42 U.S.C. § 1395ss : US Code - Section 1395SS: Certification of medicare supplemental health insurance policies

Search 42 U.S.C. § 1395ss : US Code - Section 1395SS: Certification of medicare supplemental health insurance policies

(a) Submission of policy by insurer
(1) The Secretary shall establish a procedure whereby medicare
supplemental policies (as defined in subsection (g)(1) of this
section) may be certified by the Secretary as meeting minimum
standards and requirements set forth in subsection (c) of this
section. Such procedure shall provide an opportunity for any
insurer to submit any such policy, and such additional data as the
Secretary finds necessary, to the Secretary for his examination and
for his certification thereof as meeting the standards and
requirements set forth in subsection (c) of this section. Subject
to subsections (k)(3), (m), and (n) of this section, such
certification shall remain in effect if the insurer files a
notarized statement with the Secretary no later than June 30 of
each year stating that the policy continues to meet such standards
and requirements and if the insurer submits such additional data as
the Secretary finds necessary to independently verify the accuracy
of such notarized statement. Where the Secretary determines such a
policy meets (or continues to meet) such standards and
requirements, he shall authorize the insurer to have printed on
such policy (but only in accordance with such requirements and
conditions as the Secretary may prescribe) an emblem which the
Secretary shall cause to be designed for use as an indication that
a policy has received the Secretary's certification. The Secretary
shall provide each State commissioner or superintendent of
insurance with a list of all the policies which have received his
certification.
(2) No medicare supplemental policy may be issued in a State on
or after the date specified in subsection (p)(1)(C) of this section
unless -
(A) the State's regulatory program under subsection (b)(1) of
this section provides for the application and enforcement of the
standards and requirements set forth in such subsection
(including the 1991 NAIC Model Regulation or 1991 Federal
Regulation (as the case may be)) by the date specified in
subsection (p)(1)(C) of this section; or
(B) if the State's program does not provide for the application
and enforcement of such standards and requirements, the policy
has been certified by the Secretary under paragraph (1) as
meeting the standards and requirements set forth in subsection
(c) of this section (including such applicable standards) by such
date.
Any person who issues a medicare supplemental policy, on and after
the effective date specified in subsection (p)(1)(C) of this
section, in violation of this paragraph is subject to a civil money
penalty of not to exceed $25,000 for each such violation. The
provisions of section 1320a-7a of this title (other than the first
sentence of subsection (a) and other than subsection (b)) shall
apply to a civil money penalty under the previous sentence in the
same manner as such provisions apply to a penalty or proceeding
under section 1320a-7a(a) of this title.
(b) Standards and requirements; periodic review by Secretary
(1) Any medicare supplemental policy issued in any State which
the Secretary determines has established under State law a
regulatory program that -
(A) provides for the application and enforcement of standards
with respect to such policies equal to or more stringent than the
NAIC Model Standards (as defined in subsection (g)(2)(A) of this
section), except as otherwise provided by subparagraph (H);
(B) includes requirements equal to or more stringent than the
requirements described in paragraphs (2) through (5) of
subsection (c) of this section;
(C) provides that -
(i) information with respect to the actual ratio of benefits
provided to premiums collected under such policies will be
reported to the State on forms conforming to those developed by
the National Association of Insurance Commissioners for such
purpose, or
(ii) such ratios will be monitored under the program in an
alternative manner approved by the Secretary, and that a copy
of each such policy, the most recent premium for each such
policy, and a listing of the ratio of benefits provided to
premiums collected for the most recent 3-year period for each
such policy issued or sold in the State is maintained and made
available to interested persons;
(D) provides for application and enforcement of the standards
and requirements described in subparagraphs (A), (B), and (C) to
all medicare supplemental policies (as defined in subsection
(g)(1) of this section) issued in such State,
(E) provides the Secretary periodically (but at least annually)
with a list containing the name and address of the issuer of each
such policy and the name and number of each such policy
(including an indication of policies that have been previously
approved, newly approved, or withdrawn from approval since the
previous list was provided),
(F) reports to the Secretary on the implementation and
enforcement of standards and requirements of this paragraph at
intervals established by the Secretary,
(G) provides for a process for approving or disapproving
proposed premium increases with respect to such policies, and
establishes a policy for the holding of public hearings prior to
approval of a premium increase, and
(H) in the case of a policy that meets the standards under
subparagraph (A) except that benefits under the policy are
limited to items and services furnished by certain entities (or
reduced benefits are provided when items or services are
furnished by other entities), provides for the application of
requirements equal to or more stringent than the requirements
under subsection (t) of this section,
shall be deemed (subject to subsections (k)(3), (m), and (n) of
this section, for so long as the Secretary finds that such State
regulatory program continues to meet the standards and requirements
of this paragraph) to meet the standards and requirements set forth
in subsection (c) of this section. Each report required under
subparagraph (F) shall include information on loss ratios of
policies sold in the State, frequency and types of instances in
which policies approved by the State fail to meet the standards and
requirements of this paragraph, actions taken by the State to bring
such policies into compliance, information regarding State programs
implementing consumer protection provisions, and such further
information as the Secretary in consultation with the National
Association of Insurance Commissioners may specify.
(2) The Secretary periodically shall review State regulatory
programs to determine if they continue to meet the standards and
requirements specified in paragraph (1). If the Secretary finds
that a State regulatory program no longer meets the standards and
requirements, before making a final determination, the Secretary
shall provide the State an opportunity to adopt such a plan of
correction as would permit the State regulatory program to continue
to meet such standards and requirements. If the Secretary makes a
final determination that the State regulatory program, after such
an opportunity, fails to meet such standards and requirements, the
program shall no longer be considered to have in operation a
program meeting such standards and requirements.
(3) Notwithstanding paragraph (1), a medicare supplemental policy
offered in a State shall not be deemed to meet the standards and
requirements set forth in subsection (c) of this section, with
respect to an advertisement (whether through written, radio, or
television medium) used (or, at a State's option, to be used) for
the policy in the State, unless the entity issuing the policy
provides a copy of each advertisement to the Commissioner of
Insurance (or comparable officer identified by the Secretary) of
that State for review or approval to the extent it may be required
under State law.
(c) Requisite findings
The Secretary shall certify under this section any medicare
supplemental policy, or continue certification of such a policy,
only if he finds that such policy (or, with respect to paragraph
(3) or the requirement described in subsection (s) of this section,
the issuer of the policy) -
(1) meets or exceeds (either in a single policy or, in the case
of nonprofit hospital and medical service associations, in one or
more policies issued in conjunction with one another) the NAIC
Model Standards (except as otherwise provided by subsection (t)
of this section);
(2) meets the requirements of subsection (r) of this section;
(3)(A) accepts a notice under section 1395u(h)(3)(B) of this
title as a claim form for benefits under such policy in lieu of
any claim form otherwise required and agrees to make a payment
determination on the basis of the information contained in such
notice;
(B) where such a notice is received -
(i) provides notice to such physician or supplier and the
beneficiary of the payment determination under the policy, and
(ii) provides any payment covered by such policy directly to
the participating physician or supplier involved;
(C) provides each enrollee at the time of enrollment a card
listing the policy name and number and a single mailing address
to which notices under section 1395u(h)(3)(B) of this title
respecting the policy are to be sent;
(D) agrees to pay any user fees established under section
1395u(h)(3)(B) of this title with respect to information
transmitted to the issuer of the policy; and
(E) provides to the Secretary at least annually, for
transmittal to carriers, a single mailing address to which
notices under section 1395u(h)(3)(B) of this title respecting the
policy are to be sent;
(4) may, during a period of not less than 30 days after the
policy is issued, be returned for a full refund of any premiums
paid (without regard to the manner in which the purchase of the
policy was solicited); and
(5) meets the applicable requirements of subsections (o)
through (t) of this section.
