Current through Register Vol. 49, No. 9, September, 2024
Section 1.
Purpose
The purpose of this regulation is to provide reasonable
standardization and simplification of terms and coverages of Medicare
Supplement Policies in order to facilitate public understanding and comparison
of such policies and to eliminate provisions contained in such policies are
contracts which may be misleading or confusing in connection either with the
purchase of such coverages or with the settlement of claims and to provide for
full disclosures in the sale of such coverages to persons eligible for Medicare
by reason of age.
Section 2.
Authority
This rule is issued pursuant to the authority vested in the
Commissioner under Ark. Code Ann. §
23-61-108,
§
23-66-201 through §
23-66-214,
§§
23-66-301
et seq., §
23-79-109,
§
23-79-110,
§
23-85-105,
§
23-86-105,
§ 23-74-122, §
23-75-111,
§
23-76-125 and
§§
25-15-202,
et seq., and
Public
Law 101-234.
Section 3.
Applicability and
Scope
Except as otherwise specifically provided in Sections 10 and 11,
this regulation shall apply to:
A. All
Medicare Supplement policies and subscriber contracts delivered or issued for
delivery in this State on or after the effective date hereof; and
B. All certificates issued under group
Medicare Supplement policies or subscriber contracts, which certificates have
been delivered or issued for delivery in this state.
C. This regulation shall not apply to a
policy or contract of one or more employers or labor organizations, or of the
trustees of a fund established by one or more employers or labor organizations,
or a combination thereof, for employees or former employees, or a combination
thereof, or for members or former members, or a combination thereof, of the
labor organizations.
Section
4.
Definitions
For purposes of this Regulation:
A. "Applicant" means:
(1) in the case of an individual Medicare
policy or contract, the person who seeks to contract for insurance benefits,
and
(2) in the case of a group
Medicare Supplement policy or contract, the proposed certificate-holder or
enrollee.
B.
"Certificate" means any certificate of insurance, contract or evidence of
coverage issued by an insurer, fraternal benefit society, hospital/medical
service corporation, or health maintenance organization to a resident of this
State.
C. "Policy" means any
individual or group-policy, contract or subscriber agreement issued by an
insurer, fraternal benefit society, hospital/medical service corporation or
health maintenance organization to a resident or group in this State.
D. "Medicare Supplement Policy" means a group
or individual policy of disability insurance or a subscriber contract of a
hospital/medical service corporation or a contract of a health maintenance
organization or a certificate of a fraternal benefit society which is
advertised, marketed or designed as a supplement to reimbursements under
Medicare for the hospital, medical or surgical expenses of persons eligible for
Medicare by reason of age.
Section
5.
Policy Definitions and Terms
No policy or certificate may be advertised, solicited or issued
for delivery in this State as a Medicare Supplement policy unless such policy
or certificate contains definitions or terms which conform to the requirements
of this section.
A. "Accident",
"Accidental Injury", or "Accidental Means" shall be defined to employ "result"
language and shall not include words which establish an accidental means test
or use words such as "external, violent, visible wounds" or similar words of
description or characterization.
(1) The
definition shall not be more restrictive than the following: Injury or injuries
for which benefits are provided means accidental bodily injury sustained by the
insured person which is the direct result of an accident, independent of
disease or bodily infirmity or any other cause, and occurs while insurance
coverage is in force.
(2) Such
definition may provide that injuries shall not include injuries for which
benefits are provided or available under any workers' compensation, employer's
liability or similar law, or motor vehicle no-fault plan, unless prohibited by
law.
NOTE: The first party coverage which was prescribed for use in
automobile liability policies issued in Arkansas effective July 1, 1974 is not
a motor vehicle no-fault plan under which benefits may be excluded under this
section.
B.
"Benefit Period" or "Medicare Benefit Period" shall not be defined as more
restrictive than as that defined in the Medicare program.
C. "Convalescent Nursing Home", "Extended
Care Facility", or "Skilled Nursing Facility" shall be defined in relation to
its status, facilities and available services. Rehabilitory facilities licensed
as hospitals in Arkansas shall be included in the definition of convalescent
nursing homes for the purpose of this rule.
