Current through Register Vol. 50, No. 9, September 20, 2024
A.
Disclosure is one of the principal objectives of the rules and
§137 states specifically that the rules
shall assure truthful and adequate disclosure of all material and relevant
information. The rules specifically prohibit some previous advertising
techniques.
B. These rules apply to
any advertisement as that term is defined in §105, unless
otherwise specified in the rules. These rules apply to group, blanket and
individual Medicare supplement insurance advertisements. Certain distinctions,
however, are applicable to these categories. Among them is the level of
conversance with insurance, a factor which is covered by
§109. A
C. The scope of the term
advertisement extends to the use of all media for
communications to the general public, to the use of all media for
communications to specific members of the general public, and to use of all
media for communications by agents, brokers, producers, and
solicitors.
D. A brief description
of coverage in an invitation to inquire may consist of an explanation of
Medicare benefits, minimum benefits, standards for Medicare supplement
policies, the manner in which the advertised Medicare supplement insurance
policy supplements the benefits of Medicare and meets or exceeds the minimum
benefit requirements. An invitation to inquire shall not refer to cost or the
maximum dollar amount of benefits payable. As with all Medicare supplement
insurance advertisements, an invitation to inquire must not:
1. employ devices which are designed to
create undue anxiety in the minds of the elderly or excite fear of dependence
upon relatives or charity;
2.
exaggerate the gaps in Medicare coverage;
3. exaggerate the value of the benefits
available under the advertised policy;
4. otherwise violate the provisions of these
rules.
E.
1. The rule permits the use of either of the
following alternative methods of disclosure.
a. The first alternative provides for the
disclosure of exceptions, limitations, reductions, and other restrictions
conspicuously and in close conjunction with the statements to which such
information relates. This may be accomplished by disclosure in the description
of the related benefits or in a paragraph set out in close conjunction with the
description of policy benefits.
b.
The second alternative provides for the disclosure of exceptions, limitations,
reductions, and other restrictions not in conjunction with the provisions
describing policy benefits but under appropriate captions of such prominence
that the information shall not be minimized, rendered obscure, or otherwise
made to appear unimportant. The phrase, "under appropriate captions," means
that the title must be accurately descriptive of the captioned material.
Appropriate captions include the following: "Exceptions," "Exclusions,"
"Conditions not Covered," and "Exceptions and Reductions." The use of captions
such as, or similar to, the following are not acceptable because they do not
provide adequate notice of the significance of the material: "Extent of
Coverage," "Only these Exclusions," or "Minimum Limitations."
2. In considering whether an
advertisement complies with the disclosure requirements of this rule, the rule
must be applied in conjunction with the form and content standards contained in
§107
F.
1. The
rule must be applied in conjunction with
§101. E and
§105 of the rules. The rule refers
specifically to format and content of the advertisement and
the overall impression created by the advertisement. This
involves factors such as, but not limited to, the size, color, and prominence
of type used to describe benefits. The word format means the
arrangement of the text and the captions.
2. The rule requires distinctly different
advertisements for publication in newspapers or magazines of general
circulation, as compared to scholarly, technical, or business journals and
newspapers. Where an advertisement consists of more than one piece of material,
each piece of material must, independently of all other pieces of material,
conform to the disclosure requirements of this rule.
G. The rule prohibits the use of incomplete
statements and words or phrases which have the tendency or capacity to mislead
or deceive because of the reader's unfamiliarity with insurance terminology.
Therefore, words, phrases, and illustrations used in an advertisement must be
clear and unambiguous. If the advertisement uses insurance terminology,
sufficient description of a word, phrase, or illustration shall be provided by
definition or description in the context of the advertisement. As implied in
§137 F, distinctly different levels of
comprehension to the subscribers of various publications may be
anticipated.
H. The rule prohibits
the use of incomplete statements and words or phrases which create deception by
omission or commission. The following examples are illustrations of the
prohibitions created by the rule.
1. An
advertisement which describes any benefits that vary by age must disclose the
fact.
2. An advertisement that uses
a phrase such as "no age limit" must disclose that premiums may vary by age or
that benefits may vary by age, if such is the case.
3. Advertisements, applications, requests for
additional information, and similar materials are unacceptable if they state or
imply that the recipient has been individually selected to be offered
insurance, or has had his eligibility for such insurance individually
determined in advance, when in fact the advertisement is directed to all
persons in a group or to all persons whose names appear on a mailing
list.
