coverage defined as‘‘creditable coverage’’ under title XXVIIof the Public Health Service (PHS) Act,as added by title I of the HealthInsurance Portability andAccountability Act of 1996 (HIPAA). Ifthe individual has less than 6 monthscoverage, the issuer must reduce theperiod of any preexisting conditionexclusion by the aggregate of periods of‘‘creditable coverage’’ applicable to theindividual as of the enrollment date.The rules used to determine thereduction are based on rules used undersection 2701 of the PHS Act.

The following information is providedfor the convenience of the reader. Acomplete description of requirementsunder title XXVII of the PHS Act can befound at 45 CFR parts 144, 146, and 148.Under section 2701, a policy can onlyexclude coverage for a preexistingcondition if medical advice, diagnosis,care, or treatment was recommended orreceived for the condition within the sixmonths before the effective date of theMedigap policy.

HIPAA also added section 2701(c) oftitle XXVII of the PHS Act to definecreditable coverage as coverage of theindividual under any of the following:group health plan; health insurancecoverage; Part A or B of Medicare;Medicaid; a medical care program of theIndian Health Service or a tribalorganization; a State health benefits riskpool; a public health plan; the healthcare program for active militarypersonnel; the Federal employees healthbenefit plan; and a health benefit planunder the Peace Corps Act. However,creditable coverage does not includepolicies consisting solely of coverage ofexcepted benefits, as described below.Creditable coverage must be continuous.This means the individual must have nobreaks in coverage of greater than 63days. If the break is greater than 63 days,a new period begins after the individualreacquires creditable coverage. Seesection 2701(c)(2) of the PHS Act.

An individual may demonstratecreditable coverage in several ways.First, group health plans, healthinsurance issuers, and certain otherentities must furnish a certificate ofcreditable coverage after the coverageterminates. In some cases this will bewhen employment ends; in other casesit will be after exhaustion of‘‘continuation coverage’’ under theConsolidated Omnibus Budget


Reconciliation Act of 1985 (Public Law99–272) or under a similar Stateprogram. A certificate may also beobtained upon request by theindividual. See section 2701(c) of thePHS Act. Creditable coverage can alsobe demonstrated if the individual atteststo the existence of creditable coverage,and presents corroborating evidence(such as pay stubs with insurancededuction or explanation of benefits, orverification by a physician or formerhealth care provider that the individualhad health care coverage). Theindividual must cooperate in verifyingthe information.

Excepted benefits as defined insection 2791(c) of the PHS Act meansbenefits under one or more of thefollowing: accident or disability incomeinsurance; a supplement to liabilityinsurance; workers’ compensationinsurance; liability insurance such asautomobile medical payment insuranceor general liability insurance; credit-only insurance; on-site medical clinicsand other similar insurance coverage,under which benefits for medical careare secondary or incidental to otherinsurance benefits.

Other excepted benefits, if offeredseparately, include: Limited scopedental or vision benefits, long-term care,nursing home care, home health care,community-based care, or anycombination of these. Other exceptedbenefits, if offered as independent,noncoordinated benefits, includespecified disease or illness coverage andhospital indemnity, or other fixedindemnity insurance. Medicaresupplemental insurance is alsoclassified as an excepted benefit.

Long Term Care Insurance Policies

Section 4031(c) of the BBA alsoclarifies, through a technicalamendment, that certain disclosurerequirements apply only to long-termcare insurance policies that do notcoordinate with Medicare andMedicaid.

High Deductible Medigap StandardPolicies

Section 4032 of the BBA adds twoadditional high deductible Medigapstandard policies with benefit packagesthat are the same as Plans ‘‘F’’ and ‘‘J.’’The high deductible amount is $1,500 in1998 and 1999. Out-of-pocket expenses,in this instance, are expenses thatwould ordinarily be paid by a Medigappolicy. These expenses include theMedicare deductibles for Parts ‘‘A’’ and‘‘B’’ but do not include, in Plan ‘‘J’’, theplan’s separate prescription drugdeductible of $250 or, in Plans ‘‘F’’ and

‘‘J,’’ the plans’’ separate foreign travelemergency deductible of $250.

For subsequent years, the highdeductible amount will be increased bythe percentage increase in the ConsumerPrice Index for all urban consumers (allitems; U.S. city average) for the 12-month period ending with August of thepreceding year, rounded to the nearestmultiple of $10. The beneficiary isresponsible for payment of all expensesup to this amount.

Treatment of Hospital OutpatientDepartment Copayment

Section 4031(f) of the BBA alsospecifies that ‘‘copayment’’ amountsprovided for under section 1833(t)(5) ofthe Act with respect to hospitaloutpatient department services shall betreated under Medigap policies ‘‘in thesame manner as coinsurance withrespect to such services.’’ We havetherefore clarified the Model byincluding a reference to coverage forcopayments for hospital outpatientdepartment services in section 8.B(5) ofthe Model, and in the cover page of theoutline of coverage that immediatelyfollows section 17.C(4) of the Model.For purposes of complying with Federallaw, States must use this revisedlanguage.

III. DatesThe provisions added by section 4031

of the BBA have a number of differenteffective dates, as established in section4031(d). There has also been confusionabout the effective date of theguaranteed issue provisions related toMedicare+Choice plans.

Guaranteed Issue ProvisionsSection 4031(a) of the BBA expanded

the number of opportunities in whichan individual can enroll in a Medigappolicy on a ‘‘guaranteed issue’’ basis. Itadded section 1882(s)(3)(B), clauses (i)through (vi), to the Act to require thatcertain Medigap policies be offered tosix categories of beneficiaries in specificcircumstances. Section 4031(d)(1) of theBBA makes these provisions effectiveJuly 1, 1998.

Clause (ii) assures that individualsenrolled in Medicare+Choice plans areentitled to guaranteed issue of Medigappolicies ‘‘A,’’ ‘‘B,’’ ‘‘C,’’ and ‘‘F’’ if‘‘there are circumstances permittingdiscontinuance of the individual’selection of the [Medicare+Choice] planunder the first sentence of section1851(e)(4).’’ This language causedconfusion because of its cross-referenceto the Medicare+Choice provisions insection 1851(e)(4). The latter provisionis a Medicare+Choice provision, not aMedigap provision. Under the

Medicare+Choice rules, starting in theyear 2002, beneficiaries who elect toenroll in a Medicare+Choice plan willbe subject to a ‘‘lock-in’’ provision. Thismeans that they will only be able tochange their Medicare+Choice electionunder certain circumstances. Withcertain exceptions, other than during anannual open enrollment period,individuals will not be able to change toother Medicare+Choice plans, or returnto original, fee-for-service Medicare,except as described in section1851(e)(4). Therefore, a beneficiary willnot need a Medigap policy unless he orshe is permitted to return to originalMedicare. It is our understanding thatthe NAIC drafting note following section12.B(2) of the Model was simply tryingto explain to a ‘‘Medigap audience’’ whythe Medigap requirement in clause (ii)cross-references a Medicare+Choiceprovision that will not itself be effectiveuntil 2002.

However, as a matter of Federal law,the guaranteed issue provision of clause(ii) takes effect July 1, 1998; continuesin effect through and beyond 2002, andapplies to any individual whoseMedicare+Choice election terminatesunder the ‘‘circumstances’’ specified insubparagraphs (A) through (D) of section1851(e)(4).

Clause (ii) of section 1882(s)(3)(B)conditions the right to a guaranteedissue Medigap policy on the‘‘circumstances’’ that would (beginningin 2002) permit a beneficiary to changea Medicare+Choice election. Thesecircumstances are contained insubparagraphs (A) through (D) of thefirst sentence of paragraph (e)(4). Theclearest indication that this refers to the‘‘circumstances’’ described insubparagraphs (A) through (D) of section1851(e)(4), without incorporating thedate that appears in the introductoryclause of section 1851(e)(4), is thatclause (iii) contains a virtually identicalreference to ‘‘the circumstances thatwould permit discontinuance of anindividual’s election of coverage underthe first sentence of section 1851(e)(4).’’Clause (iii) applies to termination ofMedicare managed care contracts undersection 1876 of the Act. These contractsinclude ‘‘risk’’ contracts under section1876, which cease to exist as ofDecember 31, 1998, because they will bereplaced by Medicare+Choice contracts.Therefore, clause (iii) only makes senseif it is interpreted to refer to the‘‘circumstances’’ described insubparagraphs (A) through (D) of section1851(e)(4), without the incorporation ofthe 2002 date.

On October 16, 1998, the NAIC’sMedicare Supplement Working Groupissued a Memorandum to all NAIC


members stating that it had recognizedan inconsistency in the ModelRegulation. The drafting note thatfollows subsection 12B(2), as adoptedon April 29, 1998, stated that theguaranteed issue provisions do notbecome effective until January 1, 2002,for a person in a Medicare+Choiceorganization whose contract terminates.As discussed above, HCFA hasdetermined, subsequent to the adoptionof the Model Regulation by the NAIC,that this was a drafting inconsistency inthe Model and that the provisionbecame effective on July 1, 1998 alongwith the rest of the provisions. TheNAIC has begun the process ofamending the Model Regulation toeliminate the drafting error. Therefore,the Model Regulation, as set forthbelow, contains the corrected languageas it has been proposed by the NAIC.For purposes of complying with Federallaw, States must use this correctedlanguage.

Other Provisions

Preexisting Condition ExclusionsThe limit on preexisting condition

exclusions added by section 4031(b)applies to policies issued on or afterJuly 1, 1998. See section 4031(d) of theBBA.

Long-Term Care ProvisionThe long-term care policy disclosure

provision (section 4031(c) of the BBA) iseffective July 1, 1997, as if included inHIPAA. See section 4031(d)(3) of theBBA. For purposes of disclosure,policies that coordinate with Medicareand other health insurance are notconsidered to provide benefits thatduplicate Medicare.

Changes to Conform toMedicare+Choice

The changes made by section 4003 ofthe BBA became effective on August 8,1997, the date of enactment of the BBA.

Dates Applicable to Action by the NAICSection 4031(e)(2) of the BBA

specified that if, within 9 months ofenactment of the BBA, the NAICmodified its ‘‘Model Regulation’’ toconform to the BBA amendments, thenthe revised regulation would apply forpurposes of section 1882. The NAICadopted the revised standards on April29, 1998.

Dates Applicable to Actions by theStates

Each State is required to change itsstatutes or regulations to conform itsregulatory program to the revisedstandards set forth in the NAIC ModelRegulation, in order for Medigap

policies to continue to be sold in thatState. This action generally must betaken within 1 year after the date ofadoption of the revised NAIC standards,that is, by April 29, 1999. In general, aState will not be deemed out ofcompliance solely due to failure to makechanges before that date. See section4031(e)(1) of the BBA. The statuteprovides an exception for States that weidentify as requiring new legislation toimplement the standards but whoselegislatures are not scheduled to meet in1999 in a session at which these mattersmay be considered. See section4031(e)(4)(B) of the BBA.

For States that fall within thisexception, section 4031(e)(4)(B) of theBBA provides that a State will not bedeemed out of compliance until the firstday of the first quarter following the endof the first legislative session that beginson or after July 1, 1999. This sectionalso provides that, in the case of a Statethat has a 2-year legislative session,each year of the session is deemed to bea separate regular session of the Statelegislature.

Accordingly, the standards in theModel Regulation apply to Medicaresupplemental policies issued in a Stateon or after April 29, 1999, or an earlierdate on which a State adopts thestandards, unless the State of issuancehas a legislature that does not meetduring that timeframe.

Separate notification letters were sentto the States by HCFA regional offices.States should notify the regional officesby letter when the State law conformsto the NAIC model.

IV. Publication of List for StandardizedBenefit Packages

We are publishing the list ofstandardized benefit packages,including Plans ‘‘F’’ and ‘‘J,’’ which willnow be available in standard as well ashigh deductible forms. The following isa summary of the coverages available.This list of standardized Medicaresupplemental benefit packages iscontained in section 9.E of the revisedModel Regulation adopted by the NAICon April 29, 1998, which is reprinted atthe end of this notice. Section 16 of theModel Regulation includes a chart thatoutlines the benefits covered in each ofthe 10 standardized Plans ‘‘A’’ through‘‘J.’’

Because it is necessary to refer tomore than one section of the NAICModel Regulation to determine thecontent of each standardized benefitpackage, we are providing the followingsummary of the 10 packages.

Plan ‘‘A’’ (Core Benefit Plan) (NAICModel Section 9.E.(1))

The Core Benefit Plan includes thefollowing:

• Coverage for the Part A coinsuranceamount for day 61 through day 90 ofhospitalization in each Medicare benefitperiod.

• Coverage for the Part A coinsuranceamount for each of Medicare’s 60 non-renewable lifetime hospital inpatientreserve days used.

• After all Medicare hospital benefitsare exhausted, coverage for 100 percentof the Medicare Part A eligible hospitalexpenses. Coverage is limited to amaximum of 365 days of additionalinpatient hospital care during thepolicyholder’s lifetime.

• Coverage under Medicare Parts Aand B for the reasonable cost of the firstthree pints of blood per calendar year.

• Coverage for the coinsuranceamount for Part B services, or, in thecase of hospital outpatient departmentservices, the applicable copayment,(generally 20 percent of the approvedamount) after the $100 deductible ismet. (Note that Plan A provides nocoverage for benefits described inparagraphs (1) through (11) of NAICModel Section 8.C.: the Part A inpatienthospital deductible (in 1998, $764 foreach Medicare benefit period; $768 in1999); the Part B deductible ($100 eachyear); Part A coinsurance for post-hospital skilled nursing facility care;Part B charges in excess of Medicare-approved amounts; non-Medicare-covered prescription drugs, preventiveservices, at-home recovery services, orservices received in a foreign country; ornew or innovative benefits approved bythe State insurance commissioner or byHCFA.)

Plan ‘‘B’’ (NAIC Model Section 9.E.(2))

• The core benefits; and• The Part A inpatient hospital

deductible.

Plan ‘‘C’’ (NAIC Model Section 9.E.(3))

• The core benefits;• The Part A inpatient hospital

deductible;• The Part A coinsurance for post-

hospital skilled nursing facility care fordays 21 through 100 in a Medicarebenefit period;

• The Part B annual deductible; and• Eighty percent of charges for

emergency care received in a foreigncountry during the first 60 days of a tripoutside the U.S., subject to a $250calendar year deductible and a lifetimemaximum benefit of $50,000.

Plan ‘‘D’’ (NAIC Model Section 9.E.(4))

• The core benefits;


• The Part A inpatient hospitaldeductible;

• The Part A coinsurance for post-hospital skilled nursing facility care fordays 21 through 100 in a Medicarebenefit period;

• Eighty percent of charges foremergency care received in a foreigncountry during the first 60 days of a tripoutside the U.S., subject to a $250calendar year deductible and a lifetimemaximum benefit of $50,000; and

• Services that are not covered byMedicare to provide short-term, at-homeassistance with activities of daily livingfor those recovering from an illness,injury or surgery, subject to limitationsdescribed in the NAIC Model.

Plan ‘‘E’’ (NAIC Model Section 9.E.(5))





• Preventive health services notcovered by Medicare, subject to a $120maximum annual benefit.

Plan ‘‘F’’ (NAIC Model Section 9.E.(6))




• The Part B annual deductible;• One hundred percent of Part B

excess charges (the difference betweenthe actual Medicare Part B charge asbilled, not to exceed any chargelimitation established by the Medicareprogram or State law, and the Medicare-approved Part B charge); and

• Eighty percent of charges foremergency care received in a foreigncountry during the first 60 days of a tripoutside the U.S., subject to a $250calendar year deductible and a lifetimemaximum benefit of $50,000.

Plan ‘‘F’’ High Deductible (NAIC ModelSection 9.E.(7))

The high deductible plan pays thesame or offers the same benefits as Plan‘‘F’’ after the beneficiary has paid acalendar year deductible ($1,500 in1998 and 1999). Benefits from the highdeductible Plan ‘‘F’’ will not begin untilout-of-pocket expenses are equal to the

deductible ($1,500). Out-of-pocketexpenses for this deductible areexpenses that would ordinarily be paidby the policy. This includes theMedicare deductibles for Part A andPart B but does not include the plan’sseparate foreign travel emergencydeductible.

Plan ‘‘G’’ (NAIC Model Section 9.E.(8))




• Eighty percent of Part B excesscharges (80 percent of the differencebetween the actual Medicare Part Bcharge as billed, not to exceed anycharge limitation established by theMedicare program or State law, and theMedicare-approved Part B charge);


• Services that are not covered byMedicare to provide short-term, at-homeassistance with activities of daily livingfor those recovering from an illness,injury or surgery, subject to limitationsdescribed in the NAIC ModelRegulation.

Plan ‘‘H’’ (NAIC Model Section 9.E.(9))





• Fifty percent of outpatientprescription drug charges not coveredby Medicare, subject to a $250 calendaryear deductible and a maximum $1,250in benefits per calendar year.

Plan ‘‘I’’ (NAIC Model Section 9.E.(10))




• One hundred percent of Part Bexcess charges (the difference betweenthe actual Medicare Part B charge as

billed, not to exceed any chargelimitation established by the Medicareprogram or State law, and the Medicare-approved Part B charge);

• Eighty percent of charges foremergency care received in a foreigncountry during the first 60 days of a tripoutside the U.S., subject to a $250calendar year deductible and a lifetimemaximum benefit of $50,000;

• Services that are not covered byMedicare to provide short-term, at-homeassistance with activities of daily livingfor those recovering from an illness,injury or surgery, subject to limitationsdescribed in the NAIC ModelRegulation; and

• Fifty percent of outpatientprescription drug charges not coveredby Medicare, subject to a $250 calendaryear deductible and a maximum $1,250in benefits per calendar year.

Plan ‘‘J’’ (NAIC Model Section 9.E.(11))




• The Part B annual deductible;• One hundred percent of Part B

excess charges (the difference betweenthe actual Medicare Part B charge asbilled, not to exceed any chargelimitation established by the Medicareprogram or State law, and the Medicare-approved Part B charge);

• Eighty percent of charges foremergency care received in a foreigncountry during the first 60 days of a tripoutside the U.S., subject to a $250calendar year deductible and a lifetimemaximum of $50,000;

• Services that are not covered byMedicare to provide short-term, at-homeassistance with activities of daily livingfor those recovering from an illness,injury or surgery, subject to limitationsdescribed in the NAIC ModelRegulation;

• Fifty percent of outpatientprescription drug charges not coveredby Medicare, subject to a $250 calendaryear deductible and a maximum $3,000in benefits per calendar year; and

• Preventive health services notcovered by Medicare, subject to a $120maximum annual benefit.

Plan ‘‘J’’-High Deductible (NAIC ModelSection 9.E.(12)

The high deductible plan pays thesame or offers the same benefits as Plan‘‘J’’ after a beneficiary has paid acalendar year deductible ($1,500 in1998 and 1999). Benefits from the highdeductible Plan ‘‘J’’ will not begin until


out-of-pocket expenses are equal to thedeductible ($1,500). Out-of-pocketexpenses for this deductible areexpenses that would ordinarily be paidby the policy. This includes theMedicare deductibles for Part A andPart B, but does not include the plan’sseparate prescription drug deductible,or the plan’s separate foreign travelemergency deductible.

V. Regulatory Impact StatementConsistent with the Regulatory

Flexibility Act (RFA) (5 U.S.C. 601through 612), we prepare a regulatoryflexibility analysis unless we certify thata notice will not have a significanteconomic impact on a substantialnumber of small entities. For purposesof the RFA, some insurance companiesare considered to be small entities.Small entities are nonprofitorganizations, local and municipalgovernment entities, and entitiesdefined by the Small BusinessAdministration as small businesses(firms with fewer than 500 employees).Individuals and States are not includedin the definition of a small entity.

In addition, section 1102(b) of the Actrequires us to prepare a regulatoryimpact analysis if a notice may have asignificant impact on the operations ofa substantial number of small ruralhospitals. Such an analysis mustconform to the provisions of section 604of the RFA. For purposes of section1102(b) of the Act, we define a smallrural hospital as a hospital that islocated outside of a MetropolitanStatistical Area and has fewer than 50beds.

Approximately 360 insurancecompanies offer Medigap policies.About half of the 360 insurancecompanies might be considered smallentities.

All 50 States and the 360 insurancecompanies are affected by the revisedstandards described in this notice.Under these changes, insurers will nowhave to accept people in poorer healththat the insurers could have rejectedbefore. If there are delays before theinsurance companies can raise rates toaccommodate this change, or if the Statedoes not let the insurance companiesraise rates, there will be a cost to thosecompanies. However, of thebeneficiaries in poor health and meetingthe criteria in the statute, we do notknow how many of those who couldhave been rejected before will apply forMedigap insurance. As a result, we donot know the financial impact this mayhave on insurance companies sellingMedigap insurance.