(d) Criminal penalties; civil penalties for certain violations
(1) Whoever knowingly and willfully makes or causes to be made or
induces or seeks to induce the making of any false statement or
representation of a material fact with respect to the compliance of
any policy with the standards and requirements set forth in
subsection (c) of this section or in regulations promulgated
pursuant to such subsection, or with respect to the use of the
emblem designed by the Secretary under subsection (a) of this
section, shall be fined under title 18 or imprisoned not more than
5 years, or both, and, in addition to or in lieu of such a criminal
penalty, is subject to a civil money penalty of not to exceed
$5,000 for each such prohibited act.
(2) Whoever falsely assumes or pretends to be acting, or
misrepresents in any way that he is acting, under the authority of
or in association with, the program of health insurance established
by this subchapter, or any Federal agency, for the purpose of
selling or attempting to sell insurance, or in such pretended
character demands, or obtains money, paper, documents, or anything
of value, shall be fined under title 18 or imprisoned not more than
5 years, or both, and, in addition to or in lieu of such a criminal
penalty, is subject to a civil money penalty of not to exceed
$5,000 for each such prohibited act.
(3)(A)(i) It is unlawful for a person to sell or issue to an
individual entitled to benefits under part A of this subchapter or
enrolled under part B of this subchapter (including an individual
electing a Medicare+Choice plan under section 1395w-21 of this
title) -
(I) a health insurance policy with knowledge that the policy
duplicates health benefits to which the individual is otherwise
entitled under this subchapter or subchapter XIX of this chapter,
(II) in the case of an individual not electing a
Medicare+Choice plan, a medicare supplemental policy with
knowledge that the individual is entitled to benefits under
another medicare supplemental policy or in the case of an
individual electing a Medicare+Choice plan, a medicare
supplemental policy with knowledge that the policy duplicates
health benefits to which the individual is otherwise entitled
under the Medicare+Choice plan or under another medicare
supplemental policy, or
(III) a health insurance policy (other than a medicare
supplemental policy) with knowledge that the policy duplicates
health benefits to which the individual is otherwise entitled,
other than benefits to which the individual is entitled under a
requirement of State or Federal law.
(ii) Whoever violates clause (i) shall be fined under title 18 or
imprisoned not more than 5 years, or both, and, in addition to or
in lieu of such a criminal penalty, is subject to a civil money
penalty of not to exceed $25,000 (or $15,000 in the case of a
person other than the issuer of the policy) for each such
prohibited act.
(iii) A seller (who is not the issuer of a health insurance
policy) shall not be considered to violate clause (i)(II) with
respect to the sale of a medicare supplemental policy if the policy
is sold in compliance with subparagraph (B).
(iv) For purposes of this subparagraph, a health insurance policy
(other than a Medicare supplemental policy) providing for benefits
which are payable to or on behalf of an individual without regard
to other health benefit coverage of such individual is not
considered to "duplicate" any health benefits under this
subchapter, under subchapter XIX of this chapter, or under a health
insurance policy, and subclauses (I) and (III) of clause (i) do not
apply to such a policy.
(v) For purposes of this subparagraph, a health insurance policy
(or a rider to an insurance contract which is not a health
insurance policy) is not considered to "duplicate" health benefits
under this subchapter or under another health insurance policy if
it -
(I) provides health care benefits only for long-term care,
nursing home care, home health care, or community-based care, or
any combination thereof,
(II) coordinates against or excludes items and services
available or paid for under this subchapter or under another
health insurance policy, and
(III) for policies sold or issued on or after the end of the 90-
day period beginning on August 21, 1996, discloses such
coordination or exclusion in the policy's outline of coverage.
For purposes of this clause, the terms "coordinates" and
"coordination" mean, with respect to a policy in relation to health
benefits under this subchapter or under another health insurance
policy, that the policy under its terms is secondary to, or
excludes from payment, items and services to the extent available
or paid for under this subchapter or under another health insurance
policy.
(vi)(I) An individual entitled to benefits under part A of this
subchapter or enrolled under part B of this subchapter who is
applying for a health insurance policy (other than a policy
described in subclause (III)) shall be furnished a disclosure
statement described in clause (vii) for the type of policy being
applied for. Such statement shall be furnished as a part of (or
together with) the application for such policy.
(II) Whoever issues or sells a health insurance policy (other
than a policy described in subclause (III)) to an individual
described in subclause (I) and fails to furnish the appropriate
disclosure statement as required under such subclause shall be
fined under title 18, or imprisoned not more than 5 years, or both,
and, in addition to or in lieu of such a criminal penalty, is
subject to a civil money penalty of not to exceed $25,000 (or
$15,000 in the case of a person other than the issuer of the
policy) for each such violation.
(III) A policy described in this subclause (to which subclauses
(I) and (II) do not apply) is a Medicare supplemental policy, a
policy described in clause (v), or a health insurance policy
identified under 60 Federal Register 30880 (June 12, 1995) as a
policy not required to have a disclosure statement.
(IV) Any reference in this section to the revised NAIC model
regulation (referred to in subsection (m)(1)(A) of this section) is
deemed a reference to such regulation as revised by section
171(m)(2) of the Social Security Act Amendments of 1994 (Public Law
103-432) and as modified by substituting, for the disclosure
required under section 16D(2), disclosure under subclause (I) of an
appropriate disclosure statement under clause (vii).
(vii) The disclosure statement described in this clause for a
type of policy is the statement specified under subparagraph (D) of
this paragraph (as in effect before August 21, 1996) for that type
of policy, as revised as follows:
(I) In each statement, amend the second line to read as
follows:
"THIS IS NOT MEDICARE SUPPLEMENT
INSURANCE".
(II) In each statement, strike the third line and insert the
following: "Some health care services paid for by Medicare may
also trigger the payment of benefits under this policy.".
(III) In each statement not described in subclause (V), strike
the boldface matter that begins "This insurance" and all that
follows up to the next paragraph that begins "Medicare".
(IV) In each statement not described in subclause (V), insert
before the boxed matter (that states "Before You Buy This
Insurance") the following: "This policy must pay benefits without
regard to other health benefit coverage to which you may be
entitled under Medicare or other insurance.".
(V) In a statement relating to policies providing both nursing
home and non-institutional coverage, to policies providing
nursing home benefits only, or policies providing home care
benefits only, amend the sentence that begins "Federal law" to
read as follows: "Federal law requires us to inform you that in
certain situations this insurance may pay for some care also
covered by Medicare.".
(viii)(I) Subject to subclause (II), nothing in this subparagraph
shall restrict or preclude a State's ability to regulate health
insurance policies, including any health insurance policy that is
described in clause (iv), (v), or (vi)(III).
(II) A State may not declare or specify, in statute, regulation,
or otherwise, that a health insurance policy (other than a Medicare
supplemental policy) or rider to an insurance contract which is not
a health insurance policy, that is described in clause (iv), (v),
or (vi)(III) and that is sold, issued, or renewed to an individual
entitled to benefits under part A of this subchapter or enrolled
under part B of this subchapter "duplicates" health benefits under
this subchapter or under a Medicare supplemental policy.
(B)(i) It is unlawful for a person to issue or sell a medicare
supplemental policy to an individual entitled to benefits under
part A of this subchapter or enrolled under part B of this
subchapter, whether directly, through the mail, or otherwise,
unless -
(I) the person obtains from the individual, as part of the
application for the issuance or purchase and on a form described
in clause (ii), a written statement signed by the individual
stating, to the best of the individual's knowledge, what health
insurance policies (including any Medicare+Choice plan) the
individual has, from what source, and whether the individual is
entitled to any medical assistance under subchapter XIX of this
chapter, whether as a qualified medicare beneficiary or
otherwise, and
(II) the written statement is accompanied by a written
acknowledgment, signed by the seller of the policy, of the
request for and receipt of such statement.