4. Advertisements for group
or franchise group plans which provide a common benefit or a common combination
of benefits shall not imply that the insurance coverage is tailored or designed
specifically for that group, unless such is the fact.
5. It is unacceptable to use terms such as
"enroll" or "join" with reference to group or blanket insurance coverage when
such is not the case.
6. An
advertisement which states or implies immediate coverage is provided is
unacceptable, unless suitable administrative procedures exist so that the
policy is issued within 15 working days after the application is received by
the insurer.
7. Applications,
request forms for additional information, and similar related materials are
unacceptable if they resemble paper currency, bonds, or stock certificates; or
use any name, service mark, slogan, symbol, or any device in such a manner that
implies that the insurer or the policy advertised is connected with a
government agency, such as the Social Security Administration or the Department
of Health and Human Services.
8. An
advertisement which uses the word, "plan," without identifying it as a Medicare
supplement insurance policy is not permissible.
9. An advertisement which implies in any
manner that the prospective insured may realize a profit from obtaining
Medicare supplement insurance is not permissible.
10. An advertisement which fails to disclose
any waiting or elimination periods is unacceptable.
11. Examples of benefits payable under a
policy shall not disclose only maximum benefits unless such maximum benefits
are paid for loss from common or probable illnesses or accidents, rather than
exceptional or rare illnesses or accidents or periods of confinement for such
exceptional or rare accidents or illnesses.
12. When a range of benefit levels is set
forth in an advertisement, it must be made clear that the insured will receive
only the benefit level written or printed in the policy selected and
issued.
13. Advertisements for
policies whose premiums are modest because of their limited amount of benefits
shall not describe premiums as "low," "low cost," "budget," or use qualifying
words of similar import. This rule also prohibits the use of words such as
"only" and "just" in conjunction with statements of premium amounts when used
to imply a bargain.
14. An
advertisement which exaggerates the effects of statutorily mandated benefits or
required policy provisions or which implies that such provisions are unique to
the advertised policy is unacceptable. For example: the phrase, "Money Back
Guarantee," is an exaggerated description of the 30-day right to examine the
policy and is not acceptable.
15.
An advertisement which implies that a common type of policy or a combination of
common benefits is "new," "unique," "a bonus," "a breakthrough," or is
otherwise unusual is unacceptable. Also, the addition of a novel method of
premium payment to an otherwise common plan of insurance does not render it
new.
16. An
advertisement may not omit the word covered when referring to
benefits payable under its policy. Continued reference to
covered is not necessary where this fact has been prominently
disclosed in the advertisement.
17.
An advertisement must state that benefits payable under the policy are based
upon Medicare eligible expenses, if such is the case.
18. An advertisement which fails to disclose
that the definition of hospital does not include a nursing
home, convalescent home or extended care facility, as the case may be, is
unacceptable.
19. A television,
radio, mail, or newspaper advertisement, or lead generating device which is
designed to produce leads either by use of a coupon, a request to write or to
call the company, or a subsequent advertisement prior to contact must include
information disclosing that an insurance agent may contact the applicant, if
such is the fact.
20.
Advertisements for policies designed to supplement Medicare shall not employ
devices which are designed to create undue anxiety in the minds of the elderly.
Such phrases as "here is where most people over 65 learn about the gaps in
Medicare," or "Medicare is great, but ... ," or which otherwise exaggerate the
gaps in Medicare coverage are unacceptable. Phrases or devices which unduly
excite fear of dependence upon relatives or charity are unacceptable. Phrases
or devices which imply that long sicknesses or hospital stays are common among
the elderly are unacceptable.
21.
An advertisement which is an invitation to contract implying that the coverage
is supplemental to Medicare, if it does not explain the manner in which it is
supplemental to Medicare coverage, is not acceptable.
22. An advertisement which is an invitation
to contract for Medicare supplement insurance is unacceptable if the
advertisement:
a. fails to disclose in clear
language which of the Medicare benefits the policy is not designed to
supplement, or if it otherwise implies that Medicare provides only those
benefits which the policy is designed to supplement;
b. describes the in-patient hospital coverage
of Medicare as Medicare hospital, or Medicare Part
A when the policy does not supplement the non-hospital or the
psychiatric hospital benefits of Medicare Part A;
c. fails to describe clearly the operation of
the part or parts of Medicare which the policy is designed to supplement;
or
d. describes those Medicare
benefits not supplemented by the policy in such a way as to minimize their
importance relative to the Medicare benefits which are supplemented.