(1) A definition of such home or facility
shall not be more restrictive than one requiring that it:
(a) be operated pursuant to law;
(b) be approved for payment of Hedicare
benefits or be qualified to receive such approval, if so requested;
(c) be primarily engaged in providing, in
addition to room and board accommodations, skilled nursing care under the
supervision of a duly licensed physician;
(d) provide continuous twenty-four (24) hours
a day nursing service or under the supervision of a registered graduate
professional nurse (R.N.) and
(e)
maintains a daily medical record of each patient.
(2) The definition of such home or facility
may provide that such term not be inclusive of:
(a) any home, facility or part thereof used
primarily for rest;
(b) a home or
facility for the aged or for the care of drug addicts or alcoholics;
or
(c) a home or facility primarily
used for the care and treatment of mental diseases or disorders, or custodial
or educational care.
D. "Health Care Expenses" means expenses of
health maintenance organizations associated with the delivery of health care
services which are analogous to incurred losses of insurers.
Such 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; or
(7) claims processing costs.
E. "Hospital" may be defined in
relation to its status, facilities, and available services or to reflect its
accreditation by the Joint Commission on Accreditation of Hospitals.
(1) The definition of the term "hospital"
shall not be more restrictive than one requiring that the hospital:
(a) be an institution operated pursuant to
law; and
(b) be primarily and
continuously engaged in providing or operating, either on its premises or in
facilities available to the hospital on a prearranged basis and under the
supervision of a staff of duly licensed physicians, medical, diagnostic and
major surgical facilities for the medical care and treatment of sick or injured
persons on an inpatient basis for which charge is made; and
(c) provide twenty-four (24) hour nursing
service by or under the supervision of registered graduate professional
nurses.
(2) The
definition of the term "hospital" may state that such term shall not be
inclusive of:
(a) convalescent homes,
convalescent, rest, or nursing facilities; or
(b) facilities primarily affording custodial,
educational or rehabilitory care; or
(c) facilities for the aged, drug addicts or
alcoholics; or
(d) any military or
veterans hospital or soldiers home or any hospital contracted for or operated
by any national government or agency thereof for the treatment of members or
ex-members of the armed forces, except for services rendered on an emergency
basis when a legal liability exists for charges made to the individual for such
services.
F.
"Medicare" shall be defined in the policy. Medicare may be substantially
defined as "The Health Insurance for the Aged Act, Title XVIII of the Social
Security Amendment of 1965 as Then Constituted or Later Amended", or "Title I,
Part 1 of Public Law
89-97 as Enacted by the Eighty-Ninth Congress of
the United States of America and popularly known as the Health Insurance for
the Aged Act, as then constituted and any later amendments or substitutes
thereof", or words of similar import.
G. "Medicare Eligible Expenses" shall mean
health care expenses of the kinds covered by Medicare, to the extent recognized
as reasonable by Medicare. Payment of benefits by insurers for Medicare
eligible expenses may be conditioned upon the same or less restrictive payment
conditions, including determinations of medical necessity as are applicable to
Medicare claims.
H. "Mental or
Nervous Disorders" shall not be defined more restrictively than a definition
including neurosis, psychoneurosis, psychopathy, psychosis, or mental or
emotional disease or disorder of any kind.
I. "Nurses" may be defined so that the
description of nurse is restricted to a type of nurse, such as registered
graduate professional nurse (R.N.), a licensed practical nurse (L.P.N.), or a
licensed vocational nurse (L.V.N.). If the words "nurse", "trained nurse",
"registered nurse" are used without specific instruction, then the use of such
terms requires the insurer to recognize the services of any individual who
qualified under such terminology in accordance with the applicable statutes or
administrative rules of the licensing or registry board of the state.
J. "Physician" may be defined by including
words such as "duly qualified physician" or "duly licensed physician". The use
of such terms requires an insurer to recognize and to accept, to the extent of
its obligation under the contract, all providers of medical care and treatment
when such services are within the scope of the provider's licensed authority
and are provided pursuant to applicable laws.
K. "Sickness" shall not be defined to be more
restrictive than the following:
"Sickness means sickness or disease of an insured person which
first manifests itself after the effective date of insurance and while the
insurance is in force".
The definition may be further modified to exclude sicknesses or
diseases for which benefits are provided under any workers' compensation,
occupational disease, employer's liability or similar law.
Section 6.