(ii) The statement required by clause (i) shall be made on a form
that -
(I) states in substance that a medicare-eligible individual
does not need more than one medicare supplemental policy,
(II) states in substance that individuals may be eligible for
benefits under the State medicaid program under subchapter XIX of
this chapter and that such individuals who are entitled to
benefits under that program usually do not need a medicare
supplemental policy and that benefits and premiums under any such
policy shall be suspended upon request of the policyholder during
the period (of not longer than 24 months) of entitlement to
benefits under such subchapter and may be reinstituted upon loss
of such entitlement, and
(III) states that counseling services may be available in the
State to provide advice concerning the purchase of medicare
supplemental policies and enrollment under the medicaid program
and may provide the telephone number for such services.
(iii)(I) Except as provided in subclauses (II) and (III), if the
statement required by clause (i) is not obtained or indicates that
the individual has a medicare supplemental policy or indicates that
the individual is entitled to any medical assistance under
subchapter XIX of this chapter, the sale of a medicare supplemental
policy shall be considered to be a violation of subparagraph (A).
(II) Subclause (I) shall not apply in the case of an individual
who has a medicare supplemental policy, if the individual indicates
in writing, as part of the application for purchase, that the
policy being purchased replaces such other policy and indicates an
intent to terminate the policy being replaced when the new policy
becomes effective and the issuer or seller certifies in writing
that such policy will not, to the best of the issuer's or seller's
knowledge, duplicate coverage (taking into account any such
replacement).
(III) If the statement required by clause (i) is obtained and
indicates that the individual is entitled to any medical assistance
under subchapter XIX of this chapter, the sale of the policy is not
in violation of clause (i) (insofar as such clause relates to such
medical assistance), if (aa) a State medicaid plan under such
subchapter pays the premiums for the policy, (bb) in the case of a
qualified medicare beneficiary described in section 1396d(p)(1) of
this title, the policy provides for coverage of outpatient
prescription drugs, or (cc) the only medical assistance to which
the individual is entitled under the State plan is medicare cost
sharing described in section 1396d(p)(3)(A)(ii) of this title.
(iv) Whoever issues or sells a medicare supplemental policy in
violation of this subparagraph shall be fined under title 18, or
imprisoned not more than 5 years, or both, and, in addition to or
in lieu of such a criminal penalty, is subject to a civil money
penalty of not to exceed $25,000 (or $15,000 in the case of a
seller who is not the issuer of a policy) for each such violation.
(C) Subparagraph (A) shall not apply with respect to the sale or
issuance of a group policy or plan of one or more employers or
labor organizations, or of the trustees of a fund established by
one or more employers or labor organizations (or combination
thereof), for employees or former employees (or combination
thereof) or for members or former members (or combination thereof)
of the labor organizations.
(4)(A) Whoever knowingly, directly or through his agent, mails or
causes to be mailed any matter for a prohibited purpose (as
determined under subparagraph (B)) shall be fined under title 18 or
imprisoned not more than 5 years, or both, and, in addition to or
in lieu of such a criminal penalty, is subject to a civil money
penalty of not to exceed $5,000 for each such prohibited act.
(B) For purposes of subparagraph (A), a prohibited purpose means
the advertising, solicitation, or offer for sale of a medicare
supplemental policy, or the delivery of such a policy, in or into
any State in which such policy has not been approved by the State
commissioner or superintendent of insurance.
(C) Subparagraph (A) shall not apply in the case of a person who
mails or causes to be mailed a medicare supplemental policy into a
State if such person has ascertained that the party insured under
such policy to whom (or on whose behalf) such policy is mailed is
located in such State on a temporary basis.
(D) Subparagraph (A) shall not apply in the case of a person who
mails or causes to be mailed a duplicate copy of a medicare
supplemental policy previously issued to the party to whom (or on
whose behalf) such duplicate copy is mailed.
(E) Subparagraph (A) shall not apply in the case of an issuer who
mails or causes to be mailed a policy, certificate, or other matter
solely to comply with the requirements of subsection (q) of this
section.
(5) The provisions of section 1320a-7a of this title (other than
subsections (a) and (b)) shall apply to civil money penalties under
paragraphs (1), (2), (3)(A), and (4)(A) in the same manner as such
provisions apply to penalties and proceedings under section 1320a-
7a(a) of this title.
(e) Dissemination of information
(1) The Secretary shall provide to all individuals entitled to
benefits under this subchapter (and, to the extent feasible, to
individuals about to become so entitled) such information as will
permit such individuals to evaluate the value of medicare
supplemental policies to them and the relationship of any such
policies to benefits provided under this subchapter.
(2) The Secretary shall -
(A) inform all individuals entitled to benefits under this
subchapter (and, to the extent feasible, individuals about to
become so entitled) of -
(i) the actions and practices that are subject to sanctions
under subsection (d) of this section, and
(ii) the manner in which they may report any such action or
practice to an appropriate official of the Department of Health
and Human Services (or to an appropriate State official), and
(B) publish the toll-free telephone number for individuals to
report suspected violations of the provisions of such subsection.
(3) The Secretary shall provide individuals entitled to benefits
under this subchapter (and, to the extent feasible, individuals
about to become so entitled) with a listing of the addresses and
telephone numbers of State and Federal agencies and offices that
provide information and assistance to individuals with respect to
the selection of medicare supplemental policies.
(f) Study and evaluation of comparative effectiveness of various
State approaches to regulating medicare supplemental policies;
report to Congress no later than January 1, 1982; periodic
evaluations
(1)(A) The Secretary shall, in consultation with Federal and
State regulatory agencies, the National Association of Insurance
Commissioners, private insurers, and organizations representing
consumers and the aged, conduct a comprehensive study and
evaluation of the comparative effectiveness of various State
approaches to the regulation of medicare supplemental policies in
(i) limiting marketing and agent abuse, (ii) assuring the
dissemination of such information to individuals entitled to
benefits under this subchapter (and to other consumers) as is
necessary to permit informed choice, (iii) promoting policies which
provide reasonable economic benefits for such individuals, (iv)
reducing the purchase of unnecessary duplicative coverage, (v)
improving price competition, and (vi) establishing effective
approved State regulatory programs described in subsection (b) of
this section.
(B) Such study shall also address the need for standards or
certification of health insurance policies, other than medicare
supplemental policies, sold to individuals eligible for benefits
under this subchapter.
(C) The Secretary shall, no later than January 1, 1982, submit a
report to the Congress on the results of such study and evaluation,
accompanied by such recommendations as the Secretary finds
warranted by such results with respect to the need for legislative
or administrative changes to accomplish the objectives set forth in
subparagraphs (A) and (B), including the need for a mandatory
Federal regulatory program to assure the marketing of appropriate
types of medicare supplemental policies, and such other means as he
finds may be appropriate to enhance effective State regulation of
such policies.
(2) The Secretary shall submit to the Congress no later than July
1, 1982, and periodically as may be appropriate thereafter (but not
less often than once every 2 years), a report evaluating the
effectiveness of the certification procedure and the criminal
penalties established under this section, and shall include in such
reports an analysis of -
(A) the impact of such procedure and penalties on the types,
market share, value, and cost to individuals entitled to benefits
under this subchapter of medicare supplemental policies which
have been certified by the Secretary;
(B) the need for any change in the certification procedure to
improve its administration or effectiveness; and
(C) whether the certification program and criminal penalties
should be continued.
(3) The Secretary shall provide information via a toll-free
telephone number on medicare supplemental policies (including the
relationship of State programs under subchapter XIX of this chapter
to such policies).
(g) Definitions
(1) For purposes of this section, a medicare supplemental policy
is a health insurance policy or other health benefit plan offered
by a private entity to individuals who are entitled to have payment
made under this subchapter, which provides reimbursement for
expenses incurred for services and items for which payment may be
made under this subchapter but which are not reimbursable by reason
of the applicability of deductibles, coinsurance amounts, or other
limitations imposed pursuant to this subchapter; but does not
include a prescription drug plan under part D of this subchapter or
a Medicare+Choice plan or any such policy or plan of one or more
employers or labor organizations, or of the trustees of a fund
established by one or more employers or labor organizations (or
combination thereof), for employees or former employees (or
combination thereof) or for members or former members (or
combination thereof) of the labor organizations and does not
include a policy or plan of an eligible organization (as defined in
section 1395mm(b) of this title) if the policy or plan provides
benefits pursuant to a contract under section 1395mm of this title
or an approved demonstration project described in section 603(c) of
the Social Security Amendments of 1983, section 2355 of the Deficit
Reduction Act of 1984, or section 9412(b) of the Omnibus Budget
Reconciliation Act of 1986, or a policy or plan of an organization
if the policy or plan provides benefits pursuant to an agreement
under section 1395l(a)(1)(A) of this title. For purposes of this
section, the term "policy" includes a certificate issued under such
policy.