23. Advertisements which indicate
that a particular coverage or policy is exclusively for preferred risks or a
particular segment of the population, or that particular segments of the
population are acceptable risks, when such distinctions are not maintained in
the issuance of policies, are not acceptable.
24. Any advertisement which contains
statements such as "anyone can apply," or "anyone can join," other than that
with respect to a guaranteed issue policy for which administrative procedures
exist to assure that the policy is issued within a reasonable period of time
after the application is received by the insurer, is unacceptable.
25. Any advertisement which uses any phrase
or term such as "here is all you do to apply," "simply," or "merely" to refer
to the act of applying for a policy which is not a guaranteed issue policy is
unacceptable, unless it refers to the fact that the application is subject to
acceptance or approval by the insurer.
26. Advertisements which state or imply that
premiums will not be changed in the future are not acceptable, unless the
advertised policies so provide.
27.
An advertisement which does not require the premium to accompany the
application must not overemphasize that fact and must make the effective date
of that coverage clear.
28. An
advertisement which is an invitation to contract which falls to disclose the
amount of any deductible and/or the percentage of any co-insurance factor is
not acceptable.
I.
1. The rule recognizes that certain words and
phrases in advertising may have a tendency to mislead the public as to the
extent of benefits under an advertised policy. Consequently, such terms (and
those specified in the rules do not represent a comprehensive list, but only
examples) must be used with caution to avoid any tendency to exaggerate
benefits and must not be used unless the statement is literally true in every
instance. The use of the following phrases, based on such terms, or having the
same effect must be similarly restricted: "pays hospital, surgical, etc.
bills," "pays dollars to offset the cost of medical care," "safeguards your
standard of living," "pays full coverage," "pays complete coverage," or "pays
for financial needs." Other phrases may or may not be acceptable, depending
upon the nature of the coverage being advertised.
2. The rule also prohibits words or phrases
which exaggerate the effect of benefit payment on the insured's general
well-being, such as "worry-free savings plan," "guaranteed savings," "financial
peace of mind," and "you will never have to worry about hospital bills
again."
3. Advertisements which are
an invitation to contract for policies designed to supplement Medicare benefits
are unacceptable if they fail to disclose that no hospital confinement benefits
will be payable for that portion of a Medicare benefit period for which
Medicare pays all hospital confinement expenses (currently 60 days) other than
the initial deductible, if the policy so provides. The length of said period
must be stated in days.
J. Explanations must not minimize nor
describe restrictive provisions in a positive manner. Negative features must be
accurately set forth. Any limitation on benefits precluding pre-existing
conditions must also be restated under a caption concerning exclusions or
limitations, notwithstanding that the pre-existing condition exclusion has been
disclosed elsewhere in the advertisement. See
§137 M, N, and O for additional comments
on pre-existing conditions.)
K. The
rule should be applied in conjunction with
§117 Phrases such as "we cut cost to the
bone" or "we deal direct with you so our costs are lower" shall not be
used.
L.
1. An advertisement which is an invitation to
contract, as defined in §105, must recite the exceptions, reductions, and
limitations, as required by the rule and in a manner consistent with
§105
2. If an exception, reduction, or limitation
is important enough to use in a policy, it is of sufficient importance that its
existence in the policy should be referred to in the advertisement, regardless
of whether it may also be the subject matter of a provision of the Uniform
Individual Accident and Sickness Policy Provision Law.
3. Some advertisements disclose exceptions,
reductions, and limitations as required, but the advertisement is so lengthy
that it obscures the disclosure. Where the length of an advertisement has this
effect, special emphasis must be given by changing the format to show the
restrictions in a manner which does not minimize, render obscure, or otherwise
make them appear unimportant.
M. The rule implements the objective of
§111. C.1 by requiring in
negative terms a description of the effect of a pre-existing condition
exclusion because such an exclusion is a restriction on coverage. The
subdivision also prohibits the use of the phrase pre-existing
condition without an appropriate definition or description of the term
and prohibits stating a reduction in the statutory time limit as an affirmative
benefit. The words appropriate definition or description mean
that the term pre-existing condition must be defined as it is
used by the company's claims department.