The costs of implementing the newNAIC standards will include the

codifying of changes in State insurancelaw or regulation to comply with thechanges, and the modifying of insurancepolicies and notifying of the insured ofthe additional protections included inthe changes to the NAIC ModelRegulation. Any costs attributable to theNAIC regulatory changes are essentiallymandated by the States, the Congress,and insurance companies.

There are benefits from the revisedstandards for Medicare beneficiaries.The additional protections will affordthem increased access to Medigapinsurance while providing separateopportunities to take advantage of thenew Medicare+Choice program.Additionally, Medicare beneficiarieswho enroll in the Medicare+Choiceprogram but wish to leave the program,in many instances, will have theopportunity to reenroll in a Medigappolicy if they choose to return to thetraditional Medicare fee-for-serviceprogram.

This notice itself does not impose anyrequirements or result in costs orbenefits. The purpose of the notice is tomerely inform the public of the revisedstandards.

For these reasons, we are notpreparing analyses for either the RFA orsection 1102(b) of the Act because wehave determined, and we certify, thatthis notice and the standards will nothave a significant economic impact ona substantial number of small entities ora significant impact on the operations ofa substantial number of small ruralhospitals.

In addition, this notice and thestandards have been reviewed inaccordance with the UnfundedMandates Reform Act of 1995 (UMRA)(2 U.S.C. 1501 et seq.) and ExecutiveOrder 12875. We estimate thatimplementation of the new NAICstandards will not require theexpenditure of more than $100 millionby the private sector. Therefore, we arenot required to prepare a cost-benefitanalysis of private sector expenditures,since this notice is not a significantregulatory action within the meaning ofthe UMRA.

In accordance with the provisions ofExecutive Order 12866, this notice wasreviewed by the Office of Managementand Budget.

Authority: Section 1882 of the SocialSecurity Act (42 U.S.C. 1395(ss)).

(Catalog of Federal Domestic AssistanceProgram No. 93.773, Medicare—HospitalInsurance; and Program No. 93.774,Medicare—Supplementary MedicalInsurance Program)

Dated: November 24, 1998.Nancy-Ann Min DeParle,Administrator, Health Care FinancingAdministration.

Model Regulation To Implement theNAIC Medicare Supplement InsuranceMinimum Standards Model Act

Table of Contents

Section 1. PurposeSection 2. AuthoritySection 3. Applicability and ScopeSection 4. DefinitionsSection 5. Policy Definitions and TermsSection 6. Policy ProvisionsSection 7. Minimum Benefit Standards for

Policies or Certificates Issued forDelivery Prior to [insert effective dateadopted by state]

Section 8. Benefit Standards for Policies orCertificates Issued for Delivery After[insert effective date adopted by state]

Section 9. Standard Medicare SupplementBenefit Plans

Section 10. Medicare Select Policies andCertificates

Section 11. Open EnrollmentSection 12. Guaranteed Issue for Eligible

PersonsSection 13. Standards for Claims PaymentSection 14. Loss Ratio Standards and

Refund or Credit of PremiumSection 15. Filing and Approval of Policies

and Certificates and Premium RatesSection 16. Permitted Compensation

ArrangementsSection 17. Required Disclosure ProvisionsSection 18. Requirements for Application

Forms and Replacement CoverageSection 19. Filing Requirements for

AdvertisingSection 20. Standards for MarketingSection 21. Appropriateness of

Recommended Purchase and ExcessiveInsurance

Section 22. Reporting of Multiple PoliciesSection 23. Prohibition Against Preexisting

Conditions, Waiting Periods, EliminationPeriods and Probationary Periods inReplacement Policies or Certificates

Section 24. SeparabilitySection 25. Effective DateAppendix A Reporting Form for Calculation

of Loss RatiosAppendix B Form for Reporting Duplicate

PoliciesAppendix C Disclosure Statements

Section 1. Purpose

The purpose of this regulation is toprovide for the reasonablestandardization of coverage andsimplification of terms and benefits ofMedicare supplement policies; tofacilitate public understanding andcomparison of such policies; toeliminate provisions contained in suchpolicies which may be misleading orconfusing in connection with thepurchase of such policies or with thesettlement of claims; and to provide forfull disclosures in the sale of accident


and sickness insurance coverages topersons eligible for Medicare.

Section 2. AuthorityThis regulation is issued pursuant to

the authority vested in thecommissioner under [cite appropriatesection of state law providing authorityfor minimum benefit standardsregulations or the NAIC MedicareSupplement Insurance MinimumStandards Model Act].

Editor’s Note: Wherever the term‘‘commissioner’’ appears, the title of the chiefinsurance regulatory official of the stateshould be inserted.

Section 3. Applicability and ScopeA. Except as otherwise specifically

provided in Sections 7, 12, 13, 16 and21, this regulation shall apply to:

(1) All Medicare supplement policiesdelivered or issued for delivery in thisstate on or after the effective date of thisregulation; and

(2) All certificates issued under groupMedicare supplement policies whichcertificates have been delivered orissued for delivery in this state.

B. This regulation shall not apply toa policy or contract of one or moreemployers or labor organizations, or ofthe trustees of a fund established by oneor more employers or labororganizations, or combination thereof,for employees or former employees, ora combination thereof, or for membersor former members, or a combinationthereof, of the labor organizations.

Section 4. DefinitionsFor purposes of this regulation:A. Applicant means:(1) In the case of an individual

Medicare supplement policy, the personwho seeks to contract for insurancebenefits, and

(2) In the case of a group Medicaresupplement policy, the proposedcertificateholder.

B. Bankruptcy means when aMedicare+Choice organization that isnot an issuer has filed, or has had filedagainst it, a petition for declaration ofbankruptcy and has ceased doingbusiness in the state.

C. Certificate means any certificatedelivered or issued for delivery in thisstate under a group Medicaresupplement policy.

D. Certificate form means the form onwhich the certificate is delivered orissued for delivery by the issuer.

E. Continuous period of creditablecoverage means the period duringwhich an individual was covered bycreditable coverage, if during the periodof the coverage the individual had nobreaks in coverage greater than sixty-three (63) days.

F. (1) Creditable coverage means, withrespect to an individual, coverage of theindividual provided under any of thefollowing:

(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 coverageconsisting solely of benefits undersection 1928;

(e) Chapter 55 of Title 10 UnitedStates Code (CHAMPUS);

(f) A medical care program of theIndian Health Service or of a tribalorganization;

(g) A State health benefits risk pool;(h) A health plan offered under

chapter 89 of Title 5 United States Code(Federal Employees Health BenefitsProgram);

(i) A public health plan as defined infederal regulation; and

(j) A health benefit plan under Section5(e) of the Peace Corps Act (22 UnitedStates Code 2504(e)).

(2) Creditable coverage shall notinclude one or more, or anycombination of, the following:

(a) Coverage only for accident ordisability income insurance, or anycombination thereof;

(b) Coverage issued as a supplementto liability insurance;

(c) Liability insurance, includinggeneral liability insurance andautomobile liability insurance;

(d) Workers’ compensation or similarinsurance;

(e) Automobile medical paymentinsurance;

(f) Credit-only insurance;(g) Coverage for on-site medical

clinics; and(h) Other similar insurance coverage,

specified in federal regulations, underwhich benefits for medical care aresecondary or incidental to otherinsurance benefits.

(3) Creditable coverage shall notinclude the following benefits if they areprovided under a separate policy,certificate or contract of insurance or areotherwise not an integral part of theplan:

(a) Limited scope dental or visionbenefits;

(b) Benefits for long-term care,nursing home care, home health care,community-based care, or anycombination thereof; and

(c) Such other similar, limitedbenefits as are specified in federalregulations.

(4) Creditable coverage shall notinclude the following benefits if offeredas independent, noncoordinatedbenefits:

(a) Coverage only for a specifieddisease or illness; and

(b) Hospital indemnity or other fixedindemnity insurance.

(5) Creditable coverage shall notinclude the following if it is offered asa separate policy, certificate or contractof insurance:

(a) Medicare supplemental healthinsurance as defined under section1882(g)(1) of the Social Security Act;

(b) Coverage supplemental to thecoverage provided under chapter 55 oftitle 10, United States Code; and

(c) Similar supplemental coverageprovided to coverage under a grouphealth plan.

Drafting Note: The Health InsurancePortability and Accountability Act of 1996(HIPAA) specifically addresses separate,noncoordinated benefits in the group marketat PHSA § 2721(d)(2) and the individualmarket at § 2791(c)(3). HIPAA also referencesexcepted benefits at PHSA §§ 2701(c)(1),2721(d), 2763(b) and 2791(c). In addition,creditable coverage will be addressed inregulations issued by the Secretary pursuantto HIPAA.

G. Employee welfare benefit planmeans a plan, fund or program ofemployee benefits as defined in 29U.S.C. Section 1002 (EmployeeRetirement Income Security Act).

H. Insolvency means when an issuer,licensed to transact the business ofinsurance in this state, has had a finalorder of liquidation entered against itwith a finding of insolvency by a courtof competent jurisdiction in the issuer’sstate of domicile.

Drafting Note: If the state law definition ofinsolvency differs from the above definition,please insert the state law definition.

I. Issuer includes insurancecompanies, fraternal benefit societies,health care service plans, healthmaintenance organizations, and anyother entity delivering or issuing fordelivery in this state Medicaresupplement policies or certificates.

J. Medicare means the ‘‘HealthInsurance for the Aged Act,’’ Title XVIIIof the Social Security Amendments of1965, as then constituted or lateramended.

K. Medicare+Choice plan means aplan of coverage for health benefitsunder Medicare Part C as defined in[refer to definition of Medicare+Choiceplan in Section 1859 found in Title IV,Subtitle A, Chapter 1 of P.L. 105–33],and includes:

(1) Coordinated care plans whichprovide health care services, includingbut not limited to health maintenanceorganization plans (with or without apoint-of-service option), plans offeredby provider-sponsored organizations,


and preferred provider organizationplans;

(2) Medical savings account planscoupled with a contribution into aMedicare+Choice medical savingsaccount; and

(3) Medicare+Choice private fee-for-service plans.

L. Medicare supplement policy meansa group or individual policy of [accidentand sickness] insurance or a subscribercontract [of hospital and medical serviceassociations or health maintenanceorganizations], other than a policyissued pursuant to a contract underSection 1876 of the federal SocialSecurity Act (42 U.S.C. Section 1395 et.seq.) or an issued policy under ademonstration project specified in 42U.S.C. § 1395ss(g)(1), which isadvertised, marketed or designedprimarily as a supplement toreimbursements under Medicare for thehospital, medical or surgical expenses ofpersons eligible for Medicare.

Drafting Note: OBRA 1990 contained anexception from this definition for policiesissued pursuant to an agreement underSection 1833 (42 U.S.C. 1395l) of the federalSocial Security Act. The Social Security ActAmendments of 1994 eliminated theexemption for Section 1833 plans effectiveDecember 31, 1995. These plans, commonlyknown as health care prepayment plans(HCPPs), arrange for certain Part B serviceson a pre-paid basis. The federal lawcontinues to authorize HCPP agreements.However, since they are now included in thefederal definition of a Medicare supplementpolicy, HCPPs are subject to the requirementsof this model, unless they are exempt underSection 3B. In states authorized for theMedicare Select program, these plans may beable to comply with Medicare supplementrequirements.

M. Policy form means the form onwhich the policy is delivered or issuedfor delivery by the issuer.

N. Secretary means the Secretary ofthe United States Department of Healthand Human Services.

Section 5. Policy Definitions and TermsNo policy or certificate may be

advertised, solicited or issued fordelivery in this state as a Medicaresupplement policy or certificate unlessthe policy or certificate containsdefinitions or terms which conform tothe requirements of this section.

A. Accident, accidental injury, oraccidental means shall be defined toemploy ‘‘result’’ language and shall notinclude words which establish anaccidental means test or use words suchas ‘‘external, violent, visible wounds’’ orsimilar words of description orcharacterization.

(1) The definition shall not be morerestrictive than the following: ‘‘Injury or

injuries for which benefits are providedmeans accidental bodily injurysustained by the insured person whichis the direct result of an accident,independent of disease or bodilyinfirmity or any other cause, and occurswhile insurance coverage is in force.’’

(2) The definition may provide thatinjuries shall not include injuries forwhich benefits are provided or availableunder any workers’ compensation,employer’s liability or similar law, ormotor vehicle no-fault plan, unlessprohibited by law.

B. Benefit period or Medicare benefitperiod shall not be defined morerestrictively than as defined in theMedicare program.

C. Convalescent nursing home,extended care facility, or skilled nursingfacility shall not be defined morerestrictively than as defined in theMedicare program.

D. Health care expenses meansexpenses of health maintenanceorganizations associated with thedelivery of health care services, whichexpenses are analogous to incurredlosses of insurers.

Expenses shall not include:(1) Home office and overhead costs;(2) Advertising costs;(3) Commissions and other

acquisition costs;(4) Taxes;(5) Capital costs;(6) Administrative costs; and(7) Claims processing costs.E. Hospital may be defined in relation

to its status, facilities and availableservices or to reflect its accreditation bythe Joint Commission on Accreditationof Hospitals, but not more restrictivelythan as defined in the Medicareprogram.

F. Medicare shall be defined in thepolicy and certificate. Medicare may besubstantially defined as ‘‘The HealthInsurance for the Aged Act, Title XVIIIof the Social Security Amendments of1965 as Then Constituted or LaterAmended,’’ or ‘‘Title I, Part I of PublicLaw 89–97, as Enacted by the Eighty-Ninth Congress of the United States ofAmerica and popularly known as theHealth Insurance for the Aged Act, asthen constituted and any lateramendments or substitutes thereof,’’ orwords of similar import.

G. Medicare eligible expenses shallmean expenses of the kinds covered byMedicare, to the extent recognized asreasonable and medically necessary byMedicare.

H. Physician shall not be definedmore restrictively than as defined in theMedicare program.

I. Sickness shall not be defined to bemore restrictive than the following:

‘‘Sickness means illness or disease ofan insured person which first manifestsitself after the effective date of insuranceand while the insurance is in force.’’

The definition may be furthermodified to exclude sicknesses ordiseases for which benefits are providedunder any workers’ compensation,occupational disease, employer’sliability or similar law.

Section 6. Policy Provisions

A. Except for permitted preexistingcondition clauses as described inSection 7A(1) and Section 8A(1) of thisregulation, no policy or certificate maybe advertised, solicited or issued fordelivery in this state as a Medicaresupplement policy if the policy orcertificate contains limitations orexclusions on coverage that are morerestrictive than those of Medicare.

B. No Medicare supplement policy orcertificate may use waivers to exclude,limit or reduce coverage or benefits forspecifically named or describedpreexisting diseases or physicalconditions.

C. No Medicare supplement policy orcertificate in force in the state shallcontain benefits which duplicatebenefits provided by Medicare.

Section 7. Minimum Benefit Standardsfor Policies or Certificates Issued forDelivery Prior to [insert effective dateadopted by state]

No policy or certificate may beadvertised, solicited or issued fordelivery in this state as a Medicaresupplement policy or certificate unlessit meets or exceeds the followingminimum standards. These areminimum standards and do notpreclude the inclusion of otherprovisions or benefits which are notinconsistent with these standards.

Drafting Note: This section has beenretained for transitional purposes. Thepurpose of this section is to govern allpolicies issued prior to the date a state makesits revisions to conform to the OmnibusBudget Reconciliation Act of 1990 (Pub. L.101–508).

A. General Standards. The followingstandards apply to Medicaresupplement policies and certificates andare in addition to all other requirementsof this regulation.

(1) A Medicare supplement policy orcertificate shall not exclude or limitbenefits for losses incurred more thansix (6) months from the effective date ofcoverage because it involved apreexisting condition. The policy orcertificate shall not define a preexisting


condition more restrictively than acondition for which medical advice wasgiven or treatment was recommended byor received from a physician within six(6) months before the effective date ofcoverage.

Drafting Note: States that have adopted theNAIC Individual Accident and SicknessInsurance Minimum Standards Model Actshould recognize a conflict between Section6B of that Act and this subsection. It may benecessary to include additional language inthe Minimum Standards Model Act thatrecognizes the applicability of thispreexisting condition rule to Medicaresupplement policies and certificates.

(2) A Medicare supplement policy orcertificate shall not indemnify againstlosses resulting from sickness on adifferent basis than losses resulting fromaccidents.

(3) A Medicare supplement policy orcertificate shall provide that benefitsdesigned to cover cost sharing amountsunder Medicare will be changedautomatically to coincide with anychanges in the applicable Medicaredeductible amount and copaymentpercentage factors. Premiums may bemodified to correspond with suchchanges.

Drafting Note: This provision was preparedso that premium changes can be made basedupon the changes in policy benefits that willbe necessary because of changes in Medicarebenefits. States may wish to redraft thisprovision so as to coincide with theirparticular authority.

(4) A ‘‘noncancellable, ‘‘guaranteedrenewable,’’ or ‘‘noncancellable andguaranteed renewable’’ Medicaresupplement policy shall not:

(a) Provide for termination of coverageof a spouse solely because of theoccurrence of an event specified fortermination of coverage of the insured,other than the nonpayment of premium;or

(b) Be cancelled or nonrenewed by theissuer solely on the grounds ofdeterioration of health.

(5) (a) Except as authorized by thecommissioner of this state, an issuershall neither cancel nor nonrenew aMedicare supplement policy orcertificate for any reason other thannonpayment of premium or materialmisrepresentation.

(b) If a group Medicare supplementinsurance policy is terminated by thegroup policyholder and not replaced asprovided in Paragraph (5)(d), the issuershall offer certificateholders anindividual Medicare supplement policy.The issuer shall offer thecertificateholder at least the followingchoices:

(i) An individual Medicaresupplement policy currently offered by

the issuer having comparable benefits tothose contained in the terminated groupMedicare supplement policy; and

(ii) An individual Medicaresupplement policy which provides onlysuch benefits as are required to meet theminimum standards as defined inSection 8B of this regulation.

Drafting Note: Group contracts in forceprior to the effective date of the OmnibusBudget Reconciliation Act (OBRA) of 1990may have existing contractual obligations tocontinue benefits contained in the groupcontract. This section is not intended toimpair such obligations.

(c) If membership in a group isterminated, the issuer shall:

(i) Offer the certificateholder theconversion opportunities described inSubparagraph (b); or

(ii) At the option of the grouppolicyholder, offer the certificateholdercontinuation of coverage under thegroup policy.

(d) If a group Medicare supplementpolicy is replaced by another groupMedicare supplement policy purchasedby the same policyholder, the issuer ofthe replacement policy shall offercoverage to all persons covered underthe old group policy on its date oftermination. Coverage under the newgroup policy shall not result in anyexclusion for preexisting conditions thatwould have been covered under thegroup policy being replaced.

Drafting Note: Rate increases otherwiseauthorized by law are not prohibited by thisParagraph (5).

(6) Termination of a Medicaresupplement policy or certificate shall bewithout prejudice to any continuousloss which commenced while the policywas in force, but the extension ofbenefits beyond the period duringwhich the policy was in force may bepredicated upon the continuous totaldisability of the insured, limited to theduration of the policy benefit period, ifany, or to payment of the maximumbenefits.

B. Minimum Benefit Standards.(1) Coverage of Part A Medicare

eligible expenses for hospitalization tothe extent not covered by Medicare fromthe 61st day through the 90th day in anyMedicare benefit period;

(2) Coverage for either all or none ofthe Medicare Part A inpatient hospitaldeductible amount;

(3) Coverage of Part A Medicareeligible expenses incurred as dailyhospital charges during use ofMedicare’s lifetime hospital inpatientreserve days;

(4) Upon exhaustion of all Medicarehospital inpatient coverage includingthe lifetime reserve days, coverage of

ninety percent (90%) of all MedicarePart A eligible expenses forhospitalization not covered by Medicaresubject to a lifetime maximum benefit ofan additional 365 days;

(5) Coverage under Medicare Part Afor the reasonable cost of the first three(3) pints of blood (or equivalentquantities of packed red blood cells, asdefined under federal regulations)unless replaced in accordance withfederal regulations or already paid forunder Part B;

(6) Coverage for the coinsuranceamount of Medicare eligible expensesunder Part B regardless of hospitalconfinement, subject to a maximumcalendar year out-of-pocket amountequal to the Medicare Part B deductible[$100];

(7) Effective January 1, 1990, coverageunder Medicare Part B for thereasonable cost of the first three (3)pints of blood (or equivalent quantitiesof packed red blood cells, as definedunder federal regulations), unlessreplaced in accordance with federalregulations or already paid for underPart A, subject to the Medicaredeductible amount.