(2) For purposes of this section:
(A) The term "NAIC Model Standards" means the "NAIC Model
Regulation to Implement the Individual Accident and Sickness
Insurance Minimum Standards Act", adopted by the National
Association of Insurance Commissioners on June 6, 1979, as it
applies to medicare supplemental policies.
(B) The term "State with an approved regulatory program" means
a State for which the Secretary has made a determination under
subsection (b)(1) of this section.
(C) The State in which a policy is issued means -
(i) in the case of an individual policy, the State in which
the policyholder resides; and
(ii) in the case of a group policy, the State in which the
holder of the master policy resides.
(h) Rules and regulations
The Secretary shall prescribe such regulations as may be
necessary for the effective, efficient, and equitable
administration of the certification procedure established under
this section. The Secretary shall first issue final regulations to
implement the certification procedure established under subsection
(a) of this section not later than March 1, 1981.
(i) Commencement of certification program
(1) No medicare supplemental policy shall be certified and no
such policy may be issued bearing the emblem authorized by the
Secretary under subsection (a) of this section until July 1, 1982.
On and after such date policies certified by the Secretary may bear
such emblem, including policies which were issued prior to such
date and were subsequently certified, and insurers may notify
holders of such certified policies issued prior to such date using
such emblem in the notification.
(2)(A) The Secretary shall not implement the certification
program established under subsection (a) of this section with
respect to policies issued in a State unless the Panel makes a
finding that such State cannot be expected to have established, by
July 1, 1982, an approved State regulatory program meeting the
standards and requirements of subsection (b)(1) of this section. If
the Panel makes such a finding, the Secretary shall implement such
program under subsection (a) of this section with respect to
medicare supplemental policies issued in such State, until such
time as the Panel determines that such State has a program that
meets the standards and requirements of subsection (b)(1) of this
section.
(B) Any finding by the Panel under subparagraph (A) shall be
transmitted in writing, not later than January 1, 1982, to the
Committee on Finance of the Senate and to the Committee on Energy
and Commerce and the Committee on Ways and Means of the House of
Representatives and shall not become effective until 60 days after
the date of its transmittal to the Committees of the Congress under
this subparagraph. In counting such days, days on which either
House is not in session because of an adjournment sine die or an
adjournment of more than three days to a day certain are excluded
in the computation.
(j) State regulation of policies issued in other States
Nothing in this section shall be construed so as to affect the
right of any State to regulate medicare supplemental policies
which, under the provisions of this section, are considered to be
issued in another State.
(k) Amended NAIC Model Regulation or Federal model standards
applicable; effective date; medicare supplemental policy and
State regulatory program meeting applicable standards
(1)(A) If, within the 90-day period beginning on July 1, 1988,
the National Association of Insurance Commissioners (in this
subsection referred to as the "Association") amends the NAIC Model
Regulation adopted on June 6, 1979 (as it relates to medicare
supplemental policies), with respect to matters such as minimum
benefit standards, loss ratios, disclosure requirements, and
replacement requirements and provisions otherwise necessary to
reflect the changes in law made by the Medicare Catastrophic
Coverage Act of 1988, except as provided in subsection (m) of this
section, subsection (g)(2)(A) of this section shall be applied in a
State, effective on and after the date specified in subparagraph
(B), as if the reference to the Model Regulation adopted on June 6,
1979, were a reference to the Model Regulation as amended by the
Association in accordance with this paragraph (in this subsection
and subsection (l) of this section referred to as the "amended NAIC
Model Regulation").
(B) The date specified in this subparagraph for a State is the
earlier of the date the State adopts standards equal to or more
stringent than the amended NAIC Model Regulation or 1 year after
the date the Association first adopts such amended Regulation.
(2)(A) If the Association does not amend the NAIC Model
Regulation within the 90-day period specified in paragraph (1)(A),
the Secretary shall promulgate, not later than 60 days after the
end of such period, Federal model standards (in this subsection and
subsection (l) of this section referred to as "Federal model
standards") for medicare supplemental policies to reflect the
changes in law made by the Medicare Catastrophic Coverage Act of
1988, and subsection (g)(2)(A) of this section shall be applied in
a State, effective on and after the date specified in subparagraph
(B), as if the reference to the Model Regulation adopted on June 6,
1979, were a reference to Federal model standards.
(B) The date specified in this subparagraph for a State is the
earlier of the date the State adopts standards equal to or more
stringent than the Federal model standards or 1 year after the date
the Secretary first promulgates such standards.
(3) Notwithstanding any other provision of this section (except
as provided in subsections (l), (m), and (n) of this section) -
(A) no medicare supplemental policy may be certified by the
Secretary pursuant to subsection (a) of this section,
(B) no certification made pursuant to subsection (a) of this
section shall remain in effect, and
(C) no State regulatory program shall be found to meet (or to
continue to meet) the requirements of subsection (b)(1)(A) of
this section,
unless such policy meets (or such program provides for the
application of standards equal to or more stringent than) the
standards set forth in the amended NAIC Model Regulation or the
Federal model standards (as the case may be) by the date specified
in paragraph (1)(B) or (2)(B) (as the case may be).
(l) Transitional compliance with NAIC Model Transition Regulation;
"qualifying medicare supplemental policy" and "NAIC Model
Transition Regulation" defined
(1) Until the date specified in paragraph (3), in the case of a
qualifying medicare supplemental policy described in paragraph (2)
issued -
(A) before January 1, 1989, the policy is deemed to remain in
compliance with this section if the insurer issuing the policy
complies with the NAIC Model Transition Regulation (including
giving notices to subscribers and filing for premium adjustments
with the State as described in section 5.B. of such Regulation)
by January 1, 1989; or
(B) on or after January 1, 1989, the policy is deemed to be in
compliance with this section if the insurer issuing the policy
complies with the NAIC Model Transition Regulation before the
date of the sale of the policy.
(2) In paragraph (1), the term "qualifying medicare supplemental
policy" means a medicare supplemental policy -
(A) issued in a State which -
(i) has not adopted standards equal to or more stringent than
the NAIC Model Transition Regulation by January 1, 1989, and
(ii) has not adopted standards equal to or more stringent
than the amended NAIC Model Regulation (or Federal model
standards) by January 1, 1989; and
(B) which has been issued in compliance with this section (as
in effect on June 1, 1988).
(3)(A) The date specified in this paragraph is the earlier of -
(i) the first date a State adopts, after January 1, 1989,
standards equal to or more stringent than the NAIC Model
Transition Regulation or equal to or more stringent than the
amended NAIC Model Regulation (or Federal model standards), as
the case may be, or
(ii) the later of (I) the date specified in subsection
(k)(1)(B) or (k)(2)(B) of this section (as the case may be), or
(II) the date specified in subparagraph (B).
(B) In the case of a State which the Secretary identifies as -
(i) requiring State legislation (other than legislation
appropriating funds) in order for medicare supplemental policies
to meet standards described in subparagraph (A)(i), but
(ii) having a legislature which is not scheduled to meet in
1989 in a legislative session in which such legislation may be
considered,
the date specified in this subparagraph is the first day of the
first calendar quarter beginning after the close of the first
legislative session of the State legislature that begins on or
after January 1, 1989, and in which legislation described in clause
(i) may be considered. For purposes of the previous sentence, in
the case of a State that has a 2-year legislative session, each
year of such session shall be deemed to be a separate regular
session of the State legislature.
