Virginia Law

Chapter 160. Rules to Implement Transitional Requirements for the Conversion of Medicare Supplement Insurance Benefits and Premiums to Conform to Repeal of the Medicare Catastrophic Coverage Act

14VAC5-160-10. Purpose.

This chapter (14VAC5-160-10 et seq.) is designed to

1. Assure the orderly implementation and conversion of Medicare supplement insurance benefits and premiums due to changes in the federal Medicare program;

2. Provide for the reasonable standardization of the coverage, terms and benefits of Medicare supplement policies or contracts;

3. Facilitate public understanding of such policies or contracts;

4. Eliminate provisions contained in such policies or contracts which may be misleading or confusing in connection with the purchase of such policies or contracts;

5. Eliminate policy or contract provisions which may duplicate Medicare benefits;

6. Provide for adjustment of required minimum benefits for Medicare supplement policies;

7. Provide notice to former policyholders of offer to reinstitute coverage;

8. Provide full disclosure of policy or contract benefits and benefit changes; and

9. Provide for appropriate premium adjustments.

Statutory Authority

§§ 38.2-223, 38.2-3516 through 38.2-3520, 38.2-3600 through 38.2-3609, 38.2-4214, 38.2-4215 and 38.2-514 of the Code of Virginia.

Historical Notes

Derived from Regulation 36, Case No. INS900003, § 2, eff. January 31, 1990.

14VAC5-160-20. [Reserved].

Historical Notes

Derived from Virginia Register Volume 6, Issue 11, eff. January 31, 1990.

14VAC5-160-30. Applicability and scope.

This chapter (14VAC5-160-10 et seq.) shall take precedence over other rules and requirements relating to Medicare supplement policies or contracts to the extent necessary to assure that benefits are not duplicated and to adjust minimum required benefits to changes in Medicare benefits, applicants receive adequate notice and disclosure of changes in Medicare supplement policies and contracts, appropriate premium adjustments are made in a timely manner, and premiums are reasonable in relation to benefits.

Except as provided in 14VAC5-160-50, this chapter shall apply to:

1. All Medicare supplement policies and contracts delivered, or issued for delivery in this Commonwealth, or which are otherwise subject to the jurisdiction of this Commonwealth, on or after the effective date hereof, and

2. All certificates issued under group Medicare supplement policies as provided in subdivision 1 above.

Statutory Authority

§§ 38.2-223, 38.2-3516 through 38.2-3520, 38.2-3600 through 38.2-3609, 38.2-4214, 38.2-4215 and 38.2-514 of the Code of Virginia.

Historical Notes

Derived from Regulation 36, Case No. INS900003, § 4, eff. January 31, 1990.

14VAC5-160-40. Definitions.

For purposes of this chapter (14VAC5-160-10 et seq.):

"Applicant" means:

1. In the case of an individual Medicare supplement 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.

"Certificate" means any certificate issued under a group Medicare supplement policy.

"Medicare supplement policy" means a group or individual policy of accident and sickness insurance or any other contract which is advertised, marketed or designed primarily to provide health care benefits as a supplement to reimbursements under Medicare for the hospital, medical or surgical expenses of persons eligible for Medicare by reason of age.

Statutory Authority

§§ 38.2-223, 38.2-3516 through 38.2-3520, 38.2-3600 through 38.2-3609, 38.2-4214, 38.2-4215 and 38.2-514 of the Code of Virginia.

Historical Notes

Derived from Regulation 36, Case No. INS900003, § 5, eff. January 31, 1990.

14VAC5-160-50. Benefit conversion requirements.

A. Effective January 1, 1990, no Medicare supplement insurance policy, contract or certificate in force in this Commonwealth shall contain benefits which duplicate benefits provided by Medicare.

B. Benefits eliminated by operation of the Medicare Catastrophic Coverage Act of 1988 (Public Law 100-360, 102 Stat. 683 (July 1, 1988) 42 USC § 1305) 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 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 of $75;

7. Effective January 1, 1990, coverage under Medicare Part B for the reasonable cost of the first three 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.

D. General requirements:

1. No later than January 31, 1990, every insurer, health services plan or other entity providing Medicare supplement insurance or benefits to a resident of this Commonwealth shall notify its policyholders, contract holders and certificate holders of modifications it has made to Medicare supplement insurance policies or contracts. Such notice shall be in the format adopted by the National Association of Insurance Commissioners (Appendix A).

a. Such notice shall 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.

b. The notice shall inform each covered person as to when any premium adjustment due to changes in Medicare benefits will be effective.

c. 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.

d. Such notice shall not contain or be accompanied by any solicitation.