Section 8. Benefit Standards for Policiesor Certificates Issued or Delivered on orAfter [insert effective date adopted bystate]

The following standards areapplicable to all Medicare supplementpolicies or certificates delivered orissued for delivery in this state on orafter [insert effective date]. No policy orcertificate may be advertised, solicited,delivered or issued for delivery in thisstate as a Medicare supplement policyor certificate unless it complies withthese benefit standards.

A. General Standards. The followingstandards apply to Medicaresupplement policies and certificates andare in addition to all other requirementsof this regulation.

(1) A Medicare supplement policy orcertificate shall not exclude or limitbenefits for losses incurred more thansix (6) months from the effective date ofcoverage because it involved apreexisting condition. The policy orcertificate may not define a preexistingcondition more restrictively than acondition for which medical advice wasgiven or treatment was recommended byor received from a physician within six(6) months before the effective date ofcoverage.

Drafting Note: States that have adopted theNAIC Individual Accident and SicknessInsurance Minimum Standards Model Actshould recognize a conflict between Section6B of that Act and this subsection. It may benecessary to include additional language in


the Minimum Standards Model Act thatrecognizes the applicability of thispreexisting condition rule to Medicaresupplement policies and certificates.

(2) A Medicare supplement policy orcertificate shall not indemnify againstlosses resulting from sickness on adifferent basis than losses resulting fromaccidents.

(3) A Medicare supplement policy orcertificate shall provide that benefitsdesigned to cover cost sharing amountsunder Medicare will be changedautomatically to coincide with anychanges in the applicable Medicaredeductible amount and copaymentpercentage factors. Premiums may bemodified to correspond with suchchanges.

Drafting Note: This provision was preparedso that premium changes can be made basedon the changes in policy benefits that will benecessary because of changes in Medicarebenefits. States may wish to redraft thisprovision to conform with their particularauthority.

(4) No Medicare supplement policy orcertificate shall provide for terminationof coverage of a spouse solely becauseof the occurrence of an event specifiedfor termination of coverage of theinsured, other than the nonpayment ofpremium.

(5) Each Medicare supplement policyshall be guaranteed renewable.

(a) The issuer shall not cancel ornonrenew the policy solely on theground of health status of theindividual.

(b) The issuer shall not cancel ornonrenew the policy for any reasonother than nonpayment of premium ormaterial misrepresentation.

(c) If the Medicare supplement policyis terminated by the group policyholderand is not replaced as provided underSection 8A(5)(e), the issuer shall offercertificateholders an individualMedicare supplement policy which (atthe option of the certificateholder)

(i) Provides for continuation of thebenefits contained in the group policy,or

(ii) Provides for benefits thatotherwise meet the requirements of thissubsection.

(d) If an individual is acertificateholder in a group Medicaresupplement policy and the individualterminates membership in the group,the issuer shall:

(i) Offer the certificateholder theconversion opportunity described inSection 8A(5)(c), or

(ii) At the option of the grouppolicyholder, offer the certificateholdercontinuation of coverage under thegroup policy.

(e) If a group Medicare supplementpolicy is replaced by another groupMedicare supplement policy purchasedby the same policyholder, the issuer ofthe replacement policy shall offercoverage to all persons covered underthe old group policy on its date oftermination. Coverage under the newpolicy shall not result in any exclusionfor preexisting conditions that wouldhave been covered under the grouppolicy being replaced.

Drafting Note: Rate increases otherwiseauthorized by law are not prohibited by thisParagraph (5).

(6) Termination of a Medicaresupplement policy or certificate shall bewithout prejudice to any continuousloss which commenced while the policywas in force, but the extension ofbenefits beyond the period duringwhich the policy was in force may beconditioned upon the continuous totaldisability of the insured, limited to theduration of the policy benefit period, ifany, or payment of the maximumbenefits.

(7) (a) A Medicare supplement policyor certificate shall provide that benefitsand premiums under the policy orcertificate shall be suspended at therequest of the policyholder orcertificateholder for the period (not toexceed twenty-four (24) months) inwhich the policyholder orcertificateholder has applied for and isdetermined to be entitled to medicalassistance under Title XIX of the SocialSecurity Act, but only if thepolicyholder or certificateholder notifiesthe issuer of the policy or certificatewithin ninety (90) days after the datethe individual becomes entitled toassistance.

(b) If suspension occurs and if thepolicyholder or certificateholder losesentitlement to medical assistance, thepolicy or certificate shall beautomatically reinstituted (effective asof the date of termination ofentitlement) as of the termination ofentitlement if the policyholder orcertificateholder provides notice of lossof entitlement within ninety (90) daysafter the date of loss and pays thepremium attributable to the period,effective as of the date of termination ofentitlement.

(c) Reinstitution of coverages:(i) Shall not provide for any waiting

period with respect to treatment ofpreexisting conditions;

(ii) Shall provide for coverage whichis substantially equivalent to coveragein effect before the date of suspension;and

(iii) Shall provide for classification ofpremiums on terms at least as favorable

to the policyholder or certificateholderas the premium classification terms thatwould have applied to the policyholderor certificateholder had the coverage notbeen suspended.

B. Standards for Basic (Core) BenefitsCommon to All Benefit Plans.

Every issuer shall make available apolicy or certificate including only thefollowing basic ‘‘core’’ package ofbenefits to each prospective insured. Anissuer may make available toprospective insureds any of the otherMedicare Supplement Insurance BenefitPlans in addition to the basic corepackage, but not in lieu of it.

(1) Coverage of Part A Medicareeligible expenses for hospitalization tothe extent not covered by Medicare fromthe 61st day through the 90th day in anyMedicare benefit period;

(2) Coverage of Part A Medicareeligible expenses incurred forhospitalization to the extent not coveredby Medicare for each Medicare lifetimeinpatient reserve day used;

(3) Upon exhaustion of the Medicarehospital inpatient coverage includingthe lifetime reserve days, coverage of theMedicare Part A eligible expenses forhospitalization paid at the diagnosticrelated group (DRG) day outlier perdiem or other appropriate standard ofpayment, subject to a lifetime maximumbenefit of an additional 365 days;

(4) Coverage under Medicare Parts Aand B for the reasonable cost of the firstthree (3) pints of blood (or equivalentquantities of packed red blood cells, asdefined under federal regulations)unless replaced in accordance withfederal regulations;

(5) Coverage for the coinsuranceamount (or, in the case of hospitaloutpatient department services, thecopayment amount) of Medicare eligibleexpenses under Part B regardless ofhospital confinement, subject to theMedicare Part B deductible;

C. Standards for Additional Benefits.The following additional benefits shallbe included in Medicare SupplementBenefit Plans ‘‘B’’ through ‘‘J’’ only asprovided by Section 9 of this regulation.

(1) Medicare Part A Deductible:Coverage for all of the Medicare Part Ainpatient hospital deductible amountper benefit period.

(2) Skilled Nursing Facility Care:Coverage for the actual billed charges upto the coinsurance amount from the 21stday through the 100th day in a Medicarebenefit period for posthospital skillednursing facility care eligible underMedicare Part A.

(3) Medicare Part B Deductible:Coverage for all of the Medicare Part Bdeductible amount per calendar yearregardless of hospital confinement.


(4) Eighty Percent (80%) of theMedicare Part B Excess Charges:Coverage for eighty percent (80%) of thedifference between the actual MedicarePart B charge as billed, not to exceedany charge limitation established by theMedicare program or state law, and theMedicare-approved Part B charge.

(5) One Hundred Percent (100%) ofthe Medicare Part B Excess Charges:Coverage for all of the differencebetween the actual Medicare Part Bcharge as billed, not to exceed anycharge limitation established by theMedicare program or state law, and theMedicare-approved Part B charge.

(6) Basic Outpatient Prescription DrugBenefit: Coverage for fifty percent (50%)of outpatient prescription drug charges,after a $250 calendar year deductible, toa maximum of $1,250 in benefitsreceived by the insured per calendaryear, to the extent not covered byMedicare.

(7) Extended Outpatient PrescriptionDrug Benefit: Coverage for fifty percent(50%) of outpatient prescription drugcharges, after a $250 calendar yeardeductible to a maximum of $3,000 inbenefits received by the insured percalendar year, to the extent not coveredby Medicare.

(8) Medically Necessary EmergencyCare in a Foreign Country: Coverage tothe extent not covered by Medicare foreighty percent (80%) of the billedcharges for Medicare-eligible expensesfor medically necessary emergencyhospital, physician and medical carereceived in a foreign country, whichcare would have been covered byMedicare if provided in the UnitedStates and which care began during thefirst sixty (60) consecutive days of eachtrip outside the United States, subject toa calendar year deductible of $250, anda lifetime maximum benefit of $50,000.For purposes of this benefit, ‘‘emergencycare’’ shall mean care neededimmediately because of an injury or anillness of sudden and unexpected onset.

(9) Preventive Medical Care Benefit:Coverage for the following preventivehealth services:

(a) An annual clinical preventivemedical history and physicalexamination that may include tests andservices from Subparagraph (b) andpatient education to address preventivehealth care measures.

(b) Any one or a combination of thefollowing preventive screening tests orpreventive services, the frequency ofwhich is considered medicallyappropriate:

(1) Fecal occult blood test or digitalrectal examination, or both;

(2) Mammogram;

(3) Dipstick urinalysis for hematuria,bacteriuria and proteinuria;

(4) Pure tone (air only) hearingscreening test, administered or orderedby a physician;

(5) Serum cholesterol screening (everyfive (5) years);

(6) Thyroid function test;(7) Diabetes screening.(c) Influenza vaccine administered at

any appropriate time during the yearand tetanus and diphtheria booster(every ten (10) years).

(d) Any other tests or preventivemeasures determined appropriate by theattending physician.

Reimbursement shall be for the actualcharges up to one hundred percent(100%) of the Medicare-approvedamount for each service, as if Medicarewere to cover the service as identifiedin American Medical AssociationCurrent Procedural Terminology (AMACPT) codes, to a maximum of $120annually under this benefit. This benefitshall not include payment for anyprocedure covered by Medicare.

(10) At-Home Recovery Benefit:Coverage for services to provide shortterm, at-home assistance with activitiesof daily living for those recovering froman illness, injury or surgery.

(a) For purposes of this benefit, thefollowing definitions shall apply:

(i) ‘‘Activities of daily living’’ include,but are not limited to bathing, dressing,personal hygiene, transferring, eating,ambulating, assistance with drugs thatare normally self-administered, andchanging bandages or other dressings.

(ii) ‘‘Care provider’’ means a dulyqualified or licensed home health aideor homemaker, personal care aide ornurse provided through a licensed homehealth care agency or referred by alicensed referral agency or licensednurses registry.

(iii) ‘‘Home’’ shall mean any placeused by the insured as a place ofresidence, provided that the placewould qualify as a residence for homehealth care services covered byMedicare. A hospital or skilled nursingfacility shall not be considered theinsured’s place of residence.

(iv) ‘‘At-home recovery visit’’ meansthe period of a visit required to provideat home recovery care, without limit onthe duration of the visit, except eachconsecutive four (4) hours in a twenty-four-hour period of services provided bya care provider is one visit.

(b) Coverage Requirements andLimitations.

(i) At-home recovery servicesprovided must be primarily serviceswhich assist in activities of daily living.

(ii) The insured’s attending physicianmust certify that the specific type and

frequency of at-home recovery servicesare necessary because of a condition forwhich a home care plan of treatmentwas approved by Medicare.

(iii) Coverage is limited to:(I) No more than the number and type

of at-home recovery visits certified asnecessary by the insured’s attendingphysician. The total number of at-homerecovery visits shall not exceed thenumber of Medicare approved homehealth care visits under a Medicareapproved home care plan of treatment;

(II) The actual charges for each visitup to a maximum reimbursement of $40per 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 policyor certificate and not otherwiseexcluded;

(VIII) At-home recovery visitsreceived during the period the insuredis receiving Medicare approved homecare services or no more than eight (8)weeks after the service date of the lastMedicare approved home health carevisit.

(c) Coverage is excluded for:(i) Home care visits paid for by

Medicare or other governmentprograms; and

(ii) Care provided by family members,unpaid volunteers or providers who arenot care providers.

(11) New or Innovative Benefits: Anissuer may, with the prior approval ofthe commissioner, offer policies orcertificates with new or innovativebenefits in addition to the benefitsprovided in a policy or certificate thatotherwise complies with the applicablestandards. The new or innovativebenefits may include benefits that areappropriate to Medicare supplementinsurance, new or innovative, nototherwise available, cost-effective, andoffered in a manner which is consistentwith the goal of simplification ofMedicare supplement policies.

Drafting Note: The Omnibus BudgetReconciliation Act 1990, 42 U.S.C.§ 1395ss(p)(7), does not prohibit the issuersof Medicare supplement policies, through anarrangement with a vendor for discountsfrom the vendor, from making availablediscounts from the vendor to thepolicyholder or certificateholder for thepurchase of items or services not coveredunder its Medicare supplement policies (forexample: discounts on hearing aids oreyeglasses).

Drafting Note: Use of new or innovativebenefits may be appropriate to add coverage


or access to such benefits as prescriptiondrugs, at-home recovery services andpreventive medical care. Any suchinnovative benefit, however, should offeruniquely different or significantly expandedcoverage.

Drafting Note: The NAIC discussedincluding inflation protection forprescription drugs, at-home recoverybenefits, and preventive care benefits.However, because of the lack of anappropriate mechanism for indexing thesebenefits, NAIC has not included indexing atthis point in time. However, NAIC iscommitted to evaluating the effectiveness ofthese benefits without inflation protection,and will revisit the issue. NAIC hasdetermined that OBRA does not authorizeNAIC to delegate the authority for indexingthese benefits to a federal agency without anamendment to federal law.

Section 9. Standard MedicareSupplement Benefit Plans

A. An issuer shall make available toeach prospective policyholder andcertificateholder a policy form orcertificate form containing only thebasic core benefits, as defined in Section8B of this regulation.

B. No groups, packages orcombinations of Medicare supplementbenefits other than those listed in thissection shall be offered for sale in thisstate, except as may be permitted inSection 8C(11) and in Section 10 of thisregulation.

C. Benefit plans shall be uniform instructure, language, designation andformat to the standard benefit plans ‘‘A’’through ‘‘J’’ listed in this subsection andconform to the definitions in Section 4of this regulation. Each benefit shall bestructured in accordance with theformat provided in Sections 8B and 8Cand list the benefits in the order shownin this subsection. For purposes of thissection, ‘‘structure, language, andformat’’ means style, arrangement andoverall content of a benefit.

D. An issuer may use, in addition tothe benefit plan designations required inSubsection C, other designations to theextent permitted by law.

Drafting Note: It is anticipated that if astate determines that it will authorize the saleof only some of these benefit plans, the lettercodes used in this regulation will bepreserved. The Guide to Health Insurance forPeople with Medicare’’ published jointly bythe NAIC and the Health Care FinancingAdministration will contain a chartcomparing the ten possible combinations. Inorder for consumers to compare specificpolicy choices, it will be important that auniform ‘‘naming’’ system be used. Thus, ifonly plans ‘‘A,’’ ‘‘B,’’ ‘‘D,’’ ‘‘F’’ and ‘‘H’’ (forexample) are authorized in a state, theseplans should retain these alphabeticaldesignations. However, an issuer may use, inaddition to these alphabetical designations,other designations as provided in Section 9Dof this regulation.

E. Make-up of benefit plans:(1) Standardized Medicare

supplement benefit plan ‘‘A’’ shall belimited to the basic (core) benefitscommon to all benefit plans, as definedin Section 8B of this regulation.

(2) Standardized Medicaresupplement benefit plan ‘‘B’’ shallinclude only the following: The corebenefit as defined in Section 8B of thisregulation, plus the Medicare Part Adeductible as defined in Section 8C(1).

(3) Standardized Medicaresupplement benefit plan ‘‘C’’ shallinclude only the following: The corebenefit as defined in Section 8B of thisregulation, plus the Medicare Part Adeductible, skilled nursing facility care,Medicare Part B deductible andmedically necessary emergency care ina foreign country as defined in Sections8C (1), (2), (3) and (8) respectively.

(4) Standardized Medicaresupplement benefit plan ‘‘D’’ shallinclude only the following: The corebenefit (as defined in Section 8B of thisregulation), plus the Medicare Part Adeductible, skilled nursing facility care,medically necessary emergency care inan foreign country and the at-homerecovery benefit as defined in Sections8C (1), (2), (8) and (10) respectively.

(5) Standardized Medicaresupplement benefit plan ‘‘E’’ shallinclude only the following: The corebenefit as defined in Section 8B of thisregulation, plus the Medicare Part Adeductible, skilled nursing facility care,medically necessary emergency care ina foreign country and preventivemedical care as defined in Sections 8C(1), (2), (8) and (9) respectively.

(6) Standardized Medicaresupplement benefit plan ‘‘F’’ shallinclude only the following: The corebenefit as defined in Section 8B of thisregulation, plus the Medicare Part Adeductible, the skilled nursing facilitycare, the Part B deductible, one hundredpercent (100%) of the Medicare Part Bexcess charges, and medically necessaryemergency care in a foreign country asdefined in Sections 8C (1), (2), (3), (5)and (8) respectively.

(7) Standardized Medicaresupplement benefit high deductibleplan ‘‘F’’ shall include only thefollowing: 100% of covered expensesfollowing the payment of the annualhigh deductible plan ‘‘F’’ deductible.The covered expenses include the corebenefit as defined in Section 8B of thisregulation, plus the Medicare Part Adeductible, skilled nursing facility care,the Medicare Part B deductible, onehundred percent (100%) of theMedicare Part B excess charges, andmedically necessary emergency care ina 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-pocketexpenses, other than premiums, forservices covered by the Medicaresupplement plan ‘‘F’’ policy, and shallbe in addition to any other specificbenefit deductibles. The annual highdeductible Plan ‘‘F’’ deductible shall be$1500 for 1998 and 1999, and shall bebased on the calendar year. It shall beadjusted annually thereafter by theSecretary to reflect the change in theConsumer Price Index for all urbanconsumers for the twelve-month periodending with August of the precedingyear, and rounded to the nearestmultiple of $10.

(8) Standardized Medicaresupplement benefit plan ‘‘G’’ shallinclude only the following: The corebenefit as defined in Section 8B of thisregulation, plus the Medicare Part Adeductible, skilled nursing facility care,eighty percent (80%) of the MedicarePart B excess charges, medicallynecessary emergency care in a foreigncountry, and the at-home recoverybenefit as defined in Sections 8C (1), (2),(4), (8) and (10) respectively.

(9) Standardized Medicaresupplement benefit plan ‘‘H’’ shallconsist of only the following: The corebenefit as defined in Section 8B of thisregulation, plus the Medicare Part Adeductible, skilled nursing facility care,basic prescription drug benefit andmedically necessary emergency care ina foreign country as defined in Sections8C (1), (2), (6) and (8) respectively.

(10) Standardized Medicaresupplement benefit plan ‘‘I’’ shallconsist of only the following: The corebenefit as defined in Section 8B of thisregulation, plus the Medicare Part Adeductible, skilled nursing facility care,one hundred percent (100%) of theMedicare Part B excess charges, basicprescription drug benefit, medicallynecessary emergency care in a foreigncountry and at-home recovery benefit asdefined in Sections 8C (1), (2), (5), (6),(8) and (10) respectively.

(11) Standardized Medicaresupplement benefit plan ‘‘J’’ shallconsist of only the following: The corebenefit as defined in Section 8B of thisregulation, plus the Medicare Part Adeductible, skilled nursing facility care,Medicare Part B deductible, onehundred percent (100%) of theMedicare Part B excess charges,extended prescription drug benefit,medically necessary emergency care ina foreign country, preventive medicalcare and at-home recovery benefit asdefined in Sections 8C (1), (2), (3), (5),(7), (8), (9) and (10) respectively.


(12) Standardized Medicaresupplement benefit high deductibleplan ‘‘J’’ shall consist of only thefollowing: 100% of covered expensesfollowing the payment of the annualhigh deductible plan ‘‘J’’ deductible.The covered expenses include the corebenefit as defined in Section 8B of thisregulation, plus the Medicare Part Adeductible, skilled nursing facility care,Medicare Part B deductible, onehundred percent (100%) of theMedicare Part B excess charges,extended outpatient prescription drugbenefit, medically necessary emergencycare in a foreign country, preventivemedical care benefit and at-homerecovery benefit as defined in Sections8C (1), (2), (3), (5), (7), (8), (9) and (10)respectively. The annual highdeductible plan ‘‘J’’ deductible shallconsist of out-of-pocket expenses, otherthan premiums, for services covered bythe Medicare supplement plan ‘‘J’’policy, and shall be in addition to anyother specific benefit deductibles. Theannual deductible shall be $1500 for1998 and 1999, and shall be based ona calendar year. It shall be adjustedannually thereafter by the Secretary toreflect the change in the Consumer PriceIndex for all urban consumers for thetwelve-month period ending withAugust of the preceding year, androunded to the nearest multiple of $10.