N. The phrase, "no health questions," or
words of similar import shall not be used if the policy excludes pre-existing
conditions. Use of a phrase such as "guaranteed issue" or "automatic issues" if
a policy excludes pre-existing conditions for a certain period must be
accompanied by a statement disclosing that fact in a manner which does not
minimize, render obscure, or otherwise make it appear unimportant and is
otherwise consistent with
§105
O. Some states require approval of the
application even when the application is not attached to the policy when
issued. The rule does not change such a requirement. The text of this guideline
should be modified to reflect the rule applicable in the particular
state.
P.
1. Advertisements of cancelable Medicare
supplement policies must state that the contract is cancelable or renewable, at
the option of the company, as the case may be. With respect to noncancellable
policies and guaranteed renewable policies, the policy provisions, with respect
to renewability, must be set forth and defined where appropriate.
2. The rule also requires a statement of the
qualifying conditions which constitute limitations on the permanent nature of
the coverage. These customarily fall into three categories:
a. age limits;
b. reservation of a right to increase
premiums; and
c. the establishment
of aggregate limits.
For example: "noncancellable and guaranteed renewable" does
not fulfill the requirements of the rule if the policy contains a terminal age.
In such a case, a proper statement would be "non-cancelable and guaranteed
renewable to age _______." If a guaranteed renewable policy reserves the right
to increase premiums, the statement must be expanded into language similar to
"guaranteed renewable to age ______ but the company reserves the right to
increase premium rates on a class basis." If the contract contains an aggregate
limit after which no further benefits are payable, the above statement must be
amplified with the phrase, "subject to a maximum aggregate amount of $50,000,"
or similar language. A Medicare supplement insurance policy may have one or
more of the three basic limitations, and an advertisement must describe each of
those which the policy contains. Over 50 percent of new individual policy
issues are guaranteed renewable; therefore, the fact that a policy is
guaranteed renewable shall not be exaggerated.
3. An advertisement for a Medicare supplement
insurance policy which provides for age step-rated premium rates based upon the
policy year or the insured's attained age must disclose such rate increases and
the times or ages at which such premium increases.
Q. The rule must be applied in conjunction
with §115 and requires
that all such statements must be genuine and not fictitious. Under the rule.
the manufacturing, substantive editing, or "doctoring up" of a testimonial is
clearly prohibited as being false and misleading to the insurance-buying
public. However, language which would be unacceptable under these rules must be
edited out of a testimonial.
R. The
rule requires that both approval or endorsement of a policy by an individual,
group of individuals, society, association, or other organization be factual,
and that any proprietary relationship between the sponsoring or endorsing
organization and the insurer be disclosed. For example: if the dividend under
an association group case is payable to the association, disclosure of that
fact is required. Also, if the insurer or an officer of the insurer formed or
controls the association, that fact must be disclosed. This guideline also
applies to
§115. E
S.
1. An
advertisement shall specifically identify the Medicare supplement insurance
policy to which statistics relate, and where statistics are given which are
applicable to a different policy, it must be stated clearly that the data does
not relate to the policy being advertised.
2. An advertisement which states the dollar
amount of claims paid must also indicate the period over which such claims have
been paid.
3. If the term "loss
ratio" is used, it shall be properly explained in the context of the
advertisement, and unless the state has issued a regulation otherwise defining
the term, it shall be calculated on the basis of premiums earned to losses
incurred and shall not be on a yearly run-off basis.
T. The rule does not require that statistics
for this state be used since such statistics as hospital charges and average
stays may vary from state to state. When nationwide statistics are used, such
fact should be noted, unless the statistics on the particular point are
substantially the same in a state to which the advertisement is directed.
Statistics way only be used if they are current and credible.
U. The rule prohibits disparaging, unfair, or
incomplete comparisons of policies or benefits which would have a tendency to
decline or mislead the public. The rule does not preclude the use of
comparisons by health maintenance organizations, prepaid health plans, and
other direct service organizations which describe the difference between their
prepaid health benefits coverage and indemnity insurance coverage.