(4) In the case of a medicare supplemental policy in effect on
January 1, 1989, and offered in a State which, as of such date -
(A) has adopted standards equal to or more stringent than the
amended NAIC Model Regulation (or Federal model standards), but
(B) does not have in effect standards equal to or more
stringent than the NAIC Model Transition Regulation (or otherwise
requiring notice substantially the same as the notice required in
section 5.B. of such Regulation),
the policy shall not be deemed to meet the standards in subsection
(c) of this section unless each individual who is entitled to
benefits under this subchapter and is a policyholder under such
policy on January 1, 1989, is sent such a notice in any appropriate
form by not later than January 31, 1989, that explains -
(A) the improved benefits under this subchapter contained in
the Medicare Catastrophic Coverage Act of 1988, and
(B) how these improvements affect the benefits contained in the
policies and the premium for the policy.
(5) In this subsection, the term "NAIC Model Transition
Regulation" refers to the standards contained in the "Model
Regulation to Implement Transitional Requirements for the
Conversion of Medicare Supplement Insurance Benefits and Premiums
to Conform to Medicare Program Revisions" (as adopted by the
National Association of Insurance Commissioners in September 1987).
(m) Revision of amended NAIC Model Regulation and amended Federal
model standards; effective dates; medicare supplemental policy
and State regulatory program meeting applicable standards
(1)(A) If, within the 90-day period beginning on December 13,
1989, the National Association of Insurance Commissioners (in this
subsection and subsection (n) of this section referred to as the
"Association") revises the amended NAIC Model Regulation (referred
to in subsection (k)(1)(A) of this section and adopted on September
20, 1988) to improve such regulation and otherwise to reflect the
changes in law made by the Medicare Catastrophic Coverage Repeal
Act of 1989, subsection (g)(2)(A) of this section shall be applied
in a State, effective on and after the date specified in
subparagraph (B), as if the reference to the Model Regulation
adopted on June 6, 1979, were a reference to the amended NAIC Model
Regulation (referred to in subsection (k)(1)(A) of this section) as
revised by the Association in accordance with this paragraph (in
this subsection and subsection (n) of this section referred to as
the "revised NAIC Model Regulation").
(B) The date specified in this subparagraph for a State is the
earlier of the date the State adopts standards equal to or more
stringent than the revised NAIC Model Regulation or 1 year after
the date the Association first adopts such revised Regulation.
(2)(A) If the Association does not revise the amended NAIC Model
Regulation, within the 90-day period specified in paragraph (1)(A),
the Secretary shall promulgate, not later than 60 days after the
end of such period, revised Federal model standards (in this
subsection and subsection (n) of this section referred to as
"revised Federal model standards") for medicare supplemental
policies to improve such standards and otherwise to reflect the
changes in law made by the Medicare Catastrophic Coverage Repeal
Act of 1989, subsection (g)(2)(A) of this section shall be applied
in a State, effective on and after the date specified in
subparagraph (B), as if the reference to the Model Regulation
adopted on June 6, 1979, were a reference to the revised Federal
model standards.
(B) The date specified in this subparagraph for a State is the
earlier of the date the State adopts standards equal to or more
stringent than the revised Federal model standards or 1 year after
the date the Secretary first promulgates such standards.
(3) Notwithstanding any other provision of this section (except
as provided in subsection (n) of this section) -
(A) no medicare supplemental policy may be certified by the
Secretary pursuant to subsection (a) of this section,
(B) no certification made pursuant to subsection (a) of this
section shall remain in effect, and
(C) no State regulatory program shall be found to meet (or to
continue to meet) the requirements of subsection (b)(1)(A) of
this section,
unless such policy meets (or such program provides for the
application of standards equal to or more stringent than) the
standards set forth in the revised NAIC Model Regulation or the
revised Federal model standards (as the case may be) by the date
specified in paragraph (1)(B) or (2)(B) (as the case may be).
(n) Transition compliance with revision of NAIC Model Regulation
and Federal model standards
(1) Until the date specified in paragraph (4), in the case of a
qualifying medicare supplemental policy described in paragraph (3)
issued in a State -
(A) before the transition deadline, the policy is deemed to
remain in compliance with the standards described in subsection
(b)(1)(A) of this section only if the insurer issuing the policy
complies with the transition provision described in paragraph
(2), or
(B) on or after the transition deadline, the policy is deemed
to be in compliance with the standards described in subsection
(b)(1)(A) of this section only if the insurer issuing the policy
complies with the revised NAIC Model Regulation or the revised
Federal model standards (as the case may be) before the date of
the sale of the policy.
In this paragraph, the term "transition deadline" means 1 year
after the date the Association adopts the revised NAIC Model
Regulation or 1 year after the date the Secretary promulgates
revised Federal model standards (as the case may be).
(2) The transition provision described in this paragraph is -
(A) such transition provision as the Association provides, by
not later than December 15, 1989, so as to provide for an
appropriate transition (i) to restore benefit provisions which
are no longer duplicative as a result of the changes in benefits
under this subchapter made by the Medicare Catastrophic Coverage
Repeal Act of 1989 and (ii) to eliminate the requirement of
payment for the first 8 days of coinsurance for extended care
services, or
(B) if the Association does not provide for a transition
provision by the date described in subparagraph (A), such
transition provision as the Secretary shall provide, by January
1, 1990, so as to provide for an appropriate transition described
in subparagraph (A).
(3) In paragraph (1), the term "qualifying medicare supplemental
policy" means a medicare supplemental policy which has been issued
in compliance with this section as in effect on the date before
December 13, 1989.
(4)(A) The date specified in this paragraph for a policy issued
in a State is -
(i) the first date a State adopts, after December 13, 1989,
standards equal to or more stringent than the revised NAIC Model
Regulation (or revised Federal model standards), as the case may
be, or
(ii) the date specified in subparagraph (B),
whichever is earlier.
(B) In the case of a State which the Secretary identifies, in
consultation with the Association, as -
(i) requiring State legislation (other than legislation
appropriating funds) in order for medicare supplemental policies
to meet standards described in subparagraph (A)(i), but
(ii) having a legislature which is not scheduled to meet in
1990 in a legislative session in which such legislation may be
considered,
the date specified in this subparagraph is the first day of the
first calendar quarter beginning after the close of the first
legislative session of the State legislature that begins on or
after January 1, 1990. For purposes of the previous sentence, in
the case of a State that has a 2-year legislative session, each
year of such session shall be deemed to be a separate regular
session of the State legislature.
(5) In the case of a medicare supplemental policy in effect on
January 1, 1990, the policy shall not be deemed to meet the
standards in subsection (c) of this section unless each individual
who is entitled to benefits under this subchapter and is a
policyholder or certificate holder under such policy on such date
is sent a notice in an appropriate form by not later than January
31, 1990, that explains -
(A) the changes in benefits under this subchapter effected by
the Medicare Catastrophic Coverage Repeal Act of 1989, and
(B) how these changes may affect the benefits contained in such
policy and the premium for the policy.
(6)(A) Except as provided in subparagraph (B), in the case of an
individual who had in effect, as of December 31, 1988, a medicare
supplemental 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 December 13, 1989, no
medicare supplemental policy of the insurer shall be deemed to meet
the standards in subsection (c) of this section unless the insurer -

(i) provides 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 in clause (ii), and
(ii) offers 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
the terms which (I) do not provide for any waiting period with
respect to treatment of pre-existing conditions, (II) provides
for coverage which is substantially equivalent to coverage in
effect before the date of such termination, and (III) provides
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
subparagraph (A)(ii) in the case of an individual who is a
policyholder or certificate holder in another medicare supplemental
policy as of December 13, 1989, if (as of January 1, 1990) the
individual is not subject to a waiting period with respect to
treatment of a pre-existing condition under such other policy.