Drafting Note: A state may determine bystatute or regulation which of the abovebenefit plans may be sold in that state. Thecore benefit plan must be made available byall issuers. Therefore, the core benefit planmust be one of the authorized benefit plansadopted by a state. In no event, however, maya state authorize the sale of more than 10standardized Medicare supplement benefitplans (that is, 9 plus the core policy), plusthe two (2) high deductible plans, at the sametime.

Drafting Note: The Omnibus BudgetReconciliation Act of 1990 preempts statemandated benefits in Medicare supplementpolicies or certificates, except for those stateswhich have been granted a waiver fornonstandardized plans.

Section 10. Medicare Select Policiesand Certificates

A. (1) This section shall apply toMedicare Select policies andcertificates, as defined in this section.

Drafting Note: This section should beadopted by states designated by the Secretaryof Health and Human Services to participatein the Medicare Select Program. Section 4358of the Omnibus Budget Reconciliation Act(OBRA) of 1990 (section 1882(t) of Title XVIIIof the Social Security Act) authorized a three-year, fifteen-state program with states to bedesignated by the Secretary. Additional statesmay be authorized by future changes tofederal law to apply the Medicare Select

Program requirements to existing preferredprovider arrangements.

(2) No policy or certificate may beadvertised as a Medicare Select policyor certificate unless it meets therequirements of this section.

B. For the purposes of this section:(1) Complaint means any

dissatisfaction expressed by anindividual concerning a Medicare Selectissuer or its network providers.

(2) Grievance means dissatisfactionexpressed in writing by an individualinsured under a Medicare Select policyor certificate with the administration,claims practices, or provision of servicesconcerning a Medicare Select issuer orits network providers.

(3) Medicare Select issuer means anissuer offering, or seeking to offer, aMedicare Select policy or certificate.

(4) Medicare Select policy or MedicareSelect certificate mean respectively aMedicare supplement policy orcertificate that contains restrictednetwork provisions.

(5) Network provider means aprovider of health care, or a group ofproviders of health care, which hasentered into a written agreement withthe issuer to provide benefits insuredunder a Medicare Select policy.

(6) Restricted network provisionmeans any provision which conditionsthe payment of benefits, in whole or inpart, on the use of network providers.

(7) Service area means the geographicarea approved by the commissionerwithin which an issuer is authorized tooffer a Medicare Select policy.

C. The commissioner may authorizean issuer to offer a Medicare Selectpolicy or certificate, pursuant to thissection and Section 4358 of theOmnibus Budget Reconciliation Act(OBRA) of 1990 if the commissionerfinds that the issuer has satisfied all ofthe requirements of this regulation.

D. A Medicare Select issuer shall notissue a Medicare Select policy orcertificate in this state until its plan ofoperation has been approved by thecommissioner.

E. A Medicare Select issuer shall filea proposed plan of operation with thecommissioner in a format prescribed bythe commissioner. The plan of operationshall contain at least the followinginformation:

(1) Evidence that all covered servicesthat are subject to restricted networkprovisions are available and accessiblethrough network providers, including ademonstration that:

(a) Services can be provided bynetwork providers with reasonablepromptness with respect to geographiclocation, hours of operation and after-

hour care. The hours of operation andavailability of after-hour care shallreflect usual practice in the local area.Geographic availability shall reflect theusual travel times within thecommunity.

(b) The number of network providersin the service area is sufficient, withrespect to current and expectedpolicyholders, either:

(i) To deliver adequately all servicesthat are subject to a restricted networkprovision; or

(ii) To make appropriate referrals.(c) There are written agreements with

network providers describing specificresponsibilities.

(d) Emergency care is availabletwenty-four (24) hours per day andseven (7) days per week.

(e) In the case of covered services thatare subject to a restricted networkprovision and are provided on a prepaidbasis, there are written agreements withnetwork providers prohibiting theproviders from billing or otherwiseseeking reimbursement from or recourseagainst any individual insured under aMedicare Select policy or certificate.This paragraph shall not apply tosupplemental charges or coinsuranceamounts as stated in the MedicareSelect policy or certificate.

(2) A statement or map providing aclear description of the service area.

(3) A description of the grievanceprocedure to be utilized.

(4) A description of the qualityassurance program, including:

(a) The formal organizationalstructure;

(b) The written criteria for selection,retention and removal of networkproviders; and

(c) The procedures for evaluatingquality of care provided by networkproviders, and the process to initiatecorrective action when warranted.

(5) A list and description, byspecialty, of the network providers.

(6) Copies of the written informationproposed to be used by the issuer tocomply with Subsection I.

(7) Any other information requestedby the commissioner.

F. (1) A Medicare Select issuer shallfile any proposed changes to the plan ofoperation, except for changes to the listof network providers, with thecommissioner prior to implementing thechanges. Changes shall be consideredapproved by the commissioner afterthirty (30) days unless specificallydisapproved.

(2) An updated list of networkproviders shall be filed with thecommissioner at least quarterly.

G. A Medicare Select policy orcertificate shall not restrict payment for


covered services provided by non-network providers if:

(1) The services are for symptomsrequiring emergency care or areimmediately required for an unforeseenillness, injury or a condition; and

(2) It is not reasonable to obtainservices through a network provider.

H. A Medicare Select policy orcertificate shall provide payment for fullcoverage under the policy for coveredservices that are not available throughnetwork providers.

I. A Medicare Select issuer shall makefull and fair disclosure in writing of theprovisions, restrictions and limitationsof the Medicare Select policy orcertificate to each applicant. Thisdisclosure shall include at least thefollowing:

(1) An outline of coverage sufficient topermit the applicant to compare thecoverage and premiums of the MedicareSelect policy or certificate with:

(a) Other Medicare supplementpolicies or certificates offered by theissuer; and

(b) Other Medicare Select policies orcertificates.

(2) A description (including address,phone number and hours of operation)of the network providers, includingprimary care physicians, specialtyphysicians, hospitals and otherproviders.

(3) A description of the restrictednetwork provisions, including paymentsfor coinsurance and deductibles whenproviders other than network providersare utilized.

(4) A description of coverage foremergency and urgently needed careand other out-of-service area coverage.

(5) A description of limitations onreferrals to restricted network providersand to other providers.

(6) A description of the policyholder’srights to purchase any other Medicaresupplement policy or certificateotherwise offered by the issuer.

(7) A description of the MedicareSelect issuer’s quality assuranceprogram and grievance procedure.

J. Prior to the sale of a Medicare Selectpolicy or certificate, a Medicare Selectissuer shall obtain from the applicant asigned and dated form stating that theapplicant has received the informationprovided pursuant to Subsection I ofthis section and that the applicantunderstands the restrictions of theMedicare Select policy or certificate.

K. A Medicare Select issuer shall haveand use procedures for hearingcomplaints and resolving writtengrievances from the subscribers. Theprocedures shall be aimed at mutualagreement for settlement and mayinclude arbitration procedures.

(1) The grievance procedure shall bedescribed in the policy and certificatesand in the outline of coverage.

(2) At the time the policy or certificateis issued, the issuer shall providedetailed information to the policyholderdescribing how a grievance may beregistered with the issuer.

(3) Grievances shall be considered ina timely manner and shall betransmitted to appropriate decision-makers who have authority to fullyinvestigate the issue and take correctiveaction.

(4) If a grievance is found to be valid,corrective action shall be takenpromptly.

(5) All concerned parties shall benotified about the results of a grievance.

(6) The issuer shall report no laterthan each March 31st to thecommissioner regarding its grievanceprocedure. The report shall be in aformat prescribed by the commissionerand shall contain the number ofgrievances filed in the past year and asummary of the subject, nature andresolution of such grievances.

L. At the time of initial purchase, aMedicare Select issuer shall makeavailable to each applicant for aMedicare Select policy or certificate theopportunity to purchase any Medicaresupplement policy or certificateotherwise offered by the issuer.

M. (1) At the request of an individualinsured under a Medicare Select policyor certificate, a Medicare Select issuershall make available to the individualinsured the opportunity to purchase aMedicare supplement policy orcertificate offered by the issuer whichhas comparable or lesser benefits andwhich does not contain a restrictednetwork provision. The issuer shallmake the policies or certificatesavailable without requiring evidence ofinsurability after the Medicare Selectpolicy or certificate has been in force forsix (6) months.

(2) For the purposes of thissubsection, a Medicare supplementpolicy or certificate will be consideredto have comparable or lesser benefitsunless it contains one or moresignificant benefits not included in theMedicare Select policy or certificatebeing replaced. For the purposes of thisparagraph, a significant benefit meanscoverage for the Medicare Part Adeductible, coverage for prescriptiondrugs, coverage for at-home recoveryservices or coverage for Part B excesscharges.

N. Medicare Select policies andcertificates shall provide forcontinuation of coverage in the eventthe Secretary of Health and HumanServices determines that Medicare

Select policies and certificates issuedpursuant to this section should bediscontinued due to either the failure ofthe Medicare Select Program to bereauthorized under law or its substantialamendment.

(1) Each Medicare Select issuer shallmake available to each individualinsured under a Medicare Select policyor certificate the opportunity topurchase any Medicare supplementpolicy or certificate offered by the issuerwhich has comparable or lesser benefitsand which does not contain a restrictednetwork provision. The issuer shallmake the policies and certificatesavailable without requiring evidence ofinsurability.

(2) For the purposes of thissubsection, a Medicare supplementpolicy or certificate will be consideredto have comparable or lesser benefitsunless it contains one or moresignificant benefits not included in theMedicare Select policy or certificatebeing replaced. For the purposes of thisparagraph, a significant benefit meanscoverage for the Medicare Part Adeductible, coverage for prescriptiondrugs, coverage for at-home recoveryservices or coverage for Part B excesscharges.

O. A Medicare Select issuer shallcomply with reasonable requests fordata made by state or federal agencies,including the United States Departmentof Health and Human Services, for thepurpose of evaluating the MedicareSelect Program.

Section 11. Open EnrollmentA. An issuer shall not deny or

condition the issuance or effectivenessof any Medicare supplement policy orcertificate available for sale in this state,nor discriminate in the pricing of apolicy or certificate because of thehealth status, claims experience, receiptof health care, or medical condition ofan applicant in the case of anapplication for a policy or certificatethat is submitted prior to or during thesix (6) month period beginning with thefirst day of the first month in which anindividual is both 65 years of age orolder and is enrolled for benefits underMedicare Part B. Each Medicaresupplement policy and certificatecurrently available from an insurer shallbe made available to all applicants whoqualify under this subsection withoutregard to age.

B. (1) If an applicant qualifies underSubsection A and submits anapplication during the time periodreferenced in Subsection A and, as ofthe date of application, has had acontinuous period of creditablecoverage of at least six (6) months, the


issuer shall not exclude benefits basedon a preexisting condition.

(2) If the applicant qualifies underSubsection A and submits anapplication during the time periodreferenced in Subsection A and, as ofthe date of application, has had acontinuous period of creditablecoverage that is less than six (6) months,the issuer shall reduce the period of anypreexisting condition exclusion by theaggregate of the period of creditablecoverage applicable to the applicant asof the enrollment date. The Secretaryshall specify the manner of thereduction under this subsection.

Drafting Note: The Secretary hasdeveloped regulations pursuant to HIPAAregarding methods of counting creditablecoverage, which govern the way thereduction is to be applied in Section 11B(2).

C. Except as provided in Subsection Band Section 23, Subsection A shall notbe construed as preventing theexclusion of benefits under a policy,during the first six (6) months, based ona preexisting condition for which thepolicyholder or certificateholderreceived treatment or was otherwisediagnosed during the six (6) monthsbefore the coverage became effective.

Section 12. Guaranteed Issue forEligible Persons

A. Guaranteed Issue—(1) Eligiblepersons are those individuals describedin subsection B who apply to enrollunder the policy not later than sixty-three (63) days after the date of thetermination of enrollment described insubsection B, and who submit evidenceof the date of termination ordisenrollment with the application for aMedicare supplement policy.

(2) With respect to eligible persons, anissuer shall not deny or condition theissuance or effectiveness of a Medicaresupplement policy described insubsection C that is offered and isavailable for issuance to new enrolleesby the issuer, shall not discriminate inthe pricing of such a Medicaresupplement policy because of healthstatus, claims experience, receipt ofhealth care, or medical condition, andshall not impose an exclusion ofbenefits based on a preexistingcondition under such a Medicaresupplement policy.

B. Eligible Persons—An eligibleperson is an individual described in anyof the following paragraphs:

(1) The individual is enrolled underan employee welfare benefit plan thatprovides health benefits thatsupplement the benefits underMedicare; and the plan terminates, orthe plan ceases to provide all such

supplemental health benefits to theindividual;

Drafting Note: Paragraph (1) above uses thefederal legislative language from theBalanced Budget Act of 1997 (P.L. 105–33)that defines an eligible person as anindividual with respect to whom anemployee welfare benefit plan terminates, orceases to provide ‘‘all’’ health benefits thatsupplement Medicare. There was protracteddiscussion among the drafters about theinterpretation of ‘‘all’’ in this context: if theemployer drops some supplemental benefits,but not all such benefits, from its welfareplan, should the individual be eligible for aguaranteed issue Medicare supplementproduct? This question may become crucialto certain individuals depending on thebenefits dropped by the employer. Federallegislative history appears to indicate theintention that the word ‘‘all’’ be strictlyconstrued so as to require termination orcessation of all supplemental health benefits.States, however, can provide greaterprotections to beneficiaries and may wish toinclude, as eligible persons, individuals whohave lost ‘‘some or all’’ or ‘‘substantially all’’of their supplemental health benefits, toencompass situations where a change ismade in an employee welfare benefit planthat reduces the amount of supplementalhealth benefits available to the individual.States that consider alternative language arereminded to consider the impact of issuessuch as plan changes that result in adverseselection, duplicate coverage, triggering therequirement for plan administrator notice(see Section 12D) and other issues.

(2) The individual is enrolled with aMedicare+Choice organization under aMedicare+Choice plan under part C ofMedicare, and any of the followingcircumstances apply:

(i) The organization’s or plan’scertification [under this part] has beenterminated or the organization hasterminated or otherwise discontinuedproviding the plan in the area in whichthe individual resides;

(ii) The individual is no longereligible to elect the plan because of achange in the individual’s place ofresidence or other change incircumstances specified by theSecretary, but not including terminationof the individual’s enrollment on thebasis described in section 1851(g)(3)(B)of the federal Social Security Act (wherethe individual has not paid premiumson a timely basis or has engaged indisruptive behavior as specified instandards under section 1856), or theplan is terminated for all individualswithin a residence area;

(iii) The individual demonstrates, inaccordance with guidelines establishedby the Secretary, that:

(I) The organization offering the plansubstantially violated a materialprovision of the organization’s contractunder this part in relation to the

individual, including the failure toprovide an enrollee on a timely basismedically necessary care for whichbenefits are available under the plan orthe failure to provide such covered carein accordance with applicable qualitystandards; or

(II) The organization, or agent or otherentity acting on the organization’sbehalf, materially misrepresented theplan’s provisions in marketing the planto the individual; or

(iv) The individual meets such otherexceptional conditions as the Secretarymay provide.’’

(3) (a) The individual is enrolled with:(i) An eligible organization under a

contract under Section 1876 (Medicarerisk or cost);

(ii) A similar organization operatingunder demonstration project authority,effective for periods before April 1,1999;

(iii) An organization under anagreement under Section 1833(a)(1)(A)(health care prepayment plan); or

(iv) An organization under a MedicareSelect policy; and

(b) The enrollment ceases under thesame circumstances that would permitdiscontinuance of an individual’selection of coverage under Section12B(2).

Drafting Note: Section 3(a)(iv) above is notrequired if there is a provision in state lawor regulation that provides for thecontinuation or conversion of MedicareSelect policies or certificates.

(4) The individual is enrolled under aMedicare supplement policy and theenrollment ceases because:

(a) (i) Of the insolvency of the issueror bankruptcy of the nonissuerorganization; or

(ii) Of other involuntary terminationof coverage or enrollment under thepolicy;

(b) The issuer of the policysubstantially violated a materialprovision of the policy; or

(c) The issuer, or an agent or otherentity acting on the issuer’s behalf,materially misrepresented the policy’sprovisions in marketing the policy tothe individual;

Drafting Note: The reference to‘‘insolvency of the issuer’’ in Paragraph 4(a)above is not required if there is a provisionin state law or regulation that provides forthe continuation or conversion of Medicaresupplement policies or certificates. Thereference to ‘‘substantially violated a materialprovision of the policy’’ in Paragraph 4(b)above is expected to be amplified by theSecretary when federal regulations are issuedpursuant to the Balanced Budget Act of 1997(P.L. 105–33).

(5) (a) The individual was enrolledunder a Medicare supplement policy


and terminates enrollment andsubsequently enrolls, for the first time,with any Medicare+Choice organizationunder a Medicare+Choice plan underpart C of Medicare, any eligibleorganization under a contract underSection 1876 (Medicare risk or cost),any similar organization operatingunder demonstration project authority,an organization under an agreementunder section 1833(a)(1)(A) (health careprepayment plan), or a Medicare Selectpolicy; and

(b) The subsequent enrollment undersubparagraph (a) is terminated by theenrollee during any period within thefirst twelve (12) months of suchsubsequent enrollment (during whichthe enrollee is permitted to terminatesuch subsequent enrollment undersection 1851(e) of the federal SocialSecurity Act); or

(6) The individual, upon firstbecoming eligible for benefits under partA of Medicare at age 65, enrolls in aMedicare+Choice plan under part C ofMedicare, and disenrolls from the planby not later than twelve (12) monthsafter the effective date of enrollment.

Drafting Note: Federal law provides aguaranteed issue right to a Medicaresupplement insurance product to individualswho enroll in Medicare Part B at age 65.States may wish to consider extending thisright to other classes of individuals, such asthose who postpone enrollment in MedicarePart B until after age 65 because they areworking and are enrolled in a group healthinsurance plan.

C. Products to Which Eligible Personsare Entitled—The Medicare supplementpolicy to which eligible persons areentitled under:

(1) Section 12B(1), (2), (3) and (4) isa Medicare supplement policy whichhas a benefit package classified as PlanA, B, C, or F offered by any issuer.

(2) Section 12B(5) is the sameMedicare supplement policy in whichthe individual was most recentlypreviously enrolled, if available fromthe same issuer, or, if not so available,a policy described in Subsection C(1).

(3) Section 12B(6) shall include anyMedicare supplement policy offered byany issuer.

Drafting Note: Under federal law, for statesthat are exempted from standardization andoffer benefit packages other than Plans Athrough J, the references to benefit packagesabove are deemed references to comparablebenefit packages offered in that state. Thosestates should amend the languageaccordingly.

D. Notification provisions—(1) At thetime of an event described in SubsectionB of this section because of which anindividual loses coverage or benefitsdue to the termination of a contract or

agreement, policy, or plan, theorganization that terminates the contractor agreement, the issuer terminating thepolicy, or the administrator of the planbeing terminated, respectively, shallnotify the individual of his or her rightsunder this section, and of theobligations of issuers of Medicaresupplement policies under SubsectionA. Such notice shall be communicatedcontemporaneously with thenotification of termination.

(2) At the time of an event describedin Subsection B of this section becauseof which an individual ceasesenrollment under a contract oragreement, policy, or plan, theorganization that offers the contract oragreement, regardless of the basis for thecessation of enrollment, the issueroffering the policy, or the administratorof the plan, respectively, shall notify theindividual of his or her rights under thissection, and of the obligations of issuersof Medicare supplement policies underSection 12A. Such notice shall becommunicated within ten working daysof the issuer receiving notification ofdisenrollment.

Drafting Note: States should ensure thateducational and public information materialsit develops related to Medicare includes athorough description of the rights outlined inSection 12D.

Section 13. Standards for ClaimsPayment

A. An issuer shall comply withsection 1882(c)(3) of the Social SecurityAct (as enacted by section 4081(b)(2)(C)of the Omnibus Budget ReconciliationAct of 1987 (OBRA) 1987, Pub. L. No.100–203) by:

(1) Accepting a notice from aMedicare carrier on dually assignedclaims submitted by participatingphysicians and suppliers as a claim forbenefits in place of any other claim formotherwise required and making apayment determination on the basis ofthe information contained in that notice;

(2) Notifying the participatingphysician or supplier and thebeneficiary of the paymentdetermination;

(3) Paying the participating physicianor supplier directly;

(4) Furnishing, at the time ofenrollment, each enrollee with a cardlisting the policy name, number and acentral mailing address to which noticesfrom a Medicare carrier may be sent;

(5) Paying user fees for claim noticesthat are transmitted electronically orotherwise; and

(6) Providing to the Secretary ofHealth and Human Services, at leastannually, a central mailing address to

which all claims may be sent byMedicare carriers.