Prohibited
Policy Provisions
A. No policy
or certificate may be advertised, solicited or issued for delivery in this
State as a Medicare Supplement policy as defined in Section 4 of this
Regulation, if such policy or certificate limits or excludes coverage by type
of illness, accident, treatment or medical condition, except as follows:
(1) foot care in connection with corns,
callouses, flat feet, fallen arches, weak feet, chronic foot strain, or
symptomatic complaints of the feet;
(2) mental or emotional disorders, alcoholism
and drug addiction;
(3) illness,
treatment or medical condition arising out of:
(a) war or act of war (whether declared or
undeclared); participation in a felony, riot or insurrections; service in the
armed forces or units auxiliary thereto;
(b) suicide (sane or insane), attempted
suicide or intentionally self-inflicted injury;
(c) aviation;
(4) cosmetic surgery, except that "cosmetic
surgery" shall not include reconstructive surgery when such service is
incidental to or follows surgery resulting from trauma, infection or other
diseases of the involved part;
(5)
care in connection with the detection and correction by manual or mechanical
means of structural imbalance, distortion, or subluxation in the human body for
purposes of removing nerve interference and the effect thereof, where such
interference is the result of or related to distortion, misalignment or
subluxation of or in the vertebral column;
(6) treatment provided in a governmental
hospital; benefits provided under Medicare or other governmental programs
(except Medicaid), any state or federal workers' compensation, employer's
liability or occupational disease law, or any motor vehicle no-fault law;
services rendered by employees of hospitals, laboratories or other
institutions; services performed by a member of the covered person's immediate
family and services for which no charge is normally made in the absence of
insurance;
(7) dental care or
treatment;
(8) eye glasses, hearing
aids and examination for the prescription of fitting thereof;
(9) rest cures, custodial care,
transportation and routine physical examinations;
(10) territorial limitations, outside the
United States; provided, however, supplemental policies may not contain, when
issued, limitations or exclusions of the type enumerated In subsections (1),
(5), (9), or (10) above that are more restrictive than those of Medicare.
Medicare Supplement policies may exclude coverage for any expense to the extent
of any benefit available to the insured under Medicare.
B. No Medicare Supplement policy may use
waivers to exclude, limit or reduce coverage or benefits for specifically named
or described preexisting diseases or physical conditions,
C. No Medicare Supplement policy or
certificate may include a policy fee or any other similar charge. Applicants
cannot be required to pay any fee other than the approved premium.
D. The terms "Medicare Supplement", "Medigap"
and words of similar import shall not be used unless the policy is issued in
compliance with this regulation.
E.
No Medicare Supplement insurance policy, contract or certificate in force in
this State shall contain benefits which duplicate benefits provided by
Medicare.
Section 7.
Benefit Conversion Requirements
A. Effective January 1, 1990, no Medicare
Supplement insurance policy, contract or certificate in force in this State
shall contain benefits which duplicate benefits provided by Medicare.
B. Benefits eliminated by operation of the
Medicare Catastrophic Coverage Act of 1988 transition provisions shall be
restored.
C. For Medicare
Supplement policies subject to the minimum standards adopted by the states
pursuant to Medicare Catastrophic Coverage Act of 1988, the minimum benefits
shall be:
(1) Coverage of Part A Medicare
eligible expenses for hospitalization to the extent not covered by Medicare
from the 61st day through the 90th day in any Medicare benefit
period;
(2) Coverage for either,
all or none of the Medicare Part A inpatient hospital deductible
amount;
(3) Coverage of Part A
Medicare eligible expenses incurred as daily hospital charges during use of
Medicare's lifetime hospital inpatient reserve days;
(4) Upon exhaustion of all Medicare hospital
inpatient coverage including the lifetime reserve days, coverage of ninety
percent (90%) of all Medicare Part A eligible expenses for hospitalization not
covered by Medicare subject to a lifetime maximum benefit of an additional 365
days;
(5) Coverage under Medicare
Part A for the reasonable cost of the first three (3) pints of
blood (or equivalent quantities of packed red blood cells, as defined under
Federal regulations), unless replaced in accordance with federal regulations or
already paid for under Part B;
(6)
Coverage for the coinsurance amount of Medicare eligible expenses under Part B
regardless of hospital confinement, subject to a maximum calendar year
out-of-pocket amount equal to the Medicare Part B deductible [$75];
(7) Effective January 1, 1990, coverage under
Medicare Part B for the reasonable cost of the first three (3) pints of blood
(or equivalent quantities of packed red blood cells, as defined under federal
regulations), unless replaced in accordance with federal regulations or already
paid for under Part A, subject to the Medicare deductible amount.