(o) Requirements of group benefits; core group benefits; uniform
outline of coverage
The requirements of this subsection are as follows:
(1) Each medicare supplemental policy shall provide for
coverage of a group of benefits consistent with subsections (p),
(v), and (w) of this section.
(2) If the medicare supplemental policy provides for coverage
of a group of benefits other than the core group of basic
benefits described in subsection (p)(2)(B) of this section, the
issuer of the policy must make available to the individual a
medicare supplemental policy with only such core group of basic
benefits.
(3) The issuer of the policy has provided, before the sale of
the policy, an outline of coverage that uses uniform language and
format (including layout and print size) that facilitates
comparison among medicare supplemental policies and comparison
with medicare benefits.
(p) Standards for group benefits
(1)(A) If, within 9 months after November 5, 1990, the National
Association of Insurance Commissioners (in this subsection referred
to as the "Association") changes the revised NAIC Model Regulation
(described in subsection (m) of this section) to incorporate -
(i) limitations on the groups or packages of benefits that may
be offered under a medicare supplemental policy consistent with
paragraphs (2) and (3) of this subsection,
(ii) uniform language and definitions to be used with respect
to such benefits,
(iii) uniform format to be used in the policy with respect to
such benefits, and
(iv) other standards to meet the additional requirements
imposed by the amendments made by the Omnibus Budget
Reconciliation Act of 1990,
subsection (g)(2)(A) of this section shall be applied in each
State, effective for policies issued to policyholders on and after
the date specified in subparagraph (C), as if the reference to the
Model Regulation adopted on June 6, 1979, were a reference to the
revised NAIC Model Regulation as changed under this subparagraph
(such changed regulation referred to in this section as the "1991
NAIC Model Regulation").
(B) If the Association does not make the changes in the revised
NAIC Model Regulation within the 9-month period specified in
subparagraph (A), the Secretary shall promulgate, not later than 9
months after the end of such period, a regulation and subsection
(g)(2)(A) of this section shall be applied in each State, effective
for policies issued to policyholders on and after the date
specified in subparagraph (C), as if the reference to the Model
Regulation adopted on June 6, 1979, were a reference to the revised
NAIC Model Regulation as changed by the Secretary under this
subparagraph (such changed regulation referred to in this section
as the "1991 Federal Regulation").
(C)(i) Subject to clause (ii), the date specified in this
subparagraph for a State is the date the State adopts the 1991 NAIC
Model Regulation or 1991 Federal Regulation or 1 year after the
date the Association or the Secretary first adopts such standards,
whichever is earlier.
(ii) In the case of a State which the Secretary identifies, in
consultation with the Association, as -
(I) requiring State legislation (other than legislation
appropriating funds) in order for medicare supplemental policies
to meet the 1991 NAIC Model Regulation or 1991 Federal
Regulation, but
(II) having a legislature which is not scheduled to meet in
1992 in a legislative session in which such legislation may be
considered,
the date specified in this subparagraph is the first day of the
first calendar quarter beginning after the close of the first
legislative session of the State legislature that begins on or
after January 1, 1992. For purposes of the previous sentence, in
the case of a State that has a 2-year legislative session, each
year of such session shall be deemed to be a separate regular
session of the State legislature.
(D) In promulgating standards under this paragraph, the
Association or Secretary shall consult with a working group
composed of representatives of issuers of medicare supplemental
policies, consumer groups, medicare beneficiaries, and other
qualified individuals. Such representatives shall be selected in a
manner so as to assure balanced representation among the interested
groups.
(E) If benefits (including deductibles and coinsurance) under
this subchapter are changed and the Secretary determines, in
consultation with the Association, that changes in the 1991 NAIC
Model Regulation or 1991 Federal Regulation are needed to reflect
such changes, the preceding provisions of this paragraph shall
apply to the modification of standards previously established in
the same manner as they applied to the original establishment of
such standards.
(2) The benefits under the 1991 NAIC Model Regulation or 1991
Federal Regulation shall provide -
(A) for such groups or packages of benefits as may be
appropriate taking into account the considerations specified in
paragraph (3) and the requirements of the succeeding
subparagraphs;
(B) for identification of a core group of basic benefits common
to all policies; and
(C) that, subject to paragraph (4)(B), the total number of
different benefit packages (counting the core group of basic
benefits described in subparagraph (B) and each other combination
of benefits that may be offered as a separate benefit package)
that may be established in all the States and by all issuers
shall not exceed 10 plus the 2 plans described in paragraph
(11)(A).
(3) The benefits under paragraph (2) shall, to the extent
possible -
(A) provide for benefits that offer consumers the ability to
purchase the benefits that are available in the market as of
November 5, 1990; and
(B) balance the objectives of (i) simplifying the market to
facilitate comparisons among policies, (ii) avoiding adverse
selection, (iii) providing consumer choice, (iv) providing market
stability, and (v) promoting competition.
(4)(A)(i) Except as provided in subparagraph (B) or paragraph
(6), no State with a regulatory program approved under subsection
(b)(1) of this section may provide for or permit the grouping of
benefits (or language or format with respect to such benefits)
under a medicare supplemental policy unless such grouping meets the
applicable 1991 NAIC Model Regulation or 1991 Federal Regulation.
(ii) Except as provided in subparagraph (B), the Secretary may
not provide for or permit the grouping of benefits (or language or
format with respect to such benefits) under a medicare supplemental
policy seeking approval by the Secretary unless such grouping meets
the applicable 1991 NAIC Model Regulation or 1991 Federal
Regulation.
(B) With the approval of the State (in the case of a policy
issued in a State with an approved regulatory program) or the
Secretary (in the case of any other policy), the issuer of a
medicare supplemental policy may offer new or innovative benefits
in addition to the benefits provided in a policy that otherwise
complies with the applicable 1991 NAIC Model Regulation or 1991
Federal Regulation. Any such new or innovative benefits may include
benefits that are not otherwise available and are cost-effective
and shall be offered in a manner which is consistent with the goal
of simplification of medicare supplemental policies.
(5)(A) Except as provided in subparagraph (B), this subsection
shall not be construed as preventing a State from restricting the
groups of benefits that may be offered in medicare supplemental
policies in the State.
(B) A State with a regulatory program approved under subsection
(b)(1) of this section may not restrict under subparagraph (A) the
offering of a medicare supplemental policy consisting only of the
core group of benefits described in paragraph (2)(B).
(6) The Secretary may waive the application of standards
described in clauses (i) through (iii) of paragraph (1)(A) in those
States that on November 5, 1990, had in place an alternative
simplification program.
(7) This subsection shall not be construed as preventing an
issuer of a medicare supplemental policy who otherwise meets the
requirements of this section from providing, through an arrangement
with a vendor, for discounts from that vendor to policyholders or
certificateholders for the purchase of items or services not
covered under its medicare supplemental policies.
(8) Any person who sells or issues a medicare supplemental
policy, on and after the effective date specified in paragraph
(1)(C) (but subject to paragraph (10)), in violation of the
applicable 1991 NAIC Model Regulation or 1991 Federal Regulation
insofar as such regulation relates to the requirements of
subsection (o) or (q) of this section or clause (i), (ii), or (iii)
of paragraph (1)(A) is subject to a civil money penalty of not to
exceed $25,000 (or $15,000 in the case of a seller who is not an
issuer of a policy) for each such violation. The provisions of
section 1320a-7a of this title (other than the first sentence of
subsection (a) and other than subsection (b)) shall apply to a
civil money penalty under the previous sentence in the same manner
as such provisions apply to a penalty or proceeding under section
1320a-7a(a) of this title.
(9)(A) Anyone who sells a medicare supplemental policy to an
individual shall make available for sale to the individual a
medicare supplemental policy with only the core group of basic
benefits (described in paragraph (2)(B)).
(B) Anyone who sells a medicare supplemental policy to an
individual shall provide the individual, before the sale of the
policy, an outline of coverage which describes the benefits under
the policy. Such outline shall be on a standard form approved by
the State regulatory program or the Secretary (as the case may be)
consistent with the 1991 NAIC Model Regulation or 1991 Federal
Regulation under this subsection.