B. Compliance with the requirementsset forth in Subsection A above shall becertified on the Medicare supplementinsurance experience reporting form.

Section 14. Loss Ratio Standards andRefund or Credit of Premium

A. Loss Ratio Standards—(1)(a) AMedicare Supplement policy form orcertificate form shall not be delivered orissued for delivery unless the policyform or certificate form can be expected,as estimated for the entire period forwhich rates are computed to providecoverage, to return to policyholders andcertificate holders in the form ofaggregate benefits (not includinganticipated refunds or credits) providedunder the policy form or certificateform:

(i) At least seventy-five percent (75%)of the aggregate amount of premiumsearned in the case of group policies; or

(ii) At least sixty-five percent (65%) ofthe aggregate amount of premiumsearned in the case of individualpolicies;

(b) Calculated on the basis of incurredclaims experience or incurred healthcare expenses where coverage isprovided by a health maintenanceorganization on a service rather thanreimbursement basis and earnedpremiums for the period and inaccordance with accepted actuarialprinciples and practices.

(2) All filings of rates and ratingschedules shall demonstrate thatexpected claims in relation to premiumscomply with the requirements of thissection when combined with actualexperience to date. Filings of raterevisions shall also demonstrate that theanticipated loss ratio over the entirefuture period for which the revised ratesare computed to provide coverage canbe expected to meet the appropriate lossratio standards.

(3) For purposes of applyingSubsection A(1) of this section andSubsection C(3) of Section 15 only,policies issued as a result ofsolicitations of individuals through themails or by mass media advertising(including both print and broadcastadvertising) shall be deemed to beindividual policies.

Drafting Note: Subsection A(3) replicateslanguage contained in the Omnibus BudgetReconciliation Act of 1990 (Pub. L. No. 101–508). It allows direct mail group policies soldon an individual basis to meet the minimumloss ratio required of individual business(65%) rather than that required of groupbusiness (75%). The NAIC eliminated thisconcept from this regulation in 1987 (IProceedings of the NAIC, pp. 651, 673


(1988)). At that time, NAIC required directmail group business to meet the same lossratio requirement as other group business,regardless of whether the business was soldon an individual basis. The NAIC encouragesstates to apply the 75% loss ratio to all groupbusiness. Although NAIC is restricted frommaking revisions to its models that are notin conformance with OBRA 1990, states arefree to impose more stringent requirementsthan OBRA.

(4) For policies issued prior to [inserteffective date from Section 24 of thismodel, the effective date of the statesregulation implementing therequirements of OBRA 1990], expectedclaims in relation to premiums shallmeet:

(a) The originally filed anticipatedloss ratio when combined with theactual experience since inception;

(b) The appropriate loss ratiorequirement from Subsection A(1)(a)(i)and (ii) when combined with actualexperience beginning with [inserteffective date of this revision] to date;and

(c) The appropriate loss ratiorequirement from Subsection A(1)(a)(i)and (ii) over the entire future period forwhich the rates are computed to providecoverage.

Drafting Note: The appropriate loss ratiorequirement from Subsection A(1)(a)(i) and(ii) for all group policies subject to anindividual loss ratio standard when issued is65 percent. States may amend Section 13A(4)to permit or require aggregation of closedblocks of business upon approval of theHealth Care Financing Administration.

B. Refund or Credit Calculation—(1)An issuer shall collect and file with thecommissioner by May 31 of each yearthe data contained in the applicablereporting form contained in Appendix Afor each type in a standard Medicaresupplement benefit plan.

(2) If on the basis of the experience asreported the benchmark ratio sinceinception (ratio 1) exceeds the adjustedexperience ratio since inception (ratio3), then a refund or credit calculation isrequired. The refund calculation shallbe done on a statewide basis for eachtype in a standard Medicare supplementbenefit plan. For purposes of the refundor credit calculation, experience onpolicies issued within the reporting yearshall be excluded.

(3) For the purposes of this section,policies or certificates issued prior to[insert effective date from Section 24 ofthis model, the effective date of thestates regulation implementing therequirements of OBRA 1990], the issuershall make the refund or creditcalculation separately for all individualpolicies (including all group policiessubject to an individual loss ratio

standard when issued) combined and allother group policies combined forexperience after the [insert effective dateof this amendment]. The first reportshall be due by May 31, [insert (effectiveyear + 2) of this amendment].

Drafting Note: Subsection B(3) implementsthe requirements of Section 171 of the SocialSecurity Act Amendments of 1994 thatrequire a refund or credit calculation for pre-standardized Medicare supplement policies,but only for experience subsequent to thedate the state amends its regulation.

(4) A refund or credit shall be madeonly when the benchmark loss ratioexceeds the adjusted experience lossratio and the amount to be refunded orcredited exceeds a de minimis level.The refund shall include interest fromthe end of the calendar year to the dateof the refund or credit at a rate specifiedby the Secretary of Health and HumanServices, but in no event shall it be lessthan the average rate of interest forthirteen-week Treasury notes. A refundor credit against premiums due shall bemade by September 30 following theexperience year upon which the refundor credit is based.

C. Annual filing of Premium Rates—An issuer of Medicare supplementpolicies and certificates issued before orafter the effective date of [insert citationto state’s regulation] in this state shallfile annually its rates, rating scheduleand supporting documentationincluding ratios of incurred losses toearned premiums by policy duration forapproval by the commissioner inaccordance with the filing requirementsand procedures prescribed by thecommissioner. The supportingdocumentation shall also demonstratein accordance with actuarial standardsof practice using reasonableassumptions that the appropriate lossratio standards can be expected to bemet over the entire period for whichrates are computed. The demonstrationshall exclude active life reserves. Anexpected third-year loss ratio which isgreater than or equal to the applicablepercentage shall be demonstrated forpolicies or certificates in force less thanthree (3) years.

As soon as practicable, but prior tothe effective date of enhancements inMedicare benefits, every issuer ofMedicare supplement policies orcertificates in this state shall file withthe commissioner, in accordance withthe applicable filing procedures of thisstate:

(1)(a) Appropriate premiumadjustments necessary to produce lossratios as anticipated for the currentpremium for the applicable policies orcertificates. The supporting documents

necessary to justify the adjustment shallaccompany the filing.

(b) An issuer shall make premiumadjustments necessary to produce anexpected loss ratio under the policy orcertificate to conform to minimum lossratio standards for Medicare supplementpolicies and which are expected toresult in a loss ratio at least as great asthat originally anticipated in the ratesused to produce current premiums bythe issuer for the Medicare supplementpolicies or certificates. No premiumadjustment which would modify theloss ratio experience under the policyother than the adjustments describedherein shall be made with respect to apolicy at any time other than upon itsrenewal date or anniversary date.

(c) If an issuer fails to make premiumadjustments acceptable to thecommissioner, the commissioner mayorder premium adjustments, refunds orpremium credits deemed necessary toachieve the loss ratio required by thissection.

(2) Any appropriate riders,endorsements or policy forms needed toaccomplish the Medicare supplementpolicy or certificate modificationsnecessary to eliminate benefitduplications with Medicare. The riders,endorsements or policy forms shallprovide a clear description of theMedicare supplement benefits providedby the policy or certificate.

D. Public Hearings—Thecommissioner may conduct a publichearing to gather informationconcerning a request by an issuer for anincrease in a rate for a policy form orcertificate form issued before or after theeffective date of [insert citation to state’sregulation] if the experience of the formfor the previous reporting period is notin compliance with the applicable lossratio standard. The determination ofcompliance is made withoutconsideration of any refund or credit forthe reporting period. Public notice ofthe hearing shall be furnished in amanner deemed appropriate by thecommissioner.

Drafting Note: This section does not in anyway restrict a commissioner’s statutoryauthority, elsewhere granted, to approve ordisapprove rates.

Section 15. Filing and Approval ofPolicies and Certificates and PremiumRates

A. An issuer shall not deliver or issuefor delivery a policy or certificate to aresident of this state unless the policyform or certificate form has been filedwith and approved by the commissionerin accordance with filing requirementsand procedures prescribed by thecommissioner.


B. An issuer shall not use or changepremium rates for a Medicaresupplement policy or certificate unlessthe rates, rating schedule andsupporting documentation have beenfiled with and approved by thecommissioner in accordance with thefiling requirements and proceduresprescribed by the commissioner.

C. (1) Except as provided in Paragraph(2) of this subsection, an issuer shall notfile for approval more than one form ofa policy or certificate of each type foreach standard Medicare supplementbenefit plan.

(2) An issuer may offer, with theapproval of the commissioner, up tofour (4) additional policy forms orcertificate forms of the same type for thesame standard Medicare supplementbenefit plan, one for each of thefollowing cases:

(a) The inclusion of new or innovativebenefits;

(b) The addition of either directresponse or agent marketing methods;

(c) The addition of either guaranteedissue or underwritten coverage;

(d) The offering of coverage toindividuals eligible for Medicare byreason of disability.

(3) For the purposes of this section, a‘‘type’’ means an individual policy, agroup policy, an individual MedicareSelect policy, or a group MedicareSelect policy.

D. (1) Except as provided in Paragraph(1)(a), an issuer shall continue to makeavailable for purchase any policy formor certificate form issued after theeffective date of this regulation that hasbeen approved by the commissioner. Apolicy form or certificate form shall notbe considered to be available forpurchase unless the issuer has activelyoffered it for sale in the previous twelve(12) months.

(a) An issuer may discontinue theavailability of a policy form orcertificate form if the issuer provides tothe commissioner in writing its decisionat least thirty (30) days prior todiscontinuing the availability of theform of the policy or certificate. Afterreceipt of the notice by thecommissioner, the issuer shall no longeroffer for sale the policy form orcertificate form in this state.

(b) An issuer that discontinues theavailability of a policy form orcertificate form pursuant toSubparagraph (a) shall not file forapproval a new policy form orcertificate form of the same type for thesame standard Medicare supplementbenefit plan as the discontinued formfor a period of five (5) years after theissuer provides notice to thecommissioner of the discontinuance.

The period of discontinuance may bereduced if the commissioner determinesthat a shorter period is appropriate.

(2) The sale or other transfer ofMedicare supplement business toanother issuer shall be considered adiscontinuance for the purposes of thissubsection.

(3) A change in the rating structure ormethodology shall be considered adiscontinuance under Paragraph (1)unless the issuer complies with thefollowing requirements:

(a) The issuer provides an actuarialmemorandum, in a form and mannerprescribed by the commissioner,describing the manner in which therevised rating methodology andresultant rates differ from the existingrating methodology and existing rates.

(b) The issuer does not subsequentlyput into effect a change of rates or ratingfactors that would cause the percentagedifferential between the discontinuedand subsequent rates as described in theactuarial memorandum to change. Thecommissioner may approve a change tothe differential which is in the publicinterest.

E. (1) Except as provided in Paragraph(2), the experience of all policy forms orcertificate forms of the same type in astandard Medicare supplement benefitplan shall be combined for purposes ofthe refund or credit calculationprescribed in [insert citation to Section13 of NAIC Medicare SupplementInsurance Model Regulation].

(2) Forms assumed under anassumption reinsurance agreement shallnot be combined with the experience ofother forms for purposes of the refundor credit calculation.

Drafting Note: It has come to the attentionof the NAIC that the use of attained age ratingin the determination of rates in Medicaresupplement policies may result in situationsto which a regulatory response is desirable.States should assess their Medicaresupplement marketplace to determinewhether a regulatory response is needed. Thefollowing provisions may be included as anew subsection to Section 14. The firstoption prohibits insurers from attained agerating as a methodology for setting rates. Thesecond option does not prohibit the use ofattained age rating but requires Medicaresupplement insurers who do use attained agerating as a rate setting methodology to applythe age component to its rates annually. Theeffective date of the regulation shouldprovide sufficient time for insurers to re-rateapproved policy forms in accordance withSection 14A and for the insurancedepartment to approve (according to its ratefiling practices and procedures), such re-ratings prior to the effective date of theregulation.

Option 1F. An issuer shall not present for

filing or approval a rate structure for itsMedicare supplement policies orcertificates issued after the effective dateof the amendment of this regulationbased upon attained age rating as astructure or methodology.

Option 2F. An issuer shall not present for

filing or approval a rate structure for itsMedicare supplement policies orcertificates issued after the effective dateof the amendment of this regulationbased upon a structure or methodologywith any groupings of attained agesgreater than one year. The ratio betweenrates for successive ages shall increasesmoothly as age increases.

Section 16. Permitted CompensationArrangements

A. An issuer or other entity mayprovide commission or othercompensation to an agent or otherrepresentative for the sale of a Medicaresupplement policy or certificate only ifthe first year commission or other firstyear compensation is no more than 200percent of the commission or othercompensation paid for selling orservicing the policy or certificate in thesecond year or period.

B. The commission or othercompensation provided in subsequent(renewal) years must be the same as thatprovided in the second year or periodand must be provided for no fewer thanfive (5) renewal years.

C. No issuer or other entity shallprovide compensation to its agents orother producers and no agent orproducer shall receive compensationgreater than the renewal compensationpayable by the replacing issuer onrenewal policies or certificates if anexisting policy or certificate is replaced.

D. For purposes of this section,‘‘compensation’’ includes pecuniary ornon-pecuniary remuneration of anykind relating to the sale or renewal ofthe policy or certificate including butnot limited to bonuses, gifts, prizes,awards and finders fees.

Section 17. Required DisclosureProvisions

A. General Rules—(1) Medicaresupplement policies and certificatesshall include a renewal or continuationprovision. The language orspecifications of the provision shall beconsistent with the type of contractissued. The provision shall beappropriately captioned and shallappear on the first page of the policy,and shall include any reservation by theissuer of the right to change premiums


and any automatic renewal premiumincreases based on the policyholder’sage.

(2) Except for riders or endorsementsby which the issuer effectuates a requestmade in writing by the insured,exercises a specifically reserved rightunder a Medicare supplement policy, oris required to reduce or eliminatebenefits to avoid duplication ofMedicare benefits, all riders orendorsements added to a Medicaresupplement policy after date of issue orat reinstatement or renewal whichreduce or eliminate benefits or coveragein the policy shall require a signedacceptance by the insured. After thedate of policy or certificate issue, anyrider or endorsement which increasesbenefits or coverage with a concomitantincrease in premium during the policyterm shall be agreed to in writing signedby the insured, unless the benefits arerequired by the minimum standards forMedicare supplement policies, or if theincreased benefits or coverage isrequired by law. Where a separateadditional premium is charged forbenefits provided in connection withriders or endorsements, the premiumcharge shall be set forth in the policy.

(3) Medicare supplement policies orcertificates shall not provide for thepayment of benefits based on standardsdescribed as ‘‘usual and customary,’’‘‘reasonable and customary’’ or words ofsimilar import.

(4) If a Medicare supplement policy orcertificate contains any limitations withrespect to preexisting conditions, suchlimitations shall appear as a separateparagraph of the policy and be labeledas ‘‘Preexisting Condition Limitations.’’

(5) Medicare supplement policies andcertificates shall have a noticeprominently printed on the first page ofthe policy or certificate or attachedthereto stating in substance that thepolicyholder or certificateholder shallhave the right to return the policy orcertificate within thirty (30) days of itsdelivery and to have the premiumrefunded if, after examination of thepolicy or certificate, the insured personis not satisfied for any reason.

(6) (a) Issuers of accident and sicknesspolicies or certificates which providehospital or medical expense coverage onan expense incurred or indemnity basisto persons eligible for Medicare shallprovide to those applicants a Guide toHealth Insurance for People withMedicare in the form developed jointlyby the National Association of InsuranceCommissioners and the Health CareFinancing Administration and in a typesize no smaller than 12 point type.Delivery of the Guide shall be madewhether or not the policies orcertificates are advertised, solicited orissued as Medicare supplement policiesor certificates as defined in thisregulation. Except in the case of directresponse issuers, delivery of the Guideshall be made to the applicant at thetime of application andacknowledgement of receipt of theGuide shall be obtained by the issuer.Direct response issuers shall deliver theGuide to the applicant upon request butnot later than at the time the policy isdelivered.

(b) For the purposes of this section,‘‘form’’ means the language, format, typesize, type proportional spacing, boldcharacter, and line spacing.

B. Notice Requirements—(1) As soonas practicable, but no later than thirty(30) days prior to the annual effectivedate of any Medicare benefit changes, anissuer shall notify its policyholders andcertificateholders of modifications it hasmade to Medicare supplementinsurance policies or certificates in aformat acceptable to the commissioner.The notice shall:

(a) Include a description of revisionsto the Medicare program and adescription of each modification madeto the coverage provided under theMedicare supplement policy orcertificate, and

(b) Inform each policyholder orcertificateholder as to when anypremium adjustment is to be made dueto changes in Medicare.

(2) The notice of benefit modificationsand any premium adjustments shall bein outline form and in clear and simpleterms so as to facilitate comprehension.

(3) The notices shall not contain or beaccompanied by any solicitation.

C. Outline of Coverage Requirementsfor Medicare Supplement Policies—(1)Issuers shall provide an outline ofcoverage to all applicants at the timeapplication is presented to theprospective applicant and, except fordirect response policies, shall obtain anacknowledgement of receipt of theoutline from the applicant; and (2) If anoutline of coverage is provided at thetime of application and the Medicaresupplement policy or certificate isissued on a basis which would requirerevision of the outline, a substituteoutline of coverage properly describingthe policy or certificate shall accompanythe policy or certificate when it isdelivered and contain the followingstatement, in no less than twelve (12)point type, immediately above thecompany name:

Notice: Read this outline of coveragecarefully. It is not identical to the outline ofcoverage provided upon application and thecoverage originally applied for has not beenissued.’’

(3) The outline of coverage providedto applicants pursuant to this sectionconsists of four parts: a cover page,premium information, disclosure pages,and charts displaying the features ofeach benefit plan offered by the issuer.The outline of coverage shall be in thelanguage and format prescribed belowin no less than twelve (12) point type.All plans A–J shall be shown on thecover page, and the plans that areoffered by the issuer shall beprominently identified. Premiuminformation for plans that are offeredshall be shown on the cover page orimmediately following the cover pageand shall be prominently displayed. Thepremium and mode shall be stated forall plans that are offered to theprospective applicant. All possiblepremiums for the prospective applicantshall be illustrated.

(4) The following items shall beincluded in the outline of coverage inthe order prescribed below.

[COMPANY NAME]Outline of Medicare Supplement Coverage-Cover Page:

Benefit Plans llll [insert letters of plans being offered]

Medicare supplement insurance can be sold in only ten standard plans plus two high deductible plans. This chart shows the benefits included ineach plan. Every company must make available Plan ‘‘A’’. Some plans may not be available in your state.

Basic Benefits: Included in All Plans.Hospitalization: Part A coinsurance plus coverage for 365 additional days after Medicare benefits end.Medical Expenses: Part B coinsurance (generally 20% of Medicare-approved expenses), or, in the case of hospital outpatient department serv-

ices, applicable copayments.Blood: First three pints of blood each year.


A B C D E F F* G H I J J*

BasicBene-fits.

Basic Ben-efits

Basic Ben-efits

Basic Ben-efits

Basic Ben-efits

Basic Benefits Basic Benefits Basic Benefits Basic Benefits Basic Benefits

SkilledNursingCo-Insur-ance



Skilled NursingCo-Insurance





Part A De-ductible

Part A De-ductible

Part A De-ductible

Part A De-ductible

Part A Deductible Part A Deductible Part A Deductible Part A Deductible Part A Deductible

Part B De-ductible

Part B Deductible Part B Deductible

Part B Excess(100%)

Part B Excess(80%)

Part B Excess(100%)

Part B Excess(100%)

ForeignTravelEmer-gency



Foreign TravelEmergency





At-HomeRecovery

At-Home Recov-ery

At-Home Recov-ery

At-Home Recov-ery

Basic Drugs($1,250 Limit)

Basic Drugs($1,250 Limit)

Extended Drugs($3,000 Limit)

PreventiveCare

Preventive Care

* Plans F and J also have an option called a high deductible plan F and a high deductible plan J. These high deductible plans pay the same or offer the same ben-efits as Plans F and J after one has paid a calendar year [$1500] deductible. Benefits from high deductible plans F and J will not begin until out-of-pocket expensesare [$1500]. Out-of-pocket expenses for this deductible are expenses that would ordinarily be paid by the policy. These expenses include the Medicare deductibles forPart A and Part B, but does not include, in plan J, the plan’s separate prescription drug deductible or, in Plans F and J, the plan’s separate foreign travel emergencydeductible.

PREMIUM INFORMATION [BoldfaceType]

We [insert issuer’s name] can onlyraise your premium if we raise thepremium for all policies like yours inthis State. [If the premium is based onthe increasing age of the insured,include information specifying whenpremiums will change.]