Section 8.
Minimum Benefit Standards
No policy or certificate may be advertised, solicited or issued
for delivery in this State as a Medicare Supplement policy which does not meet
the following minimum standards. These are minimum standards and do not
preclude the inclusion of other provisions or benefits which are not
inconsistent with these standards.
A.
General Standards.
The following standards apply to Medicare Supplement policies and
are in addition to all other requirements of this regulation:
(1) A Medicare Supplement policy may not deny
a claim for losses incurred more than six (6) months from the effective date of
coverage for a preexisting condition. The policy may not define a preexisting
condition more restrictively than a condition for which medical advice was
given or treatment was recommended by or received from a physician within six
(6) months before the effective date of coverage;
(2) A Medicare Supplement policy may not
indemnify against losses resulting from sickness on a different basis than
losses resulting from accidents;
(3) A Medicare Supplement policy shall
provide that benefits designed to cover cost sharing amounts under Medicare
will be changed automatically to coincide with any changes in the applicable
Medicare deductible amount and copayment percentage factors. Premiums may be
modified to correspond with such changes. Any Federal budget reduction measure
that reduces Medicare payments shall not be considered a change in the Medicare
copayment percentage factor;
(4) A
"noncancellable", "guaranteed renewable", or "noncancellable and guaranteed
renewable" Medicare Supplement policy shall not:
(a) provide for termination of coverage of a
spouse solely because of the occurrence of an event specified for termination
of coverage of the insured, other than the nonpayment of premium; or
(b) be cancelled or nonrenewed by the insurer
solely on the grounds of deterioration of health; and
(5)
(a)
Except as authorized by the Commissioner of this State, an insurer shall
neither cancel nor nonrenew a Medicare Supplement policy or certificate for any
reason other than nonpayment of premium or material
misrepresentation;
(b) If a group
Medicare Supplement insurance policy is terminated by the group policyholder
and not replaced as provided in Subsection (5)(d), the insurer shall offer
certificate-holders an individual Medicare Supplement policy. The insurer shall
offer the certificate-holder at least the following choices:
(1) an individual Medicare Supplement policy
which provides for continuation of the benefits contained in the group policy;
and
(2) an individual Medicare
Supplement policy which provides only such benefits as are required to meet the
minimum standards.
(c) If
membership in a group is terminated, the insurer shall:
(1) offer the certificate-holder such
conversion opportunities as are described in Paragraph (b); or
(2) at the option of the group policyholder,
offer the certificate-holder continuation of coverage under the group
policy.
(d) If a group
Medicare Supplement policy is replaced by another group Medicare Supplement
policy purchased by the same policyholder, the succeeding insurer shall offer
coverage to all persons covered under the old group policy on its date of
termination. Coverage under the new group policy shall not result in any
exclusion for preexisting conditions that would have been covered under the
group* policy being replaced;
(6) Termination of a Medicare Supplement
policy shall be without prejudice to any continuous loss which commenced while
the policy was in force, but the extension of benefits beyond the period while
the policy was in force may be predicated upon the continuous total disability
of the insured limited to the duration of the policy benefit period, if any, or
payment of the maximum benefits.
B. Minimum Benefit Standards.
(1) Coverage of Part A Medicare eligible
expenses for hospitalization to the extent not covered by Medicare from the
61st day through the 90th day in any Medicare benefit period;
(2) Coverage for either all or none of the
Medicare Part A inpatient hospital deductible amount;
(3) Coverage of Part A Medicare eligible
expenses incurred as daily hospital charges during use of Medicare's lifetime
hospital inpatient reserve days;
(4) Upon exhaustion of all Medicare hospital
inpatient coverage including the lifetime reserve days, coverage of ninety
percent (902) of all Medicare Part A eligible expenses for hospitalization not
covered by Medicare subject to a lifetime maximum benefit of an additional 365
days;
(5) Coverage under Medicare
Part A for the reasonable cost of the first three (3) pints of blood (or
equivalent quantities of packed red blood cells, as defined under federal
regulations) unless replaced in accordance with federal regulations or already
paid for under Part B;
(6) Coverage
for the coinsurance amount of Medicare eligible expenses under Part B
regardless of hospital confinement, subject to a maximum calendar year
out-of-pocket amount equal to the Medicare Part B deductible [$75] maximum
benefit;
(7) Effective January 1,
1990, coverage under Medicare Part B for the reasonable cost of the first three
(3) pints of blood (or equivalent quantities of packed red blood cells, as
defined under federal regulations), unless replaced in accordance with federal
regulations or already paid for under Part A, subject to the Medicare
deductible amount.