2. No modifications to an existing Medicare supplement contract or policy shall be made at the time of or in connection with the notice requirements of this section except to the extent necessary to accomplish the purposes articulated in 14VAC5-160-10.

Statutory Authority

§§ 38.2-223, 38.2-3516 through 38.2-3520, 38.2-3600 through 38.2-3609, 38.2-4214, 38.2-4215 and 38.2-514 of the Code of Virginia.

Historical Notes

Derived from Regulation 36, Case No. INS900003, § 6, eff. January 31, 1990.

14VAC5-160-60. Form and rate filing requirements.

A. As soon as practicable, but no longer than 45 days after the effective date of the Medicare benefit changes, every insurer, health services plan or other entity providing Medicare supplement insurance or contracts in this Commonwealth shall file with the Commission, in accordance with the applicable filing procedures of this Commonwealth:

1. Appropriate premium adjustments necessary to produce loss ratios as originally anticipated for the applicable policies or contracts. Such supporting documents as are necessary to justify the adjustment shall accompany the filing.

2. Any appropriate riders, endorsements or policy forms needed to accomplish the Medicare supplement insurance modifications necessary to eliminate benefit duplications with Medicare and to provide the benefits required by 14VAC5-160-50. Any such riders, endorsements or policy forms shall provide a clear description of the Medicare supplement benefits provided by the policy or contract.

B. Upon satisfying the filing and approval requirements of this Commonwealth, every insurer, health services plan or other entity providing Medicare supplement insurance in this Commonwealth shall provide each covered person with any rider, endorsement or policy form necessary to make the adjustments outlined in 14VAC5-160-50 above.

C. Any premium adjustments shall produce an expected loss ratio under such policy or contract as will conform with minimum loss ratio standards for Medicare supplement policies and shall result in an expected loss ratio at least as great as that originally anticipated by the insurer, health services plan or other entity for such Medicare supplement insurance policies or contracts. Premium adjustments may be calculated for the period commencing with Medicare benefit changes.

Statutory Authority

§§ 38.2-223, 38.2-3516 through 38.2-3520, 38.2-3600 through 38.2-3609, 38.2-4214, 38.2-4215 and 38.2-514 of the Code of Virginia.

Historical Notes

Derived from Regulation 36, Case No. INS900003, § 7, eff. January 31, 1990.

14VAC5-160-70. Offer of reinstitution of coverage.

A. Except as provided in subsection B, in the case of an individual who had in effect, as of December 31, 1988, a Medicare supplement policy with an insurer, as a policyholder or, in the case of a group policy, as a certificate holder, and the individual terminated coverage under such policy before the date of the enactment of the repeal of the Medicare Catastrophic Coverage Act of 1988 (Public Law 100-360, 102 Stat. 683 (July 1, 1988) 42 USC § 1305), the insurer shall:

1. Provide written notice no earlier than December 15, 1989, and no later than January 30, 1990, to the policyholder or certificate holder at the most recent available address, of the offer described below, and

2. Offer the individual, during a period of at least 60 days beginning not later than February 1, 1990, reinstitution of coverage, with coverage effective as of January 1, 1990, under terms which:

a. Do not provide for any waiting period with respect to treatment of pre-existing conditions;

b. Provide for coverage which is substantially equivalent to coverage in effect before the date of such termination; and

c. Provide for classification of premiums on which terms are at least as favorable to the policyholder or certificate holder as the premium classification terms that would have applied to the policyholder or certificate holder had the coverage never terminated.

B. An insurer is not required to make the offer under subdivision 2 above in the case of an individual who is a policyholder or certificate holder in another Medicare supplement policy as of January 1, 1990, if the individual is not subject to a waiting period with respect to treatment of a preexisting condition under such other policy.

Statutory Authority

§§ 38.2-223, 38.2-3516 through 38.2-3520, 38.2-3600 through 38.2-3609, 38.2-4214, 38.2-4215 and 38.2-514 of the Code of Virginia.

Historical Notes

Derived from Regulation 36, Case No. INS900003, § 8, eff. January 31, 1990.

14VAC5-160-80. Requirements for new policy and certificates.

A. Effective January 1, 1990, no Medicare supplement insurance policy, contract or certificate shall be delivered or issued for delivery in this Commonwealth which provides benefits which duplicate benefits provided by Medicare. No such policy, contract or certificate shall provide less benefits than those required under the existing law or regulation except where duplication of Medicare benefits would result and except as required by these transition provisions.