DISCLOSURES [Boldface Type]Use this outline to compare benefits

and premiums among policies.

READ YOUR POLICY VERYCAREFULLY [Boldface Type]

This is only an outline describingyour policy’s most important features.The policy is your insurance contract.You must read the policy itself tounderstand all of the rights and dutiesof both you and your insurancecompany.

RIGHT TO RETURN POLICY [BoldfaceType]

If you find that you are not satisfiedwith your policy, you may return it to[insert issuer’s address]. If you send thepolicy back to us within 30 days afteryou receive it, we will treat the policy

as if it had never been issued and returnall of your payments.

POLICY REPLACEMENT [BoldfaceType]

If you are replacing another healthinsurance policy, do NOT cancel it untilyou have actually received your newpolicy and are sure you want to keep it.

NOTICE [Boldface Type]

This policy may not fully cover all ofyour medical costs.

[For agents:]

Neither [insert company’s name] norits agents are connected with Medicare.

[For direct response:]

[insert company’s name] is notconnected with Medicare.

This outline of coverage does not giveall the details of Medicare coverage.Contact your local Social Security Officeor consult ‘‘The Medicare Handbook’’for more details.

COMPLETE ANSWERS ARE VERYIMPORTANT [Boldface Type]

When you fill out the application forthe new policy, be sure to answer

truthfully and completely all questionsabout your medical and health history.The company may cancel your policyand refuse to pay any claims if youleave out or falsify important medicalinformation. [If the policy or certificateis guaranteed issue, this paragraph neednot appear.]

Review the application carefullybefore you sign it. Be certain that allinformation has been properly recorded.

[Include for each plan prominentlyidentified in the cover page, a chartshowing the services, Medicarepayments, plan payments and insuredpayments for each plan, using the samelanguage, in the same order, usinguniform layout and format as shown inthe charts below. No more than fourplans may be shown on one chart. Forpurposes of illustration, charts for eachplan are included in this regulation. Anissuer may use additional benefit plandesignations on these charts pursuant toSection 9D of this regulation.]

[Include an explanation of anyinnovative benefits on the cover pageand in the chart, in a manner approvedby the commissioner.]

PLAN A—MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD

Services Medicare pays Plan pays You pay

Hospitalization *

Semiprivate room and board, general nursing and mis-cellaneous services and supplies:

First 60 days ............................................................ All but $[764] ..................... $0 ....................................... $[764] (Part A deductible)61st thru 90th day ................................................... All but $[191] a day ........... $[191] a day ....................... 091st day and after:

—While using 60 lifetime reserve days ........... All but $[382] a day ........... $[382] a day ....................... 0


PLAN A—MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD—Continued


—Once lifetime reserve days are used:—Additional 365 days ............................... 0 ......................................... 100% of Medicare eligible

expenses.0

—Beyond the additional 365 days ............ 0 ......................................... 0 ......................................... All costs

Skilled Nursing Facility Care *

You must meet Medicare’s requirements, includinghaving been in a hospital for at least 3 days and en-tered a Medicare-approved facility within 30 daysafter leaving the hospital:

First 20 days ............................................................ All approved amounts ........ 0 ......................................... 021st thru 100th day ................................................. All but $[95.50] a day ........ 0 ......................................... Up to $[95.50] a day 3101st day and after ................................................. 0 ......................................... 0 ......................................... All costs

Blood

First 3 pints ..................................................................... 0 ......................................... 3 pints ................................ 0Additional amounts ......................................................... 100% .................................. 0 ......................................... 0

Hospice Care

Available as long as your doctor certifies you are termi-nally ill and you elect to receive these services.

All but very limited coinsur-ance for out-patientdrugs and inpatient res-pite care.

0 ......................................... Balance

* A benefit period begins on the first day you receive service as an inpatient in a hospital and ends after you have been out of the hospital andhave not received skilled care in any other facility for 60 days in a row.

PLAN A—MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR


Medical Expenses

In or out of the hospital and outpatient hospital treat-ment, such as Physician’s services, inpatient andoutpatient medical and surgical services and sup-plies, physical and speech therapy, diagnostic tests,durable medical equipment:

First $100 of Medicare Approved Amounts* ........... $0 ....................................... $0 ....................................... $100 (Part B deductible)Remainder of Medicare Approved Amounts ........... Generally 80% ................... Generally 20% ................... 0Part B Excess Charges (Above Medicare Ap-

proved Amounts.0 ......................................... 0 ......................................... All costs

Blood

First 3 pints ..................................................................... 0 ......................................... All costs ............................. 0Next $100 of Medicare Approved Amounts* .................. 0 ......................................... 0 ......................................... $100 (Part B deductible)Remainder of Medicare Approved Amounts .................. 80% .................................... 20% .................................... 0

Clinical Laboratory Services

Blood tests for diagnostic services ................................. 100% .................................. 0 ......................................... 0

PARTS A & B

Home Health Care

Medicare approved services:—Medically necessary skilled care services and

medical supplies.100% .................................. 0 ......................................... 0

—Durable medical equipment First $100 of Medi-care Approved Amounts*.

0 ......................................... 0 ......................................... 100 (Part B deductible)

Remainder of Medicare Approved Amounts ........... 80% .................................... 20% .................................... 0

* Once you have been billed $100 of Medicare-approved amounts for covered services (which are noted with an asterisk), your Part B deduct-ible will have been met for the calendar year.

PLAN B—MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD


Hospitalization *


First 60 days ............................................................ All but $[764] ..................... $[764](Part A deductible) ... $061st thru 90th day ................................................... All but $[191] a day ........... $[191] a day ....................... 0


PLAN B—MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD—Continued


91st day and after:—While using 60 lifetime reserve days ........... All but $[382] a day ........... $[382] a day ....................... 0—Once lifetime reserve days are used:

—Additional 365 days ............................... 0 ......................................... 100% of Medicare eligibleexpenses.

0




First 20 days ............................................................ All approved amounts ........ 0 ......................................... 021st thru 100th day ................................................. All but $[95.50] a day ........ 0 ......................................... Up to $[95.50] a day101st day and after ................................................. 0 ......................................... 0 ......................................... All costs

BloodFirst 3 pints ..................................................................... 0 ......................................... 3 pints ................................ 0Additional amounts ......................................................... 100% .................................. 0 ......................................... 0

Hospice Care



0 ......................................... Balance


PLAN B—MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR


Medical ExpensesIn or out of the hospital and outpatient hospital treat-

ment, such as physician’s services, inpatient andoutpatient medical and surgical services and sup-plies, physical and speech therapy, diagnostic tests,durable medical equipment:

First $100 of Medicare Approved Amounts.* $0 ....................................... $0 ....................................... $100 (Part B deductible)Remainder of Medicare Approved Amounts ........... Generally 80% ................... Generally 20% ................... 0Part B Excess Charges (Above Medicare Ap-

proved Amounts).0 ......................................... 0 ......................................... All costs

BloodFirst 3 pints ..................................................................... 0 ......................................... All costs ............................. 0Next $100 of Medicare Approved Amounts.* 0 ......................................... 0 ......................................... 100 (Part B deductible)Remainder of Medicare Approved Amounts .................. 80% .................................... 20% .................................... 0

Clinical Laboratory ServicesBlood Test for Diagnostic Services ................................ 100% .................................. 0 ......................................... 0

PARTS A & B

Home Health CareMedicare approved services:

Medically necessary skilled care services andmedical supplies.

100% .................................. 0 ......................................... 0

Durable medical equipmentFirst $100 of Medicare Approved Amounts.* .......... 0 ......................................... 0 ......................................... 100 (Part B deductible)Remainder of Medicare Approved Amounts ........... 80% .................................... 20% .................................... 0


PLAN C—MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD


Hospitalization *Semiprivate room and board, general nursing and mis-

cellaneous services and supplies:First 60 days ............................................................ All but $[764] ..................... $[764](Part A deductible) ... $0


PLAN C—MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD—Continued


61st thru 90th day ................................................... All but $[191] a day ........... $[191] a day ....................... 091st day and after:

—While using 60 lifetime reserve days ........... All but $[382] a day ........... $[382] a day ....................... 0—Once lifetime reserve days are used:


0




First 20 days ............................................................ All approved amounts ........ 0 ......................................... 021st thru 100th day ................................................. All but $[95.50] a day ........ Up to $[95.50] a day .......... 0101st day and after ................................................. 0 ......................................... 0 ......................................... All costs

Blood


Hospice Care


All but very limited coinsur-ance for outpatient drugsand inpatient respitecare.

0 ......................................... Balance


PLAN C—MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR


Medical Expenses

In or out of the hospital and outpatient hospital treat-ment, such as physician’s services, inpatient andoutpatient medical and surgical services and sup-plies, physical and speech therapy, diagnostic tests,durable medical equipment:

First $100 of Medicare Approved Amounts * .......... $0 ....................................... $100 (Part B deductible) ... $0Remainder of Medicare Approved Amounts ........... Generally 80% ................... Generally 20% ................... 0Part B Excess Charges (Above Medicare Ap-


Blood

First 3 pints ..................................................................... 0 ......................................... All costs ............................. 0Next $100 of Medicare Approved Amounts * ................. 0 ......................................... 100 (Part B deductible) ..... 0Remainder of Medicare Approved Amounts .................. 80% .................................... 20% .................................... 0



PARTS A & B

Home Health Care

Medicare approved services;—Medically necessary skilled care services and


—Durable medical equipment First $100 of Medi-care Approved Amounts *.

0 ......................................... 100 (Part B deductible) ..... 0

Remainder of Medicare Approved Amounts ........... 80% .................................... 20% .................................... 0

OTHER BENEFITS—NOT COVERED BY MEDICARE

Foreign Travel

Not covered by Medicare:Medically necessary emergency care services be-

ginning during the first 60 days of each trip out-side the USA:

First $250 each calendar year ......................... 0 ......................................... 0 ......................................... 0


PLAN C—MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR—Continued


Remainder of Charges ..................................... 0 ......................................... 80% to a lifetime maximumbenefit of $50,000.

20% and amounts over the$50,000 lifetime maxi-mum.


PLAN D—MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD


Hospitalization *


First 60 days ............................................................ All but $[764] ..................... $[764] (Part A deductible) 061st thru 90th day ................................................... All but $[191] a day ........... $[191] a day ....................... 091st day and after:

—While using 60 lifetime reserve days ........... All but $[382] a day ........... $[382] a day $0 ................. 0—Once lifetime reserve days are used:


0





Blood


Hospice Care



0 ......................................... Balance


PLAN D—MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR


Medical Expenses


First $100 of Medicare Approved Amounts* ........... $0 ....................................... $0 ....................................... $100 (Part B deductible)Remainder of Medicare Approved Amounts ........... Generally 80% ................... Generally 20% ................... 0

Part B Excess Charges (Above Medicare Ap-proved Amounts).

0 ......................................... 0 ......................................... All costs

Blood

First 3 pints ..................................................................... 0 ......................................... All costs ............................. 0Next $100 of Medicare Approved Amounts * ................. 0 ......................................... 0 ......................................... $100 (Part B deductible)Remainder of Medicare Approved Amounts .................. 80% .................................... 20% .................................... 0



PARTS A & B

Home Health Care

Medicare approved services:


PLAN D—MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR—Continued


—Medically necessary skilled care services andmedical supplies.

100% .................................. 0 ......................................... 0

—Durable medical equipmentFirst $100 of Medicare Approved Amounts* .... 0 ......................................... 0 ......................................... 100 (Part B deductible)Remainder of Medicare Approved Amounts .... 80% .................................... 20% .................................... 0

At-home recovery services—not covered by Medicare:Home care certified by your doctor, for personal

care during recovery from an injury or sicknessfor which Medicare approved a Home CareTreatment Plan:

—Benefit for each visit ..................................... 0 ......................................... Actual charges to $40 avisit.

Balance

—Number of visits covered (Must be receivedwithin 8 weeks of last Medicare Approvedvisit).

0 ......................................... Up to the number of Medi-care Approved visits, notto exceed 7 each week.

—Calendar year maximum .............................. 0 ......................................... 1,600 ..................................


Foreign Travel—Not Covered by Medicare

Medically necessary emergency care services begin-ning during the first 60 days of each trip outside theUSA:

First $250 each calendar year ................................ 0 ......................................... 0 ......................................... 250Remainder of charges ............................................. 0 ......................................... 80% to a lifetime maximum

benefit of $50,000.20% and amounts over the

$50,000 lifetime maxi-mum


PLAN E—MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD


Hospitalization *


First 60 days ............................................................ All but $[764] ..................... $[764] (Part deductible ...... $061st thru 90th day ................................................... All but $[191) a day ........... $[191] a day ....................... 091st day and after:

—While Using 60 lifetime reserve days ........... All but $[382] a day ........... $[382] a day ....................... 0—Once lifetime reserve days are used:


0





Blood


Hospice Care

Available as long as your doctor certifies you are termi-nally ill and you elect to receive these services


0 ......................................... Balance



PLAN E—MEDICARE (PART B)—MEDICAL SERVICES—PER BENEFIT PERIOD


Medical Expenses

In or out of the hospital and outpatient hospital treat-ment, such as Physician’s services, inpatient andoutpatient medical and surgical services and sup-plies, physical and speech therapy, diagnostic tests,durable medical equipment:

First $100 of Medicare Approved Amounts 1 $0 ....................................... $0 ....................................... $100 (Part B deductible)Remainder of Medicare Approved Amounts ........... Generally 80% ................... Generally 20% ................... 0Part B Excess Charges (Above Medicare Ap-


Blood

First 3 pints ..................................................................... 0 ......................................... All costs ............................. 0Next $100 of Medicare Approved Amounts 1 0 ......................................... 0 ......................................... $100 (Part B deductible)Remainder of Medicare Approved Amounts .................. 80% .................................... 20% .................................... 0


Blood tests for diagnostic service ........................... 100% .................................. 0 ......................................... 0

PARTS A & B

Home Health Care

Medicare approved services:Medically necessary skilled care services and

medical supplies100% .................................. 0 ......................................... 0

—Durable medical equipment First $100 of Medi-care Approved Amounts 1.

0 ......................................... 0 ......................................... 100 (Part B deductible)

Remainder of Medicare Approved Amounts .................. 80% .................................... 20% .................................... 0


Foreign Travel—Not Covered By Medicare





Preventive Medical Care Benefit—Not Covered byMedicare 2

Some annual physical and preventive tests and serv-ices such as: digital rectal exam, hearing screening,dipstick urinalysis, diabetes screening, thyroid func-tion test, tetanus and diphtheria booster and edu-cation, administered or ordered by your doctor whennot covered by Medicare:

First $120 each calendar year ................................ 0 ......................................... 120 ..................................... 0Additional charges ................................................... 0 ......................................... 0 ......................................... All costs

1 Once you have been billed $100 of Medicare-approved amounts for covered services (which are noted with an asterisk), your Part B deduct-ible will have been met for the calendar year.

2 Medicare benefits are subject to change. Please consult the latest Guide to Health Insurance for People with Medicare.

PLAN F OR HIGH DEDUCTIBLE PLAN F—MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD

Services Medicare pays After you pay $1500deductible,2 plan pays

In addition to $1500deductible,2 you pay

Hospitalization 1


First 60 days ............................................................ All but $[764] ..................... $[764] (Part A deductible) $061st thru 90th day ................................................... All but $[191] a day ........... $[191] a day ....................... 091st day and after:

While using 60 lifetime reserve days ............... All but $[382] a day ........... $[382] a day ....................... 0Once lifetime reserve days are used:

Additional 365 days ................................... 0 ......................................... 100% of Medicare eligibleexpenses.

0

Beyond the additional 365 days ............... 0 ......................................... 0 ......................................... All costs


PLAN F OR HIGH DEDUCTIBLE PLAN F—MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD—Continued

Services Medicare pays After you pay $1500deductible,2 plan pays

In addition to $1500deductible,2 you pay

Skilled Nursing Facility Care 1



Blood


Hospice Care



0 ......................................... Balance

MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR

Medical Expenses


First $100 of Medicare approved amounts 1 ........... 0 ......................................... 100 (Part B deductible ....... 0Remainder of Medicare approved amounts ............ Generally 80% ................... Generally 20% ................... 0Part B excess charges (Above Medicare approved

amounts).0 ......................................... 100% .................................. 0

BLOOD

First 3 pints ..................................................................... 0 ......................................... All costs ............................. 0Next $100 of Medicare approved amounts 1 .................. 0 ......................................... 100 (Part B deductible ....... 0Remainder of Medicare approved amounts ................... 80 ....................................... 20% .................................... 0



PARTS A & B

Home Health Care

Medicare approved services:—Medically necessary skilled care services and


—Durable medical equipmentFirst $100 of Medicare approved amounts 2 .... 0 ......................................... 100 (Part B deductible ....... 0Remainder of Medicare approved Amounts .... 80% .................................... 20% .................................... 0






$50,000 life-time maxi-mum

1 A benefit period begins on the first day you receive service as an inpatient in a hospital and ends after you have been out of the hospital andhave not received skilled care in any other facility for 60 days in a row.

2 This high deductible plan pays the same or offers the same benefits as Plan F after one has paid a calendar year [$1500] deductible. Bene-fits from the high deductible plan F will not begin until out-of-pocket expenses are [$1500]. Out-of-pocket expenses for this deductible are ex-penses that would ordinarily be paid by the policy. This includes the Medicare deductibles for Part A and Part B, but does not include the plan’sseparate foreign travel emergency deductible.


PLAN G—MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD


Hospitalization*Semiprivate room and board, general nursing and mis-

cellaneous services and supplies:First 60 days ............................................................ All but $[764] ..................... $[764] (Part A deductible) $061st thru 90th day ................................................... All but $[191] a day ........... $[191] a day ....................... 091st day and after:




Skilled Nursing Facility Care*You must meet Medicare’s requirements, including

having been in a hospital for at least 3 days and en-tered a Medicare-approved facility within 30 daysafter leaving the hospital:



Hospice Care



0 ......................................... Balance


PLAN G—MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR


Medical ExpensesIn or out of the hospital and outpatient hospital treat-

ment, such as physician’s services, inpatient andoutpatient medical and surgical services and sup-plies, physical and speech therapy, diagnostic tests,durable medical equipment:


proved Amounts).0 ......................................... 80% .................................... 20%

Blood

First 3 pints ..................................................................... 0 ......................................... All costs ............................. 0Next $100 of Medicare Approved Amounts* .................. 0 ......................................... 0 ......................................... 100 (Part B deductible)Remainder of Medicare Approved Amounts .................. 80% .................................... 20% .................................... 0

Clinical Laboratory ServicesBlood tests for diagnostic services ................................. 100% .................................. 0 ......................................... 0

PARTS A & B

Home Health CareMedicare approved services:

—Medically necessary skilled care services andmedical supplies.

100% .................................. 0 ......................................... 0


At-home recovery services—not covered by MedicareHome care certified by your doctor, for personal

care during recovery from an injury or sicknessfor which Medicare approved a Home CareTreatment Plan:

—Benefit for each visit ..................................... 0 ......................................... Actual charges to $40 avisit.

Balance


PLAN G—MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR—Continued


—Number of visits covered (Must be receivedwithin 8 weeks of last Medicare Approvedvisit).

0 ......................................... Up to the number of Medi-care-approved visits, notto exceed 7 each week.

—Calendar year maximum .............................. 0 ......................................... 1,600 ..................................


Foreign TravelNot covered by Medicare:

Medically necessary emergency care services be-ginning during the first 60 days of each trip out-side the USA:

First $250 each calendar year ......................... 0 ......................................... 0 ......................................... 250Remainder of Charges ..................................... 0 ......................................... 80% to a lifetime maximum


$50,000 lifetime maxi-mum.


PLAN H—MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD


Hospitalization*


First 60 days ............................................................ All but $[764] ..................... $[764] (Part A deductible) $061st thru 90th day .................................................. All but $[191] a day ........... $[191] a day ....................... 091st day and after:.



0


Skilled Nursing Facility Care*



Blood


Hospice Care



0 ......................................... Balance


PLAN H—MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR


Medical Expenses

In or out of the hospital and outpatient hospital treat-ment, such as Physi-cian’s services, inpatient andoutpatient medical and surgical services and sup-plies, physical and speech therapy, diagnostic tests,durable medical equipment:




PLAN H—MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR—Continued


Blood

First 3 pints ..................................................................... 0 ......................................... All costs ............................. 0Next $100 of Medicare Approved Amounts* .................. 0 ......................................... 0 ......................................... 100 (Part B deductible)Remainder of Medicare Approved Amounts .................. 80% .................................... 20% .................................... 0



PARTS A & B

Home Health Care

Medicare Approved Services:—Medically necessary skilled care services and




Foreign Travel

Not covered by Medicare—Medically necessary emer-gency care services beginning during the first 60days of each trip outside the USA:




Basic Outpatient Prescription Drugs—Not Coveredby Medicare

First $250 each calendar year ........................................ 0 ......................................... 0 ......................................... 250Next $250 each calendar year ....................................... 0 ......................................... 50%—$1,250 calendar

year maximum benefit.50%

Over $2,500 each calendar year .................................... 0 ......................................... 0 ......................................... All costs

* Once you have been billed $100 of Medicare-approved amounts for covered services (which are noted with an asterisk), your Part B Deduct-ible will have been met for the calendar year.