C.
Medicare Eligible Expenses.
Medicare eligible expenses shall mean health care expenses of the
kinds covered by Medicare, to the extent recognized as reasonable by Medicare.
Payment of benefits by insurers for Medicare eligible expenses may be
conditioned upon the same or less restrictive payment conditions, including
determinations of medical necessity as are applicable to Medicare
claims.
Section 9.
Standards for Claims Payments
A. Every entity providing Medicare Supplement
policies or contracts shall comply with all provisions of Section 4081 of the
Omnibus Budget Reconciliation Act of 1987 (
P.L.
100-203).
B. Compliance with the requirements set forth
in Subsection A above must be certified on the Medicare Supplement insurance
experience reporting form.
Section
10.
Loss Ratio Standards
Medicare Supplement policies shall return to policyholders in the
form of aggregate benefits under the policy, for the entire period for which
rates are computed to provide coverage, on the basis of incurred claims
experience or incurred health care expenses where coverage is provided by a
health maintenance organization on a service rather than reimbursement basis
and earned premiums for such period and in accordance with accepted actuarial
principles and practices:
A. At least
75 percent of the aggregate amount of premiums earned in the case of group
policies, and
B. At least 60
percent of the aggregate amount of premiums earned in the case of individual
policies.
All filings of rates and rating schedules shall demonstrate that
actual and expected losses in relation to premiums comply with the requirements
of this section.
C. Every
entity providing Medicare Supplement policies in this State shall file annually
its rates, rating schedule and supporting documentation including ratios of
incurred losses to earned premiums by number of years of policy duration
demonstrating that it is in compliance with the foregoing applicable loss ratio
standards and that the period for which the policy is rated is reasonable in
accordance with accepted actuarial principles and experience.
For the purposes of this section, policy forms shall be deemed to
comply with the loss ratio standard if:
(i) for the most recent year, the ratio of
the incurred losses to earned premiums for policies or certificates which have
been in force for three years or more is greater than or equal to the
applicable percentages contained in this section; and
(ii) the expected losses in relation to
premiums over the entire period for which the policy is rated comply with the
requirements of this section. An expected third-year loss ratio which is
greater than or equal to the applicable percentage shall be demonstrated for
policies or certificates in force less than three years.
D. As soon as practicable, prior to the
effective date of Medicare benefit changes every insurer, health care service
plan or other entity providing Medicare Supplement insurance or contracts in
this State shall file with the Commissioner, in accordance with the applicable
filing procedures of this State:
(For purposes of this section, Medicare Supplement Policies
issued as a result of solicitations of individuals through the mail or mass
media advertising, including both print and broadcast advertising, shall be
treated as individual policies.)
(1)
(a) Appropriate premium adjustments necessary
to produce loss ratios as originally anticipated for the applicable policies or
contracts. Such supporting documents as necessary to justify the adjustment
shall accompany the filing; and
(b)
Every insurer, health care service plan or other entity providing Medicare
Supplement insurance or benefits to a resident of this State shall make such
premium adjustments as are necessary to produce an expected loss ratio under
such policy or contract as will conform with minimum loss ratio standards for
Medicare Supplement policies and which are expected to result in a loss ratio
at least as great as that originally anticipated in the rates used to produce
current premiums by the insurer, health care service plan or other entity for
such Medicare Supplement insurance policies or contracts. No premium adjustment
which would modify the loss ratio experience under the policy other than the
adjustments described herein should be made with respect to a policy at any
time other than upon its renewal date or anniversary date;
(2) Any appropriate riders, endorsements or
policy farms needed to accomplish the Medicare Supplement insurance
modifications necessary to eliminate benefit duplications with Medicare. Any
such riders, endorsements or policy forms shall provide a clear description of
the Medicare Supplement benefits provided by policy or contract.
Section 11.