V. The rule prohibits advertisements which
imply that an insurer is licensed beyond the limits of those jurisdictions
where it is actually licensed. An advertisement which contains testimonials
from persons who reside in a state in which the insurer is not licensed or
which refers to claims of persons residing in states in which the insurer is
not licensed implies licensing in those states, and therefore, is in violation
of this rule unless the advertisement states that the insurer is not licensed
in those states.
W.
1 Although the rule permits a reference to an
insurer being licensed in a state where the advertisement appears, it does not
allow exaggeration of the fact of such licensing nor does it permit the
suggestion that competing insurers may not be so licensed because, in most
states, an insurer must be licensed in the state to which it directs its
advertising.
2. Terms such as
"official" or words of similar import used to describe any policy or
application form are not permissible because of the potential for deceiving or
misleading the public. This guideline also applies to
§119. A.3
X. The rule prohibits
advertising representing that a product is offered on an introductory, initial,
or special offer basis or otherwise which:
1.
will not be available later; or
2.
is available only to certain individuals, unless such is the fact. This rule
prohibits the repetitive use of such advertisements. Where an insurer uses
enrollment periods as the usual method of advertising these policies, the rule
prohibits describing an enrollment period as a special opportunity or offer for
the applicant.
Y.
1. The rule restricts the repetitive use of
enrollment periods. The requirement of reasonable closing dates and waiting
periods between enrollment periods was adopted to eliminate the abuses which
formerly existed. This rule does not limit just the use of enrollment periods.
It requires that a particular insurance product offered in an enrollment period
through any advertising media, including the prepared presentations of agents,
cannot be offered again in the state until (insert number) months from the
close of the enrollment period. Thus, an insurer must choose whether to use
enrollment periods or open enrollment for a product. (See
§137. Y.1 for the
definition of a particular insurance product.)
2. The rule does not prohibit multiple
advertising during an enrollment period through any and all media published or
transmitted within this state as long as the enrollment periods for all such
advertisements have the same expiration date.
3. The rule does not prohibit the
solicitation of members of a group or association for the same product even
though there has not been a lapse of (insert months) since the close of a
preceding enrollment period which was open to the general public for the same
product.
4. The rule does not
require separation by (insert number) months of enrollment periods for the same
insurance product in this state if the advertising material is directed by an
admitted insurer to persons by direct mail on the basis that a common
relationship exists with an entity. Examples of such would be a bank and its
depositors, a department store to its charge account customers, or an oil
company to its credit card holders, and more than one of such organizations is
sponsoring such insurance product at different times if providing such
insurance under such a method is not otherwise prohibited by law. However, the
(insert number) month rule does apply to one specific sponsor to the same
persons in this state on the basis of their status as customers of that one
specific entity only.
Z.
The rule defines the meaning of a particular insurance product
in §137.
Y.1 and prohibits advertising of products
having minor variations such as different periods or different amounts of daily
hospital indemnity benefits in a succession of enrollment periods.
AA. The rule is closely related to the
requirements of
§115 concerning the use of statistics. The
rule prohibits insurers which have been organized for only a brief period of
time advertising that they are "old" and also prohibits emphasizing the size
and magnitude of the insurer. Also, the occupations of the persons comprising
the insurer's board of directors or the public's familiarity with their names
or reputations is irrelevant and must not be emphasized. The preponderance of a
particular occupation or profession among the board of directors of an insurer
does not justify the advertisement of a plan of insurance offered to the
general public as insurance designed or recommended by members of that
occupation or profession. For example, it is unacceptable for an insurance
company to advertise a policy offered to the general public as "the physicians'
policy" or "the doctors' plan" simply because there is a preponderance of
physicians or doctors on the board of directors of the insurer. The rule
prohibits the use of recommendation of a commercial rating system unless the
purpose, meaning, and limitations of the recommendation are clearly
indicated.
BB. The text of
Subsection A is identical to the text of the first paragraph of the Enforcement
Section of previous drafts of the rules, except the last sentence of the
Subsection has been revised to require that the advertising file be maintained
either for a period of four years (rather than three as previously) or until
the next regular examination of the insurer, whichever is the longer period of
time.
CC. The rule is attached as
an example of the text of a rule which may be used, at the option of the
commissioner, in a state which reviews advertisements prior to use. The NAIC
takes no position here on the question of whether direct response advertising
material should be subject to prior review by the commissioner.
AUTHORITY NOTE:
Promulgated in accordance with
R.S.
22:2 and
22:224.
