Bulletin 1998-6

Kansas Insurance Department

Kathleen Sebelius, Commissioner of Insurance

To: Medicare Supplement Insurers

Subject: Medicare Supplement Sales to Persons Under Age 65

Date: April 8, 1998

It has come to the attention of the Kansas Insurance Department that some Medicare Supplement insurers are indirectly attempting to deny coverage to disabled individuals under age 65 who become eligible for Medicare Part B. These practices are designed to avoid the guarantee issue requirements of Kansas Insurance Department regulation 40-4-35. Such activities will be considered an unfair trade practice as defined in K.S.A. 40-404(7)(b). Examples of practices which have been reported to the Department include but are not limited to:

(a) The reduction or denial of commissions to agents who make application for coverage on behalf of disabled individuals under the age of 65. Commissions on sales of Medicare Supplement insurance to disabled individuals under the age of 65 should be equal to the commissions on sales to individuals age 65.

(b) Insurers making a record of agents and brokers that make applications for coverage on behalf of disabled individuals under age 65. These records could be the basis for retribution against the agent.

(c) The use of delay tactics in processing applications from "disabled individuals under age 65". As a result of such tactics, the applicant seeks coverage with another Medicare supplement insurer.

This list illustrates some but not all of the ways in which Medicare Supplement insurers may try to discourage disabled individuals under the age 65 from obtaining coverage from the insurer. These practices are contrary to the guarantee issue provisions of K.A.R. 40-4-35. When these or other practices are brought to the attention of the Kansas Insurance Department, the insurer will be subject to the provisions of K.S.A. 40-2407, which provides for monetary fines, penalties, and orders from the Commissioner of Insurance to cease and desist such unfair practices.

In order to determine the number of disabled individuals under the age of 65 who are currently covered under a Medicare Supplement policy, we would appreciate your company providing us with the total number of Medicare Supplement policies currently issued to disabled individuals as of April 1, 1998. Please provide this information in writing within fifteen (15) days upon receipt of this Bulletin.

If you have any questions or comments regarding this Bulletin, please contact the Accident and Health Division of the Kansas Insurance Department, 420 SW 9th Street, Topeka, Kansas 66612, (785) 296-7850 or You may send e-mail to rhuncker@ink.org.