PLAN I—MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD


Hospitalization*


First 60 days ............................................................ All but $[764] ..................... $[764] (Part A deductible) $061st thru 90th day ................................................... All but $[191] a day ........... $[191] a day ....................... 091st day and after:



0


Skilled Nursing Facility Care*


First 20 days ............................................................ All approved amounts ........ 0 ......................................... 021st thru 100th day ................................................. All but $[95.50] a day ........ Up to $[95.50] a day .......... 01st day and after ................................................... 0 ......................................... 0 ......................................... All costs

Blood



PLAN I—MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD—Continued


Hospice Care



0 ......................................... Balance


PLAN I—MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR


Medical Expenses

In or out of the hospital and outpatient hospital treat-ment, such as physi-cian’s services, inpatient andoutpatient medical and surgical services and sup-plies, physical and speech therapy, diagnostic tests,durable medical equipment:

First $100 of Medicare Approved Amounts * .......... $0 ....................................... $0 ....................................... $100 (Part B deductible)Remainder of Medicare Approved Amounts ........... Generally 80% ................... Generally 20% ................... 0Part B Excess Charges (Above Medicare Ap-

proved Amounts).0 ......................................... 100% .................................. 0

Blood

First 3 pints ..................................................................... 0 ......................................... All costs ............................. 0Next $100 of Medicare Approved Amounts * ................. 0 ......................................... 0 ......................................... 100 (Part B deductible)Remainder of Medicare Approved Amounts .................. 80% .................................... 20% .................................... 0


Blood test for diagnostic services ................................... 100% .................................. 0 ......................................... 0

PARTS A & B

Home Health Care



—Durable medical equipmentFirst $100 of Medicare Approved Amounts * ... 0 ......................................... 0 ......................................... 100 (Part B deductible)Remainder of Medicare Approved Amounts .... 80% .................................... 20% .................................... 0

At-Home Recovery Services—Not Covered By Medi-care—Home care certified by your doctor, for per-sonal care during recovery from an injury or sicknessfor which Medicare approved a Home Care Treat-ment Plan:

—Benefit for each visit ............................................ 0 ......................................... Actual charges to $40 avisit.

Balance

—Number of visits covered (Must be receivedwithin 8 weeks of last Medicare Approved visit).

0 ......................................... Up to the number of Medi-care-approved visits, notto exceed 7 each week.

—Calendar year maximum ...................................... 0 ......................................... 1,600 ..................................


Foreign Travel—Not Covered By Medicare


First $250 each calendar year ................................ 0 ......................................... 0 ......................................... 250Remainder of charges ............................................. 0 ......................................... 80% to a lifetime maxi-

mum benefit of $50,000.20% and amounts over the


Basic Outpatient Prescription Drugs—Not Coveredby Medicare

First $250 each calendar year ........................................ 0 ......................................... 0 ......................................... 250Next $250 each calendar year ....................................... 0 ......................................... 50%—$1,250 calendar



PLAN I—MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR—Continued


Over $2,500 each calendar year .................................... 0 ......................................... 0 ......................................... All costs


PLAN J OR HIGH DEDUCTIBLE PLAN J—MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD

Services Medicare paysAfter you pay $1500

deductible,**plan pays

In addition to $1500deductible,**

you pay

Hospitalization *Semiprivate room and board, general nursing and mis-

cellaneous services and supplies:First 60 days ............................................................ All but $[764] ..................... $[764] (Part A deductible) $061st thru 90th day ................................................... All but $[191] a day ........... $[191] a day ....................... 091st day and after:








Hospice Care



0 ......................................... Balance


** This high deductible plan pays the same or offers the same benefits as Plan J after one has paid a calendar year [$1500] deductible. Bene-fits from high deductible plan J will not begin until out-of-pocket expenses are [$1500]. Out-of-pocket expenses for this deductible are expensesthat would ordinarily be paid by the policy. This includes the Medicare deductibles for Part A and Part B, but does not include the plan’s separateprescription drug deductible or the plan’s separate foreign travel emergency deductible.

PLAN J OR HIGH DEDUCTIBLE PLAN J—MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR




you pay

Medical Expenses


First $100 of Medicare Approved Amounts* ........... $0 ....................................... $100 (Part B deductible) ... $0Remainder of Medicare Approved Amounts ........... Generally 80% ................... Generally 20% ................... 0Part B Excess Charges (Above Medicare Ap-

proved Amounts).0 ......................................... 100% .................................. 0

Blood

First 3 pints ..................................................................... 0 ......................................... All costs ............................. 0Next $100 of Medicare Approved Amounts.* 0 ......................................... $100 (Part B deductible) ... 0Remainder of Medicare Approved Amounts .................. 80% .................................... 20% .................................... 0




PLAN J OR HIGH DEDUCTIBLE PLAN J—MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR—Continued




you pay

PARTS A & B

Home Health Care



—Durable medical equipment First $100 of Medi-care Approved Amounts *

0 ......................................... 100 (Part B deductible) ..... 0

Remainder of Medicare Approved Amounts .... 80% .................................... 20% .................................... 0At-home recovery services—not covered by Medi-

care—Home care certified by your doctor, for per-sonal care during recovery from an injury or sicknessfor which Medicare approved a Home Care Treat-ment Plan:

—Benefit for each visit ............................................ 0 ......................................... Actual charges to $40 avisit.

Balance

—Number of visits covered (Must be receivedwithin 8 weeks of last Medicare Approved visit).

0 ......................................... Up to the number of Medi-care Approved visits, notto exceed 7 each week.

—Calendar year maximum ...................................... 0 ......................................... $1,600 ................................




First $250 each calendar year ........................................ 0 ......................................... 0 ......................................... 250Remainder of charges .................................................... 0 ......................................... 80% to a lifetime maximum



Extended Outpatient Prescription Drugs—NotCovered by Medicare

First $250 each calendar year ........................................ 0 ......................................... 0 ......................................... 250Next $6,000 each calendar year .................................... 0 ......................................... 50%—$3,000 calendar


Over $6,000 each calendar year ............................. 0 ......................................... 0 ......................................... All costs

***Preventive Medical Care Benefit—Not Coveredby Medicare

Some annual physical and preventive tests and serv-ices such as: digital rectal exam, hearing screening,dipstick urinalysis, diabetes screening, thyroid func-tion test, tetanus and diphtheria booster and edu-cation, administered or ordered by your doctorwhen not covered by Medicare:

First $120 each calendar year ................................ 0 ......................................... 120 ..................................... 0Additional charges ................................................... 0 ......................................... 0 ......................................... All costs


** This high deductible plan pays the same or offers the same benefits as Plan J after one has paid a calendar year [$1500] deductible. Bene-fits from high deductible plan J will not begin until out-of-pocket expenses are [$1500]. Out-of-pocket expenses for this deductible are expensesthat would ordinarily be paid by the policy. This includes the Medicare deductibles for Part A and Part B, but does not include the plan’s separateprescription drug deductible or the plan’s separate foreign travel emergency deductible.

*** Medicare benefits are subject to change. Please consult the latest Guide to Health Insurance for People with Medicare.

D. Notice Regarding Policies orCertificates Which Are Not MedicareSupplement Policies.

(1) Any accident and sicknessinsurance policy or certificate, otherthan a Medicare supplement policy apolicy issued pursuant to a contractunder Section 1876 of the Federal SocialSecurity Act (42 U.S.C. § 1395 et seq.),disability income policy; or other policy

identified in Section 3B of thisregulation, issued for delivery in thisstate to persons eligible for Medicareshall notify insureds under the policythat the policy is not a Medicaresupplement policy or certificate. Thenotice shall either be printed or attachedto the first page of the outline ofcoverage delivered to insureds underthe policy, or if no outline of coverage

is delivered, to the first page of thepolicy, or certificate delivered toinsureds. The notice shall be in no lessthan twelve (12) point type and shallcontain the following language:

‘‘THIS [POLICY OR CERTIFICATE] ISNOT A MEDICARE SUPPLEMENT[POLICY OR CONTRACT]. If you areeligible for Medicare, review the Guide


to Health Insurance for People withMedicare available from the company.’’

(2) Applications provided to personseligible for Medicare for the healthinsurance policies or certificatesdescribed in Subsection D(1) shalldisclose, using the applicable statementin Appendix C, the extent to which thepolicy duplicates Medicare. Thedisclosure statement shall be providedas a part of, or together with, theapplication for the policy or certificate.

Section 18. Requirements forApplication Forms and ReplacementCoverage

A. Application forms shall includethe following questions designed toelicit information as to whether, as ofthe date of the application, the applicanthas another Medicare supplement orother health insurance policy orcertificate in force or whether aMedicare supplement policy orcertificate is intended to replace anyother accident and sickness policy orcertificate presently in force. Asupplementary application or otherform to be signed by the applicant andagent containing such questions andstatements may be used.

[Statements]

(1) You do not need more than oneMedicare supplement policy.

(2) If you purchase this policy, youmay want to evaluate your existinghealth coverage and decide if you needmultiple coverages.

(3) You may be eligible for benefitsunder Medicaid and may not need aMedicare supplement policy.

(4) The benefits and premiums underyour Medicare supplement policy canbe suspended, if requested, during yourentitlement to benefits under Medicaidfor 24 months. You must request thissuspension within 90 days of becomingeligible for Medicaid. If you are nolonger entitled to Medicaid, your policywill be reinstituted if requested within90 days of losing Medicaid eligibility.

(5) Counseling services may beavailable in your state to provide adviceconcerning your purchase of Medicaresupplement insurance and concerningmedical assistance through the stateMedicaid program, including benefits asa Qualified Medicare Beneficiary (QMB)and a Specified Low-Income MedicareBeneficiary (SLMB).

[Questions]

To the best of your knowledge,(1) Do you have another Medicare

supplement policy or certificate inforce?

(a) If so, with which company?

(b) If so, do you intend to replace yourcurrent Medicare supplement policywith this policy [certificate]?

(2) Do you have any other healthinsurance coverage that providesbenefits similar to this Medicaresupplement policy?

(a) If so, with which company?(b) What kind of policy?(3) Are you covered for medical

assistance through the state Medicaidprogram:

(a) As a Specified Low-IncomeMedicare Beneficiary (SLMB)?

(b) As a Qualified MedicareBeneficiary (QMB)?

(c) For other Medicaid medicalbenefits?

B. Agents shall list any other healthinsurance policies they have sold to theapplicant.

(1) List policies sold which are still inforce.

(2) List policies sold in the past five(5) years which are no longer in force.

C. In the case of a direct responseissuer, a copy of the application orsupplemental form, signed by theapplicant, and acknowledged by theinsurer, shall be returned to theapplicant by the insurer upon deliveryof the policy.

D. Upon determining that a sale willinvolve replacement of Medicaresupplement coverage, any issuer, otherthan a direct response issuer, or itsagent, shall furnish the applicant, priorto issuance or delivery of the Medicaresupplement policy or certificate, anotice regarding replacement ofMedicare supplement coverage. Onecopy of the notice signed by theapplicant and the agent, except wherethe coverage is sold without an agent,shall be provided to the applicant andan additional signed copy shall beretained by the issuer. A direct responseissuer shall deliver to the applicant atthe time of the issuance of the policy thenotice regarding replacement ofMedicare supplement coverage.

E. The notice required by SubsectionD above for an issuer shall be providedin substantially the following form in noless than twelve (12) point type:

NOTICE TO APPLICANT REGARDINGREPLACEMENT OF MEDICARESUPPLEMENT INSURANCE [Insurancecompany’s name and address]

SAVE THIS NOTICE! IT MAY BEIMPORTANT TO YOU IN THEFUTURE.

According to [your application][information you have furnished], youintend to terminate existing Medicaresupplement insurance and replace itwith a policy to be issued by [Company

Name] Insurance Company. Your newpolicy will provide thirty (30) dayswithin which you may decide withoutcost whether you desire to keep thepolicy.

You should review this new coveragecarefully. Compare it with all accidentand sickness coverage you now have. If,after due consideration, you find thatpurchase of this Medicare supplementcoverage is a wise decision, you shouldterminate your present Medicaresupplement coverage. You shouldevaluate the need for other accident andsickness coverage you have that mayduplicate this policy.

STATEMENT TO APPLICANT BYISSUER, AGENT [BROKER OR OTHERREPRESENTATIVE]:

I have reviewed your current medicalor health insurance coverage. To thebest of my knowledge, this Medicaresupplement policy will not duplicateyour existing Medicare supplementcoverage because you intend toterminate your existing Medicaresupplement coverage. The replacementpolicy is being purchased for thefollowing reason (check one):

ll Additional benefits.ll No change in benefits, but lower

premiums.ll Fewer benefits and lower

premiums.ll Other. (please specify)

lllllllllllllllllllll

1. Health conditions which you maypresently have (preexisting conditions)may not be immediately or fully coveredunder the new policy. This could resultin denial or delay of a claim for benefitsunder the new policy, whereas a similarclaim might have been payable underyour present policy.

2. State law provides that yourreplacement policy or certificate maynot contain new preexisting conditions,waiting periods, elimination periods orprobationary periods. The insurer willwaive any time periods applicable topreexisting conditions, waiting periods,elimination periods, or probationaryperiods in the new policy (or coverage)for similar benefits to the extent suchtime was spent (depleted) under theoriginal policy.

3. If, you still wish to terminate yourpresent policy and replace it with newcoverage, be certain to truthfully andcompletely answer all questions on theapplication concerning your medicaland health history. Failure to include allmaterial medical information on anapplication may provide a basis for thecompany to deny any future claims andto refund your premium as though yourpolicy had never been in force. After theapplication has been completed and


before you sign it, review it carefully tobe certain that all information has beenproperly recorded. [If the policy orcertificate is guaranteed issue, thisparagraph need not appear.]

Do not cancel your present policyuntil you have received your new policyand are sure that you want to keep it.lllllllllllllllllllll(Signature of Agent, Broker or OtherRepresentative)*[Typed Name and Address of Issuer, Agentor Broker]lllllllllllllllllllll(Applicant’s Signature)lllllllllllllllllllll(Date)

*Signature not required for direct responsesales.

F. Paragraphs 1 and 2 of thereplacement notice (applicable topreexisting conditions) may be deletedby an issuer if the replacement does notinvolve application of a new preexistingcondition limitation.

Section 19. Filing Requirements forAdvertising

An issuer shall provide a copy of anyMedicare supplement advertisementintended for use in this state whetherthrough written, radio or televisionmedium to the Commissioner ofInsurance of this state for review orapproval by the commissioner to theextent it may be required under statelaw.

Drafting Note: States should examine theirexisting laws regarding the filing ofadvertisements to determine the extent towhich review or approval is required.

Section 20. Standards for MarketingA. An issuer, directly or through its

producers, shall:(1) Establish marketing procedures to

assure that any comparison of policiesby its agents or other producers will befair and accurate.

(2) Establish marketing procedures toassure excessive insurance is not sold orissued.

(3) Display prominently by type,stamp or other appropriate means, onthe first page of the policy the following:

‘‘Notice to buyer: This policy may notcover all of your medical expenses.’’

(4) Inquire and otherwise make everyreasonable effort to identify whether aprospective applicant or enrollee forMedicare supplement insurance alreadyhas accident and sickness insurance andthe types and amounts of any suchinsurance.

(5) Establish auditable procedures forverifying compliance with thisSubsection A.

B. In addition to the practicesprohibited in [insert citation to stateunfair trade practices act], the followingacts and practices are prohibited:

(1) Twisting. Knowingly making anymisleading representation or incompleteor fraudulent comparison of anyinsurance policies or insurers for thepurpose of inducing, or tending toinduce, any person to lapse, forfeit,surrender, terminate, retain, pledge,assign, borrow on, or convert aninsurance policy or to take out a policyof insurance with another insurer.

(2) High pressure tactics. Employingany method of marketing having theeffect of or tending to induce thepurchase of insurance through force,fright, threat, whether explicit orimplied, or undue pressure to purchaseor recommend the purchase ofinsurance.

(3) Cold lead advertising. Making usedirectly or indirectly of any method ofmarketing which fails to disclose in aconspicuous manner that a purpose ofthe method of marketing is solicitationof insurance and that contact will bemade by an insurance agent orinsurance company.

C. The terms ‘‘Medicare Supplement,’’‘‘Medigap,’’ ‘‘Medicare Wrap-Around’’and words of similar import shall not beused unless the policy is issued incompliance with this regulation.

Drafting Note: Remember that the UnfairTrade Practice Act in your state applies toMedicare supplement insurance policies andcertificates.

Section 21. Appropriateness ofRecommended Purchase and ExcessiveInsurance

A. In recommending the purchase orreplacement of any Medicaresupplement policy or certificate anagent shall make reasonable efforts todetermine the appropriateness of arecommended purchase or replacement.

B. Any sale of Medicare supplementcoverage that will provide an individualmore than one Medicare supplementpolicy or certificate is prohibited.

Section 22. Reporting of MultiplePolicies

A. On or before March 1 of each year,an issuer shall report the followinginformation for every individualresident of this state for which theissuer has in force more than one

Medicare supplement policy orcertificate:

(1) Policy and certificate number, and(2) Date of issuance.B. The items set forth above must be

grouped by individual policyholder.Editor’s Note: Appendix B contains a

reporting form for compliance with thissection.

Section 23. Prohibition AgainstPreexisting Conditions, WaitingPeriods, Elimination Periods andProbationary Periods in ReplacementPolicies or Certificates

A. If a Medicare supplement policy orcertificate replaces another Medicaresupplement policy or certificate, thereplacing issuer shall waive any timeperiods applicable to preexistingconditions, waiting periods, eliminationperiods and probationary periods in thenew Medicare supplement policy orcertificate for similar benefits to theextent such time was spent under theoriginal policy.

B. If a Medicare supplement policy orcertificate replaces another Medicaresupplement policy or certificate whichhas been in effect for at least six (6)months, the replacing policy shall notprovide any time period applicable topreexisting conditions, waiting periods,elimination periods and probationaryperiods for benefits similar to thosecontained in the original policy orcertificate.

Drafting Note: Although NAIC is restrictedfrom making revisions to its models that donot conform to the Omnibus BudgetReconciliation Act of 1990, states areencouraged to consider deletion of the words‘‘for similar benefits’’ in Subsection A andthe words ‘‘for benefits similar to thosecontained in the original policy orcertificate’’ in Subsection B. States shouldeliminate Paragraphs (1) and (2) (applicableto preexisting conditions) of the replacementnotice required by Section 16E.

Section 24. Separability

If any provision of this regulation orthe application thereof to any person orcircumstance is for any reason held tobe invalid, the remainder of theregulation and the application of suchprovision to other persons orcircumstances shall not be affectedthereby.

Section 25. Effective Date

This regulation shall be effective on[insert date].

Appendix A—Medicare Supplement Refund Calculation Form for Calendar Yearlll

TYPE 1 lllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllFor the State of lllllllllllllllllllllllllllllllllllllllllllllllllllllllll


NAIC Group Code llllllllllllllllllllllllllllllllllllllllllllllllllllllllAddress lllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllTitle llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllSMSBP 2 llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllCompany Name lllllllllllllllllllllllllllllllllllllllllllllllllllllllllNAIC Company Code lllllllllllllllllllllllllllllllllllllllllllllllllllllllPerson Completing Exhibit llllllllllllllllllllllllllllllllllllllllllllllllllllTelephone Number llllllllllllllllllllllllllllllllllllllllllllllllllllllll

Line(a)

EarnedPremium 3

(b)IncurredClaims 4

1. ....... Current Year’s Experience.a. Total (all policy years) ..................................................................................................................................b. Current year’s issues 5 ..................................................................................................................................c. Net (for reporting purposes = 1a–1b ............................................................................................................

2. ....... Past Years’ Experience (all policy years) .........................................................................................................3. ....... Total Experience (Net Current Year + Past Year) ...........................................................................................4. ...... Refunds Last Year (Excluding Interest) ....................................................................................................................................5. ...... Previous Since Inception (Excluding Interest) ..........................................................................................................................6. ...... Refunds Since Inception (Excluding Interest) ...........................................................................................................................7. ...... Benchmark Ratio Since Inception (see worksheet for Ratio 1) ...............................................................................................8. ...... Experienced Ratio Since Inception (Ratio 2) Total Actual Incurred Claims (line 3, col. b) ÷ Total Earned Prem. (line 3, col.

a)¥Refunds Since Inception (line 6).9. ...... Life Years Exposed Since Inception.If the Experienced Ratio is less than the Benchmark Ratio, and there are more than

500 life years exposure, then proceed to calculation of refund10. .... Tolerance Permitted (obtained from credibility table) ...............................................................................................................

