Kansas Insurance Department
Kathleen Sebelius, Commissioner of Insurance
TO: All companies authorized to transact Medicare Supplement business in the state of Kansas
SUBJECT: Guarantee Issue Rights Pursuant to The Federal Balanced Budget Act of 1997 (P.L. 105-33) and Proposed Changes to K.A.R. 40-4-35.
DATE:November 10, 1998
The purpose of this bulletin is to advise all companies authorized to transact Medicare supplement business in the state of Kansas of the guarantee issue provisions in The Federal Balanced Budget Act of 1997.
With respect to eligible persons, an issuer shall not deny or condition the issuance or effectiveness of a Medicare supplement policy described below that is offered and is available for issuance to new enrollees by the issuer, shall not discriminate in the pricing of such a Medicare supplement policy because of health status, claims experience, receipt of health care, or medical condition, and shall not impose an exclusion of benefits based on a pre-existing condition under such a Medicare supplement policy.
Disclosed below are the conditions that allow an individual the right to a guaranteed issue Medicare supplement policy. Eligible persons are those individuals highlighted below who apply to enroll under the policy not later than sixty-three (63) days after the date of the termination of enrollment described below and who submit evidence of the date of termination or disenrollment with the application for a Medicare supplement policy. The conditions for guaranteed issue and the eligible products are as follows:
- The individual is enrolled as an employee, retiree or dependent under an employee welfare plan including federal or state that provides health benefits that supplement the benefits under Medicare; and the plan terminates or the plan ceases to provide some or all such supplemental health benefits to the individual; or the individual is enrolled as an employee, retiree or dependent under an employee welfare benefit plan including federal or state that is primary to Medicare and the plan terminates or the plan ceases to provide some or all health benefit to the individual because the individual leaves the plan that individual would be eligible for Plans A, B, C or F offered by any issuer. The aforementioned situations set forth in this paragraph expand the guarantee issue requirements in the Balanced Budget Act.
- The individual is enrolled with a Medicare+Choice organization under a Medicare+Choice plan under part C of Medicare and the individual demonstrates that the organization offering the plan substantially violated a material provision of the organizationís contract under this part in relation to the individual, including the failure to provide an enrollee on a timely basis medically necessary care for which benefits are available under the plan or the failure to provide such covered care in accordance with applicable quality standards; or the organization, or agent or other entity acting on the organizationís behalf, materially misrepresented the planís provisions in marketing the plan to the individual; or the individual meets such other exceptional conditions as the Secretary of Health and Human Services may provide; or the organizationís or planís certification has been terminated or the organization has terminated or otherwise discontinued providing the plan in the area in which the individual resides or the individual is no longer eligible to elect the plan because of a change in the individualís place of residence or other change in circumstances but not including termination of the individualís enrollment when the individual has not paid premiums on a timely basis or has engaged in disruptive behavior or the plan is terminated for all individuals within a residence area that individual would be eligible for Plans A, B, C or F offered by any issuer.
- The individual is enrolled with an eligible organization under a contract of Medicare risk or cost; a similar organization operating under demonstration project authority, effective for periods before April 1, 1999; an organization under an agreement as a health care prepayment plan; or an organization under a Medicare Select policy; and the enrollment ceases under the same circumstances that would permit discontinuance of an individualís election of coverage under the first sentence of Section 1851(e)(4) of the Federal Social Security Act that individual would be eligible for Plans A, B, C or F offered by any issuer.
- The individual is enrolled under Medicare supplement policy and the enrollment ceases because of the insolvency of the issuer or bankruptcy of the nonissuer organization; or of other involuntary termination of coverage or enrollment under the policy; the issuer of the policy substantially violated a material provision of the policy; or the issuer, or an agent or other entity acting on the issuerís behalf, materially misrepresented the policyís provisions in marketing the policy to the individual that individual would be eligible for Plans A, B, C or F offered by any issuer.
- The individual was enrolled under a Medicare supplement policy and terminates enrollment and subsequently enrolls, for the first time, with any Medicare+Choice organization under a Medicare+Choice plan under part C of Medicare, any eligible organization under a Medicare risk or cost contract, any similar organization operating under demonstration project authority, an organization under an agreement under a health care prepayment plan, or a Medicare Select policy; and the subsequent enrollment is terminated by the enrollee during any period within the first twelve (12) months of such subsequent enrollment that individual is eligible for the same Medicare supplement policy in which the individual was most recently previously enrolled, if available from the same issuer, or , if not so available, Plans A, B, C or F offered by any issuer.
- The individual, upon first becoming enrolled in Medicare Part B for benefits enrolls in a Medicare+Choice plan under part C of Medicare, and disenrolls from the plan by not later than twelve (12) months after the effective date of enrollment that individual is eligible for any Medicare supplement policy offered by any issuer.
- The individual who loses eligibility for health benefits under Title XIX of the Social Security Act (Medicaid) shall be eligible for any Medicare supplement policy offered by any issuer. These individuals are not specifically set forth in the Balanced Budget Act but are guaranteed issue eligible individuals with the proposed changes to K.A.R. 40-4-35.
Regardless of when State laws and regulations come into conformity with the Federal requirements, section 1882(s)(4) contains a Federal civil monetary penalty that can be imposed independently of any State enforcement mechanisms. It is essential for Medigap issuers to understand that the Federal guaranteed issue requirements added to section 1882(s) by the Balanced Budget Act, as well as the Federal civil money penalty enforcement authority in section 1882(s)(4), apply to all Medigap issuers as of the statutory effective date, July 1, 1998.
Any questions regarding this bulletin may be directed to the Kansas Insurance Department, Accident and Health Division, 420 SW 9th Street, Topeka, Kansas 66612, (785) 296-7850.