Filing Requirements for Out-Of-State Group Policies
Every insurer providing group Medicare Supplement insurance
benefits to a resident of this State shall file a copy of the master policy and
any certificate used in this State in accordance with the filing requirements
and procedures applicable to group Medicare Supplement policies issued in this
State. Provided, however, that no insurer shall be required to make a filing
earlier than 30 days after insurance was provided to a resident of this State
under a master policy issued for delivery outside this State.
Section 12.
Permitted
Compensation Arrangements
A. An
insurer or other entity may provide commission or other compensation to an
agent or other representative for the sale of a Medicare Supplement policy or
certificate only if the first year commission or other first year compensation
is no more than 200 percent (200%) of the commission or other compensation paid
for selling or servicing the policy or certificate in the second year or
period.
B. The commission or other
compensation provided in subsequent (renewal) years must be the same as that
provided in the second year or period and must be provided for at least three
years beyond the anniversary of the date of issuance.
C. No entity shall provide compensation to
its agents or other producers and no agent or producer shall receive
compensation greater than the renewal compensation payable by the replacing
insurer on renewal policies or certificates if an existing policy or
certificate is replaced, unless the coverage benefits of the new policy or
certificate are clearly and substantially greater than the benefits under the
replaced policy or certificate.
D.
"Compensation" includes pecuniary or non-pecuniary remuneration of of any kind
relating to the sale or renewal of the policy or certificate including but not
limited to commissions, bonuses, gifts, prizes, awards, finders fees, and any
and all other fees.
Section
13.
Required Disclosure Provisions
A. General Rules
(1) Medicare Supplement policies shall
include a renewal or continuation provision. The language or specifications of
such provision must be consistent with the type of contract issued. Such
provisions shall be appropriately captioned and shall appear on the first page
of the policy.
(2) Except for
riders or endorsements by which the insurer effectuates a request made in
writing by the insured, or exercises a specifically reserved right under a
Medicare policy, or is required to reduce or eliminate benefits to avoid
duplication of Medicare benefits; all riders or endorsements added to a
Medicare Supplement policy after date of issue or at reinstatement or renewal
which reduce or eliminate benefits or coverage in the policy shall require a
signed acceptance by the insured. After the date of policy issue, any rider or
endorsement which increases benefits or coverage with a concomitant increase in
premium during the policy term must be agreed to in writing signed by the
insured, unless the benefits are required by the minimum standards for Medicare
Supplement insurance policies, or if the increased benefits or coverage is
required by law or this regulation. Where a separate additional premium is
charged for benefits provided in connection with riders or endorsements, such
premium charge shall be set forth in the policy.
(3) A Medicare Supplement policy which
provides for the payment of benefits based on standards described as "usual and
customary", "reasonable and customary" or words of similar import shall include
a definition of such terms and an explanation of such terms in its accompanying
outline of coverage.
(4) If a
Medicare Supplement policy contains any limitations with respect to preexisting
conditions, such limitations must appear as a separate paragraph of the policy
and be labeled as "Preexisting Condition Limitations".
(5) Medicare Supplement policies or
certificates shall have a notice printed on the first page of the policy or
certificate or attached thereto stating in substance that the policyholder or
certificate holder shall have the right to return the policy or certificate
within thirty days of its delivery and to have the premium refunded if, after
examination of the policy or certificate, the insured person is not satisfied
for any reason.
(6) Insurers
issuing disability policies, certificates or subscriber contracts which provide
hospital or medical expense coverage on expense incurred or indemnity basis,
other than incidentally, to a person(s) eligible for Medicare by reason of age
shall provide to all applicants a Medicare Supplement "buyer's guide" in the
form developed jointly by the National Association of Insurance Commissioners
and the Health Care Financing Administration. Delivery of the "buyer's guide"
shall be made whether or not such policies, certificates or subscriber
contracts are advertised, solicited or issued as Medicare Supplement policies
as defined in this regulation. Except in the case of direct response insurers,
delivery of the "buyers guide" shall be made to the applicant at the time
application and acknowledgement of receipt of the "buyer's guide" shall be
obtained by the insurer. Direct response insurers shall deliver the "buyer's
guide" to the applicant upon request but not later than at the time the policy
is delivered.
B. Notice
Requirements.