1 Individual, Group, Individual Medicare Select, or Group Medicare Select Only.2 ‘‘SMSBP’’=Standardized Medicare Supplement Benefit Plan—Use ‘‘P’’ for pre-standardized plans.3 Includes Modal Loadings and Fees Charged.4 Excludes Active Life Reserves.5 This is to be used as ‘‘Issue Year Earned Premium’’ for Year 1 of next year’s ‘‘Worksheet for Calculation of Benchmark Ratios’’.

MEDICARE SUPPLEMENT CREDIBILITY TABLE

Life Years Exposed

Since Inception Tolerance

10,000 + ............................................................................................................................................................................................... 0.0%5,000–9,999 ......................................................................................................................................................................................... 5.0%2,500–4,999 ......................................................................................................................................................................................... 7.5%1,000–2,499 ......................................................................................................................................................................................... 10.0%500–999 ............................................................................................................................................................................................... 15.0%If less than 500, no credibility.

REPORTING FORM FOR THE CALCULATION OF BENCHMARK RATIO SINCE INCEPTION FOR GROUP POLICIESFOR CALENDAR YEAR lll

TYPE 1 lllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllSMSBP 2 llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllFor the State of lllllllllllllllllllllllllllllllllllllllllllllllllllllllllCompany Name lllllllllllllllllllllllllllllllllllllllllllllllllllllllllNAIC Group Code llllllllllllllllllllllllllllllllllllllllllllllllllllllllNAIC Company Code lllllllllllllllllllllllllllllllllllllllllllllllllllllllAddress lllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllPerson Completing Exhibit llllllllllllllllllllllllllllllllllllllllllllllllllllTitle llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllTelephone Number llllllllllllllllllllllllllllllllllllllllllllllllllllllll

(a) 3 (b) 4 (c) (d) (e) (f) (g) (h) (i) (j) (o) 5

Year EarnedPremium Factor (b)x(c)

Cumu-lativeLossRatio

(d)x(e) Factor (b)x(g)


(h)x(i)

PolicyYearLossRatio

1 ................................. 2.770 0.507 0.000 0.0000 0.462 ................................. 4.175 0.567 0.000 0.000 0.633 ................................. 4.175 0.567 1.194 0.759 0.754 ................................. 4.175 0.567 2.245 0.771 0.775 ................................. 4.175 0.567 3.170 0.782 0.806 ................................. 4.175 0.567 3.998 0.792 0.82


(a) 3 (b) 4 (c) (d) (e) (f) (g) (h) (i) (j) (o) 5

Year EarnedPremium Factor (b)x(c)


(d)x(e) Factor (b)x(g)


(h)x(i)

PolicyYearLossRatio

7 ................................. 4.175 0.567 4.754 0.802 0.848 ................................. 4.175 0.567 5.445 0.811 0.879 ................................. 4.175 0.567 6.075 0.818 0.8810 ............................... 4.175 0.567 6.650 0.824 0.8811 ............................... 4.175 0.567 7.176 0.828 0.8812 ............................... 4.175 0.567 7.655 0.831 0.8813 ............................... 4.175 0.567 8.093 0.834 0.8914 ............................... 4.175 0.567 8.493 0.837 0.8915 ............................... 4.175 0.567 8.684 0.838 0.89Total: .......................... (k): (l): (m): (n):

Benchmark Ratio Since Inception: (l + n)/(k + m): ll1 Individual, Group, Individual Medicare Select, or Group Medicare Select Only.2 ‘‘SMSBP’’ = Standardized Medicare Supplement Benefit Plan—Use ‘‘P’’ for pre-standardized plans3 Year 1 is the current calendar year—1. Year 2 is the current calendar year—2 (etc.) (Example: If the current year is 1991, then: Year 1 is

1990; Year 2 is 1989, etc.)4 For the calendar year on the appropriate line in column (a), the premium earned during that year for policies issued in that year.5 These loss ratios are not explicitly used in computing the benchmark loss ratios. They are the loss ratios, on a policy year basis, which result

in the cumulative loss ratios displayed on this worksheet. They are shown here for informational purposes only.

Reporting Form for the Calculation of Benchmark Ratio Since Inception for Individual Policies for CalendarYearlll

Type 1 llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllSMSBP 2 llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllFor the State of lllllllllllllllllllllllllllllllllllllllllllllllllllllllllCompany Name lllllllllllllllllllllllllllllllllllllllllllllllllllllllllNAIC Group Code NAIC lllllllllllllllllllllllllllllllllllllllllllllllllllllCompany Code lllllllllllllllllllllllllllllllllllllllllllllllllllllllllAddress lllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllPerson Completing Exhibit llllllllllllllllllllllllllllllllllllllllllllllllllllTitle llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllTelephone Number llllllllllllllllllllllllllllllllllllllllllllllllllllllll

(a) 3 (b) 4 (c) (d) (e) (f) (g) (h) (i) (j) (o) 5

Year Earnedpremium Factor (b)×(c)

Cumu-lative loss

ratio(d)×(e) Factor (b)×(g)

Cumu-lative loss

ratio(h)×(i)

PolicyYearLossRatio

1 ................................. 2.770 0.442 0.000 0.000 0.402 ................................. 4.175 0.493 0.000 0.000 0.553 ................................. 4.175 0.493 1.194 0.659 0.654 ................................. 4.175 0.493 2.245 0.669 0.675 ................................. 4.175 0.493 3.170 0.678 0.696 ................................. 4.175 0.493 3.998 0.686 0.717 ................................. 4.175 0.493 4.754 0.695 0.738 ................................. 4.175 0.493 5.445 0.702 0.759 ................................. 4.175 0.493 6.075 0.708 0.7610 ............................... 4.175 0.493 6.650 0.713 0.7611 ............................... 4.175 0.493 7.176 0.717 0.7612 ............................... 4.175 0.493 7.655 0.720 0.7713 ............................... 4.175 0.493 8.093 0.723 0.7714 ............................... 4.175 0.493 8.493 0.725 0.7715 ............................... 4.175 0.493 8.684 0.725 0.77

Total: ................... (k): (l): (m): (n):

Benchmark Ratio Since Inception: (l + n)/(k + m): ll1 Individual, Group, Individual Medicare Select, or Group Medicare Select Only.2 ‘‘SMSBP’’ = Standardized Medicare Supplement Benefit Plan—Use ‘‘P’’ for pre-standardized plans3 Year 1 is the current calendar year—1. Year 2 is the current calendar year—2 (etc.) (Example: If the current year is 1991, then: Year 1 is

1990; Year 2 is 1989, etc.)4 For the calendar year on the appropriate line in column (a), the premium earned during that year for policies issued in that year.5 These loss ratios are not explicitly used in computing the benchmark loss ratios. They are the loss ratios, on a policy year basis, which result

in the cumulative loss ratios displayed on this worksheet. They are shown here for informational purposes only.


Appendix B—Form for Reporting Medicare Supplement Policies

Company Name: lllllllllllllllllllllllllllllllllllllllllllllllllllllllllAddress: llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllPhone Number: lllllllllllllllllllllllllllllllllllllllllllllllllllllllllDue March 1, annually

The purpose of this form is to report the following information on each resident of this state who has in forcemore than one Medicare supplement policy or certificate. The information is to be grouped by individual policyholder.

Policy and certificte # Date of issuance

llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllSignaturellllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllName and Title (please type)llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllDate

Appendix C Disclosure Statements

Instructions for Use of the Disclosure Statements for Health Insurance Policies Sold to Medicare Beneficiaries That Duplicate Medicare

1. Section 1882 (d) of the federal Social Security Act [42 U.S.C. 1395ss] prohibits the sale of a health insurance policy (theterm policy includes certificate) to Medicare beneficiaries that duplicates Medicare benefits unless it will pay benefits without regardto a beneficiary’s other health coverage and it includes the prescribed disclosure statement on or together with the application forthe policy.

2. All types of health insurance policies that duplicate Medicare shall include one of the attached disclosure statements, accordingto the particular policy type involved, on the application or together with the application. The disclosure statement may not varyfrom the attached statements in terms of language or format (type size, type proportional spacing, bold character, line spacing, andusage of boxes around text).

3. State and federal law prohibits insurers from selling a Medicare supplement policy to a person that already has a Medicaresupplement policy except as a replacement policy.

4. Property/casualty and life insurance policies are not considered health insurance.5. Disability income policies are not considered to provide benefits that duplicate Medicare.6. Long-term care insurance policies that coordinate with Medicare and other health insurance are not considered to provide

benefits that duplicate Medicare.7. The federal law does not preempt state laws that are more stringent than the federal requirements.8. The federal law does not preempt existing state form filing requirements.9. Section 1882 of the federal Social Security Act was amended in Subsection (d)(3)(A) to allow for alternative disclosure statements.

The disclosure statements already in Appendix C remain. Carriers may use either disclosure statement with the requisite insuranceproduct. However, carriers should use either the original disclosure statements or the alternative disclosure statements and not useboth simultaneously.

[Original disclosure statement for policies that provide benefits for expenses incurred for an accidental injury only.]

IMPORTANT NOTICE TO PERSONS ON MEDICARE—THIS INSURANCE DUPLICATES SOME MEDICARE BENEFITS

This is not Medicare Supplement Insurance

This insurance provides limited benefits, if you meet the policy conditions, for hospital or medical expenses thatresult from accidental injury. It does not pay your Medicare deductibles or coinsurance and is not a substitute forMedicare Supplement insurance.

This insurance duplicates Medicare benefits when it pays:• Hospital or medical expenses up to the maximum stated in the policyMedicare generally pays for most or all of these expenses.Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These

include:• Hospitalization• Physician services• Other approved items and services

Before You Buy This Insurance

✔ Check the coverage in all health insurance policies you already have.✔ For more information about Medicare and Medicare Supplement insurance, review the Guide to Health Insurance

for People with Medicare, available from the insurance company.✔ For help in understanding your health insurance, contact your state insurance department or state senior insurance

counseling program.

[Original disclosure statement for policies that provide benefits for specified limited services.]



This Is Not Medicare Supplement Insurance

This insurance provides limited benefits, if you meet the policy conditions, for expenses relating to the specificservices listed in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute forMedicare Supplement insurance.

This insurance duplicates Medicare benefits when:• Any of the services covered by the policy are also covered by MedicareMedicare pays extensive benefits for medically necessary services regardless of the reason you need them. These

include:• Hospitalization• Physician services• Other approved items and services




counseling program.

[Original disclosure statement for policies that reimburse expenses incurred for specified diseases or other specifiedimpairments. This includes expense-incurred cancer, specified disease and other types of health insurance policies thatlimit reimbursement to named medical conditions.]



This insurance provides limited benefits, if you meet the policy conditions, for hospital or medical expenses onlywhen you are treated for one of the specific diseases or health conditions listed in the policy. It does not pay yourMedicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

This insurance duplicates Medicare benefits when it pays:• Hospital or medical expenses up to the maximum stated in the policyMedicare generally pays for most or all of these expenses.Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These

include:• Hospitalization• Physician services• Hospice• Other approved items and services




counseling program.

[Original disclosure statement for policies that pay fixed dollar amounts for specified diseases or other specified impair-ments. This includes cancer, specified disease, and other health insurance policies that pay a scheduled benefit orspecific payment based on diagnosis of the conditions named in the policy.]



This insurance pays a fixed amount, regardless of your expenses, if you meet the policy conditions, for one ofthe specific diseases or health conditions named in the policy. It does not pay your Medicare deductibles or coinsuranceand is not a substitute for Medicare Supplement insurance.

This insurance duplicates Medicare benefits because Medicare generally pays for most of the expenses for the diagnosisand treatment of the specific conditions or diagnoses named in the policy.

Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. Theseinclude:

• Hospitalization• Physician services• Hospice• Other approved items and services



for People with Medicare, available from the insurance company.


✔ For help in understanding your health insurance, contact your state insurance department or state senior insurancecounseling program.

[Original disclosure statement for indemnity policies and other policies that pay a fixed dollar amount per day, excludinglong-term care policies.]



This insurance pays a fixed dollar amount, regardless of your expenses, for each day you meet the policy conditions.It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

This insurance duplicates Medicare benefits when:Any expenses or services covered by the policy are also covered by MedicareMedicare generally pays for most or all of these expenses.Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These

include:• Hospitalization• Physician services• Hospice• Other approved items and services




counseling program.

[Original disclosure statement for policies that provide benefits upon both an expense-incurred and fixed indemnitybasis.]



This insurance pays limited reimbursement for expenses if you meet the conditions listed in the policy. It alsopays a fixed amount, regardless of your expenses, if you meet other policy conditions. It does not pay your Medicaredeductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

This insurance duplicates Medicare benefits when:• Any expenses or services covered by the policy are also covered by Medicare; or• It pays the fixed dollar amount stated in the policy and Medicare covers the same eventMedicare generally pays for most or all of these expenses.Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These

include:• Hospitalization• Physician services• Hospice care• Other approved items & services




counseling program.

[Original disclosure statement for other health insurance policies not specifically identified in the preceding statements.]



This insurance provides limited benefits if you meet the conditions listed in the policy. It does not pay yourMedicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.

This insurance duplicates Medicare benefits when it pays:• The benefits stated in the policy and coverage for the same event is provided by MedicareMedicare generally pays for most or all of these expenses.Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These

include:• Hospitalization• Physician services• Hospice


• Other approved items and services




counseling program.

[Alternative disclosure statement for policies that provide benefits for expenses incurred for an accidental injury only.]

IMPORTANT NOTICE TO PERSONS ON MEDICARE—THIS IS NOT MEDICARE SUPPLEMENT INSURANCE

Some health care services paid for by Medicare may also trigger the payment of benefits from this policy.This insurance provides limited benefits, if you meet the policy conditions, for hospital or medical expenses that

result from accidental injury. It does not pay your Medicare deductibles or coinsurance and is not a substitute forMedicare Supplement insurance.

Medicare generally pays for most or all of these expenses.Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These

include:• Hospitalization• Physician services• Other approved items and servicesThis policy must pay benefits without regard to other health benefit coverage to which you may be entitled under

Medicare or other insurance.




counseling program.

[Alternative disclosure statement for policies that provide benefits for specified limited services.]


Some health care services paid for by Medicare may also trigger the payment of benefits under this policy.This insurance provides limited benefits, if you meet the policy conditions, for expenses relating to the specific

services listed in the policy. It does not pay your Medicare deductibles or coinsurance and is not a substitute forMedicare Supplement insurance.


• Hospitalization• Physician services• Other approved items and servicesThis policy must pay benefits without regard to other health benefit coverage to which you may be entitled under





counseling program.[Alternative disclosure statement for policies that reimburse expenses incurred for specified diseases or other specifiedimpairments. This includes expense-incurred cancer, specified disease and other types of health insurance policies thatlimit reimbursement to named medical conditions.]


Some health care services paid for by Medicare may also trigger the payment of benefits from this policy. Medicaregenerally pays for most or all of these expenses.

This insurance provides limited benefits, if you meet the policy conditions, for hospital or medical expenses onlywhen you are treated for one of the specific diseases or health conditions listed in the policy. It does not pay yourMedicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.


include:• Hospitalization• Physician services• Hospice


• Other approved items and servicesThis policy must pay benefits without regard to other health benefit coverage to which you may be entitled under





counseling program.

[Alternative disclosure statement for policies that pay fixed dollar amounts for specified diseases or other specifiedimpairments. This includes cancer, specified disease, and other health insurance policies that pay a scheduled benefitor specific payment based on diagnosis of the conditions named in the policy.]


Some health care services paid for by Medicare may also trigger the payment of benefits from this policy.This insurance pays a fixed amount, regardless of your expenses, if you meet the policy conditions, for one of

the specific diseases or health conditions named in the policy. It does not pay your Medicare deductibles or coinsuranceand is not a substitute for Medicare Supplement insurance.


• Hospitalization• Physician services• Hospice• Other approved items and servicesThis policy must pay benefits without regard to other health benefit coverage to which you may be entitled under





counseling program.

[Alternative disclosure statement for indemnity policies and other policies that pay a fixed dollar amount per day,excluding long-term care policies.]


Some health care services paid for by Medicare may also trigger the payment of benefits from this policy.This insurance pays a fixed dollar amount, regardless of your expenses, for each day you meet the policy conditions.

It does not pay your Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.Medicare generally pays for most or all of these expenses.Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These

include:• Hospitalization• Physician services• Hospice• Other approved items and servicesThis policy must pay benefits without regard to other health benefit coverage to which you may be entitled under





counseling program.[Alternative disclosure statement for policies that provide benefits upon both an expense-incurred and fixed indemnitybasis.]


Some health care services paid for by Medicare may also trigger the payment of benefits from this policy.This insurance pays limited reimbursement for expenses if you meet the conditions listed in the policy. It also

pays a fixed amount, regardless of your expenses, if you meet other policy conditions. It does not pay your Medicaredeductibles or coinsurance and is not a substitute for Medicare Supplement insurance.


include:


• Hospitalization• Physician services• Hospice care• Other approved items & servicesThis policy must pay benefits without regard to other health benefit coverage to which you may be entitled under





counseling program.

[Alternative disclosure statement for other health insurance policies not specifically identified in the preceding statements.]


Some health care services paid for by Medicare may also trigger the payment of benefits from this policy.This insurance provides limited benefits if you meet the conditions listed in the policy. It does not pay your

Medicare deductibles or coinsurance and is not a substitute for Medicare Supplement insurance.Medicare generally pays for most or all of these expenses.Medicare pays extensive benefits for medically necessary services regardless of the reason you need them. These

include:• Hospitalization• Physician services• Hospice• Other approved items and servicesThis policy must pay benefits without regard to other health benefit coverage to which you may be entitled under





counseling program.

Legislative History (All References Are to the Proceedings of the NAIC).

1980 Proc. II 22, 26, 588, 591, 593, 595–603 (adopted).1981 Proc. I 47, 51, 420, 422, 424, 446–447, 470–481 (amended and reprinted).1988 Proc. I 9, 20–21, 629–630, 652–654, 668–677 (amended and reprinted).1988 Proc. II 5, 13, 568, 601, 604, 615–624 (amended and reprinted).1989 Proc. I 14, 813–814, 836.4–836.26 (amended at special plenary session September 1988).1989 Proc. I 9, 25, 703, 753–754, 757–760 (appendices amended at regular plenary session).1990 Proc. I 6, 27–28, 477, 574–576, 580–599 (amended and reprinted).1990 Proc. II 7, 16, 599, 656, 657 (adopted reporting form).1992 Proc. I 12, 16–75, 1084–1085 (amended at special plenary session in July 1991).1995 Proc. 1st Quarter 7, 12, 501, 575, 586, 592–615 (amended and most of model reprinted).1995 Proc. 4th Quarter 11, 33, 889, 892 (amended).1998 Proc. 1st Quarter (amended).

[FR Doc. 98–32103 Filed 12–3–98; 8:45 am]BILLING CODE 4120–01–C

DEPARTMENT OF HEALTH ANDHUMAN SERVICES

National Institutes of Health NationalHeart, Lung, and Blood Institute

Submission for OMB Review;Comment Request; Jackson HeartStudy Participant Recruitment Survey

SUMMARY: Under the provisions ofSection 3506(c)(2)(A) of the PaperworkReduction Act of 1995, the NationalHeart, Lung, and Blood Institute(NHLBI), the National Institutes ofHealth (NIH) has submitted to the Officeof Management and Budget (OMB) arequest to review and approve the

information collection listed below.This proposed information waspreviously published in the FederalRegister on August 11, 1998, pages42864–42865 and allowed 60-days forpublic comment. No public commentswere received. The purpose of thisnotice is to allow an additional 30 daysfor public comment. The NationalInstitutes of Health may not conduct orsponsor, and the respondent is notrequired to respond to, an informationcollection that has been extended orimplemented on or after October 1,1995, unless it displays a currently validOMB control number.

PROPOSED COLLECTION: Title: JacksonHeart Study Participant RecruitmentSurvey, Type of Information CollectionRequest: NEW. Need and Use ofInformation Collection: This survey willbe used as a planning tool for theupcoming NHLBI-sponsored JacksonHeart Study. Participation and retentionof African-Americans in observationalepidemiologic studies has been muchlower than for white populations.Experience with recruitment andretention of African-Americans inJackson, Mississippi, is derived from theongoing ARIC (Atherosclerosis Risk InCommunities) study. Initial responsewas very low, with a 47 percent