(C) Whoever sells a medicare supplemental policy in violation of
this paragraph is subject to a civil money penalty of not to exceed
$25,000 (or $15,000 in the case of a seller who is not the issuer
of the policy) for each such violation. The provisions of section
1320a-7a of this title (other than the first sentence of subsection
(a) and other than subsection (b)) shall apply to a civil money
penalty under the previous sentence in the same manner as such
provisions apply to a penalty or proceeding under section 1320a-
7a(a) of this title.
(D) Subject to paragraph (10), this paragraph shall apply to
sales of policies occurring on or after the effective date
specified in paragraph (1)(C).
(10) No penalty may be imposed under paragraph (8) or (9) in the
case of a seller who is not the issuer of a policy until the
Secretary has published a list of the groups of benefit packages
that may be sold or issued consistent with paragraph (1)(A)(i).
(11)(A) For purposes of paragraph (2), the benefit packages
described in this subparagraph are as follows:
(i) The benefit package classified as "F" under the standards
established by such paragraph, except that it has a high
deductible feature.
(ii) The benefit package classified as "J" under the standards
established by such paragraph, except that it has a high
deductible feature.
(B) For purposes of subparagraph (A), a high deductible feature
is one which -
(i) requires the beneficiary of the policy to pay annual out-of-
pocket expenses (other than premiums) in the amount specified in
subparagraph (C) before the policy begins payment of benefits,
and
(ii) covers 100 percent of covered out-of-pocket expenses once
such deductible has been satisfied in a year.
(C) The amount specified in this subparagraph -
(i) for 1998 and 1999 is $1,500, and
(ii) for a subsequent year, is the amount specified in this
subparagraph for the previous year increased by the percentage
increase in the Consumer Price Index for all urban consumers (all
items; U.S. city average) for the 12-month period ending with
August of the preceding year.
If any amount determined under clause (ii) is not a multiple of
$10, it shall be rounded to the nearest multiple of $10.
(q) Guaranteed renewal of policies; termination; suspension
The requirements of this subsection are as follows:
(1) Each medicare supplemental policy shall be guaranteed
renewable and -
(A) the issuer may not cancel or nonrenew the policy solely
on the ground of health status of the individual; and
(B) the issuer shall not cancel or nonrenew the policy for
any reason other than nonpayment of premium or material
misrepresentation.
(2) If the medicare supplemental policy is terminated by the
group policyholder and is not replaced as provided under
paragraph (4), the issuer shall offer certificateholders an
individual medicare supplemental policy which (at the option of
the certificateholder) -
(A) provides for continuation of the benefits contained in
the group policy, or
(B) provides for such benefits as otherwise meets (!1) the
requirements of this section.
(3) If an individual is a certificateholder in a group medicare
supplemental policy and the individual terminates membership in
the group, the issuer shall -
(A) offer the certificateholder the conversion opportunity
described in paragraph (2), or
(B) at the option of the group policyholder, offer the
certificateholder continuation of coverage under the group
policy.
(4) If a group medicare supplemental policy is replaced by
another group medicare supplemental policy purchased by the same
policyholder, issuer (!2) of the replacement policy shall offer
coverage to all persons covered under the old group policy on its
date of termination. Coverage under the new group policy shall
not result in any exclusion for preexisting conditions that would
have been covered under the group policy being replaced.
(5)(A) Each medicare supplemental policy shall provide that
benefits and premiums under the policy shall be suspended at the
request of the policyholder for the period (not to exceed 24
months) in which the policyholder has applied for and is
determined to be entitled to medical assistance under subchapter
XIX of this chapter, but only if the policyholder notifies the
issuer of such policy within 90 days after the date the
individual becomes entitled to such assistance. If such
suspension occurs and if the policyholder or certificate holder
loses entitlement to such medical assistance, such policy shall
be automatically reinstituted (effective as of the date of
termination of such entitlement) under terms described in
subsection (n)(6)(A)(ii) of this section as of the termination of
such entitlement if the policyholder provides notice of loss of
such entitlement within 90 days after the date of such loss.
(B) Nothing in this section shall be construed as affecting the
authority of a State, under subchapter XIX of this chapter, to
purchase a medicare supplemental policy for an individual
otherwise entitled to assistance under such subchapter.
(C) Any person who issues a medicare supplemental policy and
fails to comply with the requirements of this paragraph or
paragraph (6) is subject to a civil money penalty of not to
exceed $25,000 for each such violation. The provisions of section
1320a-7a of this title (other than the first sentence of
subsection (a) and other than subsection (b)) shall apply to a
civil money penalty under the previous sentence in the same
manner as such provisions apply to a penalty or proceeding under
section 1320a-7a(a) of this title.
(6) Each medicare supplemental policy shall provide that
benefits and premiums under the policy shall be suspended at the
request of the policyholder if the policyholder is entitled to
benefits under section 426(b) of this title and is covered under
a group health plan (as defined in section 1395y(b)(1)(A)(v) of
this title). If such suspension occurs and if the policyholder or
certificate holder loses coverage under the group health plan,
such policy shall be automatically reinstituted (effective as of
the date of such loss of coverage) under terms described in
subsection (n)(6)(A)(ii) of this section as of the loss of such
coverage if the policyholder provides notice of loss of such
coverage within 90 days after the date of such loss.
(r) Required ratio of aggregate benefits to aggregate premiums
(1) A medicare supplemental policy may not be issued or renewed
(or otherwise provide coverage after the date described in
subsection (p)(1)(C) of this section) in any State unless -
(A) the policy can be expected for periods after the effective
date of these provisions (as estimated for the entire period for
which rates are computed to provide coverage, on the basis of
incurred claims experience and earned premiums for such periods
and in accordance with a uniform methodology, including uniform
reporting standards, developed by the National Association of
Insurance Commissioners) to return to policyholders in the form
of aggregate benefits provided under the policy, at least 75
percent of the aggregate amount of premiums collected in the case
of group policies and at least 65 percent in the case of
individual policies; and
(B) the issuer of the policy provides for the issuance of a
proportional refund, or a credit against future premiums of a
proportional amount, based on the premium paid and in accordance
with paragraph (2), of the amount of premiums received necessary
to assure that the ratio of aggregate benefits provided to the
aggregate premiums collected (net of such refunds or credits)
complies with the expectation required under subparagraph (A),
treating policies of the same type as a single policy for each
standard package.
For purposes of applying subparagraph (A) only, policies issued as
a result of solicitations of individuals through the mails or by
mass media advertising (including both print and broadcast
advertising) shall be deemed to be individual policies. For the
purpose of calculating the refund or credit required under
paragraph (1)(B) for a policy issued before the date specified in
subsection (p)(1)(C) of this section, the refund or credit
calculation shall be based on the aggregate benefits provided and
premiums collected under all such policies issued by an insurer in
a State (separated as to individual and group policies) and shall
be based only on aggregate benefits provided and premiums collected
under such policies after the date specified in section 171(m)(4)
of the Social Security Act Amendments of 1994.
(2)(A) Paragraph (1)(B) shall be applied with respect to each
type of policy by standard package. Paragraph (1)(B) shall not
apply to a policy until 12 months following issue. The Comptroller
General, in consultation with the National Association of Insurance
Commissioners, shall submit to Congress a report containing
recommendations on adjustment in the percentages under paragraph
(1)(A) that may be appropriate. In the case of a policy issued
before the date specified in subsection (p)(1)(C) of this section,
paragraph (1)(B) shall not apply until 1 year after the date
specified in section 171(m)(4) of the Social Security Act
Amendments of 1994.
(B) A refund or credit required under paragraph (1)(B) shall be
made to each policyholder insured under the applicable policy as of
the last day of the year involved.
(C) Such a refund or credit shall include interest from the end
of the calendar year involved until the date of the refund or
credit at a rate as specified by the Secretary for this purpose
from time to time which is not less than the average rate of
interest for 13-week Treasury notes.