(1) As soon as practicable, but
no later than thirty (30) days prior to the annual effective date of any
Medicare benefit changes, every insurer, health care service plan or other
entity providing Medicare Supplement insurance or benefits to a resident of
this State shall notify its policyholders, contract holders and
certificate-holders of modifications it has made to Medicare Supplement
insurance policies or contracts in the format set forth in Appendix A;
(a) Include a description of revisions to the
Medicare program and a description of each modification made to the coverage
provided under the Medicare Supplement insurance policy or contract,
and
(b) Inform each covered person
as to when any premium adjustment is to be made due to changes in
Medicare.
(2) The notice
of benefit modifications and any premium adjustments shall be in outline form
and in clear and simple terms so as to facilitate comprehension.
(3) Such notices shall not contain or be
accompanied by any solicitation.
C. Outline of Coverage Requirements for
Medicare Supplement Policies.
(1) Insurers
issuing Medicare Supplement policies or certificates for delivery in this State
shall provide an outline of coverage to all applicants at the time application
is made and, except for direct response policies, shall obtain an
acknowledgement of receipt of such outline from the applicant; and
(2) If an outline of coverage is provided at
the time of application and the Medicare Supplement policy or certificate is
issued on a basis which would require revision of the outline, a substitute
outline of coverage properly describing the policy or certificate must
accompany such policy or certificate when it is delivered and contain the
following statement, in no less than twelve (12) point type, immediately above
the company name:
"NOTICE: Read this outline of coverage carefully. It is not
identical to the outline of coverage provided upon application and the coverage
originally applied for has not been issued."
(3) The outline of coverage provided to
applicants pursuant to paragraphs (1) and (2) shall include at a minimum, the
information prescribed in Appendix B. All outlines of coverage shall be no less
than ten (10) point type, ten leaded.
D. Notice Regarding Policies or Subscriber
Contracts Which Are Not Medicare Supplement Policies.
Any accident and sickness policy or certificate, other than a
Medicare Supplement policy; or a policy issued pursuant to a contract under
Section 1876 of the Federal Social Security Act (42 U.S.C. §
1395
et seq.). disability
income policy, basic, catastrophic, or major medical expense policy, single
premium nonrenewable policy or other policy identified in Section 3B of this
regulation, issued for delivery in this State to persons eligible for Medicare
by reason of age shall notify insureds under the policy or certificate that the
policy or certificate is not a Medicare Supplement policy. Such notice shall
either be printed or attached to the first page of the outline of coverage
delivered to insureds under the policy or certificate, subscriber contract, or
if no outline of coverage is delivered, to the first page of the policy,
certificate or subscriber contract delivered to insureds. Such notice shall be
no less than twelve (12) point type and shall contain the following
language:
"THIS [POLICY, CERTIFICATE OR SUBSCRIBER CONTRACT] IS NOT A
MEDICARE SUPPLEMENT [POLICY, CERTIFICATE OR CONTRACT]. If you are eligible for
Medicare, review the Medicare Supplement Buyer's Guide available from the
company."
Section
14.
Requirements for Application Forms and Replacement
Coverage
A. Application forms
shall include the following questions designed to elicit information as to
whether as of the date of the application, the applicant has another Medicare
Supplement insurance policy in force or whether a Medicare Supplement policy or
certificate is intended to replace any other disability policy or certificate
presently in force. A supplementary application or other form to be signed by
the applicant and agent except where the coverage is sold without an agent,
containing such questions may be used.
(1) Do
you have another Medicare Supplement insurance policy or certificate in force
(including health care service contract, health maintenance organization
contract)
(2) Did you have another
Medicare Supplement policy or certificate in force during the last twelve (12)
months
(a) If so, with which
company
(b) If that policy lapsed,
when did it lapse?
(3)
Are you covered by Medicaid?
(4) Do
you intend to replace any of your medical or health insurance coverage with
this policy [certificate]?
B. Agents shall list any other health
insurance policy they have sold to the applicant.
(1) List policies sold which are still in
force.
(2) List policies sold in
the past five (5) years which are no longer in force.
C. Upon determining that a sale will involve
replacement, an insurer, other than a direct response insurer, or its agent,
shall furnish the applicant, prior to issuance or delivery of the Medicare
Supplement policy or certificate, a comparison of benefits form and notice
regarding replacement of disability coverage. The replacement/comparison/notice
(hereinafter referred to as "notice") shall be signed by the applicant and the
agent, except where the coverage is sold without an agent. One copy of the
"notice" shall be left with the applicant. One copy shall be attached to the
application and made a part of the policy. A direct response insurer shall
deliver to the applicant at the time of the issuance of the policy the "notice"
regarding replacement of disability coverage: said "notice" is also to be a
part of the policy.