B. General requirements.

1. Within 90 days of the effective date of this chapter, every insurer, health services plan or other entity required to file its policies or contracts for approval by the Commission shall file new Medicare supplement insurance policies or contracts which eliminate any duplication of Medicare supplement benefits with benefits provided by Medicare, which adjust minimum required benefits to changes in Medicare benefits, and which provide a clear description of the policy or contract benefit;

2. The filing required under 14VAC5-160-60 A 1 shall provide for less ratios which are in compliance with all statutory and regulatory requirements; and

3. Every applicant for a Medicare supplement insurance policy, contract or certificate shall be provided with an outline of coverage which simplifies and accurately describes benefits provided by Medicare and policy or contract benefits along with benefit limitations.

Statutory Authority

§§ 38.2-223, 38.2-3516 through 38.2-3520, 38.2-3600 through 38.2-3609, 38.2-4214, 38.2-4215 and 38.2-514 of the Code of Virginia.

Historical Notes

Derived from Regulation 36, Case No. INS900003, § 9, eff. January 31, 1990.

14VAC5-160-90. Filing requirements for advertising.

Every insurer, health services plan or other entity providing Medicare supplement insurance or benefits in this Commonwealth shall provide a copy of any advertisement intended for use in this Commonwealth whether through written, radio or television medium to the Commission for review. Such advertisement shall comply with all applicable laws of this Commonwealth.

Statutory Authority

§§ 38.2-223, 38.2-3516 through 38.2-3520, 38.2-3600 through 38.2-3609, 38.2-4214, 38.2-4215 and 38.2-514 of the Code of Virginia.

Historical Notes

Derived from Regulation 36, Case No. INS900003, § 10, eff. January 31, 1990.

14VAC5-160-100. Buyer's guide.

No insurer, health services plan or other entity shall make use of or otherwise disseminate any buyer's guide or informational brochure which does not accurately outline current Medicare benefits.

Statutory Authority

§§ 38.2-223, 38.2-3516 through 38.2-3520, 38.2-3600 through 38.2-3609, 38.2-4214, 38.2-4215 and 38.2-514 of the Code of Virginia.

Historical Notes

Derived from Regulation 36, Case No. INS900003, § 11, eff. January 31, 1990.

14VAC5-160-110. Severability.

If any provision of this chapter (14VAC5-160-10 et seq.), or the application thereof to any person or circumstances is for any reason held to be invalid, the remainder of the chapter and the application of such provision to other persons or circumstances shall not be affected thereby.

Statutory Authority

§§ 38.2-223, 38.2-3516 through 38.2-3520, 38.2-3600 through 38.2-3609, 38.2-4214, 38.2-4215 and 38.2-514 of the Code of Virginia.

Historical Notes

Derived from Regulation 36, Case No. INS900003, § 12, eff. January 31, 1990.

14VAC5-160-110:1. APPENDIX A. NOTICE OF CHANGES IN MEDICARE AND YOUR MEDICARE SUPPLEMENT COVERAGE-1990.

APPENDIX A.

[COMPANY NAME]

NOTICE OF CHANGES IN MEDICARE AND YOUR MEDICARE SUPPLEMENT COVERAGE-1990

THE FOLLOWING OUTLINE BRIEFLY DESCRIBES THE MODIFICATIONS IN MEDICARE AND IN YOUR MEDICARE SUPPLEMENT COVERAGE. PLEASE READ THIS CAREFULLY!

[A BRIEF DESCRIPTION OF THE REVISIONS TO MEDICARE PARTS A & B WITH A PARALLEL DESCRIPTION OF SUPPLEMENTAL BENEFITS WITH SUBSEQUENT CHANGES, INCLUDING DOLLAR AMOUNTS, PROVIDED BY THE MEDICARE SUPPLEMENT COVERAGE IN SUBSTANTIALLY THE FOLLOWING FORMAT.]

[Any other policy benefits not mentioned in this chart should be added to the chart in the order prescribed by the outline of coverage benefits. If there are corresponding Medicare benefits, they should be shown.]

[Describe any coverage provisions changing due to Medicare modifications.]

[Include information about when premium adjustments that may be necessary due to changes in Medicare benefits will be effective.]

THIS CHART SUMMARIZING THE CHANGES IN YOUR MEDICARE BENEFITS AND IN YOUR MEDICARE SUPPLEMENT PROVIDED BY [COMPANY] ONLY BRIEFLY DESCRIBES SUCH BENEFITS. FOR INFORMATION ON YOUR MEDICARE BENEFITS CONTACT YOUR SOCIAL SECURITY OFFICE OR THE HEALTH CARE FINANCING ADMINISTRATION. FOR INFORMATION ON YOUR MEDICARE SUPPLEMENT [Policy] CONTACT:

[COMPANY OR FOR AN INDIVIDUAL POLICY - NAME OF AGENT]

[ADDRESS/PHONE NUMBER]