Title 3 . Commerce, Community, and Economic Development

Chapter 28 . Miscellaneous

Section 450. Medicare supplement minimum standards for policies or certificates issued before 7/1/92

3 AAC 28.450. Medicare supplement minimum standards for policies or certificates issued before 7/1/92

(a) A medicare supplement policy or certificate issued before 7/1/92 may not be advertised, solicited, or issued for delivery in this state, unless it meets the following minimum policy or certificate standards:

(1) a loss incurred more than six months after the effective date of coverage for a preexisting condition must be covered;

(2) "preexisting condition" may not be more restrictively defined than a condition for which medical advice was given or treatment was recommended by or received from a physician within six months before the effective date of coverage;

(3) limitations of coverage with respect to preexisting conditions must appear as a separate paragraph in the policy or certificate and be labeled as "Preexisting Condition Limitations";

(4) a sickness may not be covered on a different basis than a loss resulting from an accident;

(5) benefits designed to cover cost-sharing amounts under medicare must be changed automatically to coincide with any changes in the applicable medicare deductible amount and copayment percentage factors, and the premiums charged may be changed to correspond with these changes;

(6) cancellation or nonrenewal may not be based solely on deterioration of health;

(7) other than for the nonpayment of premium, coverage provided to the spouse of the named insured through the same policy or certificate may not be cancelled or nonrenewed solely because of an occurrence or event that results in the termination of the named insured's coverage;

(8) renewal, continuation, or nonrenewal provisions must be contained in the policy or certificate;

(9) except for a rider or an endorsement by which the insurer effectuates a request made in writing by an insured who exercises a specifically reserved right under a medicare supplement policy or certificate, or a rider or an endorsement that is required to reduce or eliminate benefits to avoid duplication of medicare benefits, a rider or an endorsement added to a medicare supplement policy or certificate after the date of issue or at reinstatement or renewal that reduces or eliminates benefits or coverage in the policy or certificate requires a signed acceptance by the insured; after the date of policy issuance, a rider or an endorsement that increases benefits or coverage with a concomitant increase in premium during the policy term must be agreed to in written form, signed by the insured, unless the benefits are required by the minimum standards for a medicare supplement insurance policy or certificate, or the increased benefits or coverage are required by law; if a separate, additional, premium is charged for benefits provided in connection with a rider or an endorsement, that premium charge shall be set out in the policy or certificate;

(10) termination must be without prejudice to any continuous loss that commenced while coverage was in force, but the extension of benefits beyond the period during which the policy or certificate is in force may be predicated upon the continuous total disability of the insured and may be limited to the duration of the benefit period for payment of the maximum benefits; receipt of medicare Part D benefits may not be considered in determining a continuous loss;

(11) if benefits are based on standards described as "usual and customary," "reasonable and customary," or words of similar import, the terms must be defined in the policy or certificate;

(12) the first page must notify the purchaser that the policy or certificate may be unconditionally returned within 30 days after its delivery and the premium will be refunded;

(13) repealed 8/8/90.

(b) A medicare supplement policy issued before 7/1/92 may not be advertised, solicited, or issued for delivery in this state unless it meets the following minimum benefit standards:

(1) coverage of medicare Part A 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 of medicare Part A eligible expenses incurred as daily hospital charges during use of medicare's lifetime hospital inpatient reserve days;

(3) upon exhaustion of all medicare hospital inpatient coverage, including the lifetime reserve days, coverage of 90 percent of all medicare Part A eligible expenses for hospitalization not covered by medicare, subject to a lifetime maximum benefit of an additional 365 days;

(4) coverage of 20 percent of the amount of medicare eligible expenses under Part B regardless of hospital confinement, subject to a maximum calendar-year out-of-pocket deductible of $200 of these expenses and to a maximum benefit of at least $5,000 per calendar year;

(5) coverage for either all or none of the medicare Part A inpatient hospital deductible amount;

(6) coverage under medicare Part A 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 medicare Part B;

(7) coverage for the coinsurance amount, or in the case of hospital outpatient department services paid under a prospective payment system, the copayment amount, of the medicare-eligible expenses under medicare Part B, regardless of hospital confinement of medicare-eligible expenses under medicare Part B, regardless of hospital confinement, subject to a maximum calendar year out-of-pocket amount equal to the medicare Part B deductible; and

(8) 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.

(c) The standards enumerated in (a) and (b) of this section are required minimum standards and do not prohibit additional provisions or benefits that are not inconsistent with these standards.

(d) Except as authorized by the director of insurance, an insurer shall neither cancel nor nonrenew a medicare supplement policy for any reason other than nonpayment of premium or material misrepresentation.

(e) Payment by insurers of benefits for medicare-eligible expenses may be conditioned upon the same less restrictive payment conditions, including determinations of medical necessity, as are applicable to medicare claims.

(f) If a group policyholder terminates its group medicare supplement insurance policy and does not replace the group policy as described in (h) of this section, the issuer shall offer each certificate holder in the group an individual medicare supplement policy. The issuer shall offer the certificate holder an individual medicare supplement policy that, at the option of the certificate holder,

(1) provides for continuation of the benefits contained in the group policy; or

(2) provides only the benefits that are required to meet the minimum standards listed in (a) of this section.

(g) If a certificate holder's coverage in a group medicare supplement insurance policy is terminated, the issuer shall

(1) offer the certificate holder the option to convert to an individual policy that meets the minimum standards listed in (a) of this section; or

(2) at the option of the group policyholder, offer the certificate holder continuation of coverage under the group policy.

(h) If a group policyholder replaces its group medicare supplement policy with another group medicare supplement policy, the issuer of the replacement policy shall offer coverage to all persons covered under the old group policy on its date of termination. The issuer of the replacement policy may not exclude coverage under the new group policy for a preexisting condition that would have been covered under the group policy that is being replaced.

(i) If an issuer modifies a medicare supplement policy to remove an outpatient prescription benefit as a result of requirements imposed by P.L. 108 - 173 (Medicare Prescription Drug, Improvement, and Modernization Act of 2003), the issuer's renewal of the modified policy satisfies the guaranteed renewal requirements in this section.

History: Eff. 3/26/82, Register 81; am 8/8/90, Register 115; am 7/1/92, Register 122; am 9/17/2003, Register 167; am 9/4/2005, Register 175

Authority: AS 21.06.090

AS 21.42.130

AS 21.89.060