D. The notice
required by Subsection C above for an insurer, other than a direct response
insurer, shall be provided in substantially the format found in Appendix
C.
E. The notice required by
Subsection C above for a direct response insurer is found in Appendix
D.
Section 15.
Filing Requirements for Advertising
Every insurer, health care service plan or other entity providing
Medicare Supplement insurance or benefits in this State shall provide a copy of
any Medicare Supplement advertisement intended for use in this State whether
through written, radio or television medium to the Commissioner of Insurance of
this State for review and approval by the Commissioner.
Section 16.
Standards for
Marketing
A. Every insurer,
health care service plan or other entity marketing Medicare Supplement
insurance coverage in this State, directly or through its producers, shall:
(1) Establish marketing procedures to assure
that any comparison of policies by its agents or other producers will be fair
and accurate.
(2) Establish
marketing procedures to assure excessive insurance is not sold or
issued.
(3) Display prominently by
type, stamp or other appropriate means, on the first page of the outline of
coverage and policy the following:
"Notice to buyer: This policy may not cover all of the costs
associated with medical care incurred by the buyer during the period of
coverage. The buyer is advised to carefully review all policy
limitations."
(4) Inquire
and otherwise make every reasonable effort to identify whether a prospective
applicant or enrollee for Medicare Supplement insurance already has disability
insurance and the types and amounts of any such insurance.
(5) Every insurer or entity marketing
Medicare Supplement insurance shall establish auditable procedures for
verifying compliance with this Subsection A.
B. In addition to the practices prohibited in
Ark. Code Ann. §§
23-66-201, et seq., the following
acts and practices are . prohibited:
(1)
Twisting. Knowingly making any misleading representation or incomplete or
fraudulent comparison of any insurance policies or insurers for the purpose of
inducing, or tending to induce, any person to lapse, forfeit, surrender,
terminate, retain, pledge, assign, borrow on, or convert any insurance policy
or to take out a policy of insurance with another insurer. Conviction of
twisting is a class D felony pursuant to Ark. Code Ann. §
23-66-306.
(2) High pressure tactics. Employing any
method of marketing having the effect of or tending to induce the purchase of
insurance through force, fright, threat whether explicit or implied, or undue
pressure to purchase or recommend the purchase of insurance.
(3) Cold lead advertising. Making use
directly or indirectly of any method of marketing which fails to disclose in a
conspicuous manner that a purpose of the method of marketing is solicitation of
insurance and that contact will be made by an insurance agent or insurance
company.
Section
17.
Appropriateness of Recommended Purchase and
Excessive Insurance
A. In
recommending the purchase or replacement of any Medicare Supplement policy or
certificate an agent shall make reasonable efforts to determine the
appropriateness of a recommended purchase or replacement.
B. Any sale of Medicare Supplement coverage
which will provide an individual more than one Medicare Supplement policy or
certificate is prohibited; provided, however, that additional Medicare
Supplement coverage may be sold if, when combined with that individual's health
coverage already in force, it would insure no more than 1002 of the
individual's actual medical expenses covered under the combined
policies.
Section 18.
Reporting of Multiple Policies
A. Annually, On or before March 1, every
insurer or other entity providing Medicare Supplement insurance coverage in
this State shall report the following information for every individual resident
of this State for which the insurer or entity has in force more than one
Medicare Supplement insurance policy or certificate:
(1) Policy and certificate number,
and
(2) Date of issuance.
B. The items set forth above must
be grouped by individual policyholder.
C. The format as-prescribed in Appendix E
should be used for this report.
Section 19.
Prohibition Against
Preexisting Conditions, Waiting Periods, Elimination Periods and Probationary
Periods in Replacement Policies or Certificates
If a Medicare Supplement policy or certificate replaces another
Medicare Supplement policy or certificate, the replacing insurer shall waive
any time periods applicable to preexisting conditions, waiting periods,
elimination periods and probationary periods in the new Medicare Supplement
policy for similar benefits to the extent such time was spent under the
original policy.
Section 20.
Severability
Any section or provision of this rule held by a court to be
invalid or unconstitutional will not affect the validity of any other section
or provision.