(D) For purposes of this paragraph and paragraph (1)(B), refunds
or credits against premiums due shall be made, with respect to a
calendar year, not later than the third quarter of the succeeding
calendar year.
(3) The provisions of this subsection do not preempt a State from
requiring a higher percentage than that specified in paragraph
(1)(A).
(4) The Secretary shall submit in October of each year (beginning
with 1993) a report to the Committees on Energy and Commerce and
Ways and Means of the House of Representatives and the Committee on
Finance of the Senate on loss ratios under medicare supplemental
policies and the use of sanctions, such as a required rebate or
credit or the disallowance of premium increases, for policies that
fail to meet the requirements of this subsection (relating to loss
ratios). Such report shall include a list of the policies that
failed to comply with such loss ratio requirements or other
requirements of this section.
(5)(A) The Comptroller General shall periodically, not less often
than once every 3 years, perform audits with respect to the
compliance of medicare supplemental policies with the loss ratio
requirements of this subsection and shall report the results of
such audits to the State involved and to the Secretary.
(B) The Secretary may independently perform such compliance
audits.
(6)(A) A person who fails to provide refunds or credits as
required in paragraph (1)(B) is subject to a civil money penalty of
not to exceed $25,000 for each policy issued for which such failure
occurred. The provisions of section 1320a-7a of this title (other
than the first sentence of subsection (a) and other than subsection
(b)) shall apply to a civil money penalty under the previous
sentence in the same manner as such provisions apply to a penalty
or proceeding under section 1320a-7a(a) of this title.
(B) Each issuer of a policy subject to the requirements of
paragraph (1)(B) shall be liable to the policyholder or, in the
case of a group policy, to the certificate holder for credits
required under such paragraph.
(s) Coverage for pre-existing conditions
(1) If a medicare supplemental policy replaces another medicare
supplemental policy, the issuer of the replacing policy shall waive
any time periods applicable to preexisting conditions, waiting
period, elimination periods and probationary periods in the new
medicare supplemental policy for similar benefits to the extent
such time was spent under the original policy.
(2)(A) The issuer of a medicare supplemental policy may not deny
or condition the issuance or effectiveness of a medicare
supplemental policy, or discriminate in the pricing of the policy,
because of health status, claims experience, receipt of health
care, or medical condition in the case of an individual for whom an
application is submitted prior to or during the 6 month period
beginning with the first month as of the first day on which the
individual is 65 years of age or older and is enrolled for benefits
under part B of this subchapter.
(B) Subject to subparagraphs (C) and (D), subparagraph (A) shall
not be construed as preventing the exclusion of benefits under a
policy, during its first 6 months, based on a pre-existing
condition for which the policyholder received treatment or was
otherwise diagnosed during the 6 months before the policy became
effective.
(C) If a medicare supplemental policy or certificate replaces
another such policy or certificate which has been in effect for 6
months or longer, the replacing policy may not provide any time
period applicable to pre-existing conditions, waiting periods,
elimination periods, and probationary periods in the new policy or
certificate for similar benefits.
(D) In the case of a policy issued during the 6-month period
described in subparagraph (A) to an individual who is 65 years of
age or older as of the date of issuance and who as of the date of
the application for enrollment has a continuous period of
creditable coverage (as defined in section 300gg(c) of this title)
of -
(i) at least 6 months, the policy may not exclude benefits
based on a pre-existing condition; or
(ii) less than 6 months, if the policy excludes benefits based
on a preexisting condition, the policy shall reduce the period of
any preexisting condition exclusion by the aggregate of the
periods of creditable coverage (if any, as so defined) applicable
to the individual as of the enrollment date.
The Secretary shall specify the manner of the reduction under
clause (ii), based upon the rules used by the Secretary in carrying
out section 300gg(a)(3) of this title.
(3)(A) The issuer of a medicare supplemental policy -
(i) may not deny or condition the issuance or effectiveness of
a medicare supplemental policy described in subparagraph (C) that
is offered and is available for issuance to new enrollees by such
issuer;
(ii) may not discriminate in the pricing of such policy,
because of health status, claims experience, receipt of health
care, or medical condition; and
(iii) may not impose an exclusion of benefits based on a
preexisting condition under such policy,
in the case of an individual described in subparagraph (B) who
seeks to enroll under the policy during the period specified in
subparagraph (E) and who submits evidence of the date of
termination or disenrollment along with the application for such
medicare supplemental policy.
(B) An individual described in this subparagraph is an individual
described in any of the following clauses:
(i) The individual is enrolled under an employee welfare
benefit plan that provides health benefits that supplement the
benefits under this subchapter and the plan terminates or ceases
to provide all such supplemental health benefits to the
individual.
(ii) The individual is enrolled with a Medicare+Choice
organization under a Medicare+Choice plan under part C of this
subchapter, and there are circumstances permitting discontinuance
of the individual's election of the plan under the first sentence
of section 1395w-21(e)(4) of this title or the individual is 65
years of age or older and is enrolled with a PACE provider under
section 1395eee of this title, and there are circumstances that
would permit the discontinuance of the individual's enrollment
with such provider under circumstances that are similar to the
circumstances that would permit discontinuance of the
individual's election under the first sentence of such section if
such individual were enrolled in a Medicare+Choice plan.
(iii) The individual is enrolled with an eligible organization
under a contract under section 1395mm of this title, a similar
organization operating under demonstration project authority,
effective for periods before April 1, 1999, with an organization
under an agreement under section 1395l(a)(1)(A) of this title, or
with an organization under a policy described in subsection (t)
of this section, and such enrollment ceases under the same
circumstances that would permit discontinuance of an individual's
election of coverage under the first sentence of section 1395w-
21(e)(4) of this title and, in the case of a policy described in
subsection (t) of this section, there is no provision under
applicable State law for the continuation or conversion of
coverage under such policy.
(iv) The individual is enrolled under a medicare supplemental
policy under this section and such enrollment ceases because -
(I) of the bankruptcy or insolvency of the issuer or because
of other involuntary termination of coverage or enrollment
under such policy and there is no provision under applicable
State law for the continuation or conversion of such coverage;
(II) the issuer of the policy substantially violated a
material provision of the policy; or
(III) the issuer (or an agent or other entity acting on the
issuer's behalf) materially misrepresented the policy's
provisions in marketing the policy to the individual.
(v) The individual -
(I) was enrolled under a medicare supplemental policy under
this section,
(II) subsequently terminates such enrollment and enrolls, for
the first time, with any Medicare+Choice organization under a
Medicare+Choice plan under part C of this subchapter, any
eligible organization under a contract under section 1395mm of
this title, any similar organization operating under
demonstration project authority, any PACE provider under
section 1395eee of this title, or any policy described in
subsection (t) of this section, and
(III) the subsequent enrollment under subclause (II) is
terminated by the enrollee during any period within the first
12 months of such enrollment (during which the enrollee is
permitted to terminate such subsequent enrollment under section
1395w-21(e) of this title).
(vi) The individual, upon first becoming eligible for benefits
under part A of this subchapter at age 65, enrolls in a
Medicare+Choice plan under part C of this subchapter or in a
PACE program under section 1395eee of this title, and disenrolls
from such plan or such program by not later than 12 months after
the effective date of such enrollment.
(C)(i) Subject to clauses (ii) and (iii), a medicare supplemental
policy described in this subparagraph is a medicare supplemental
policy which has a benefit package classified as "A", "B", "C", or
"F" under the standards established under subsection (p)(2) of this
section.
(ii)(I) Subject to subclause (II), only for purposes of an
individual described in subparagraph (B)(v), a medicare
supplemental policy described in this subparagraph is the same
medicare supplemental policy referred to in such subparagraph in
which the individual was most recently previously enrolled, if
available from the same issuer, or, if not so available, a policy
described in clause (i).
(II) If the medicare supplemental policy referred to in
subparagraph (B)(v) was a medigap Rx policy (as defined in
subsection (v)(6)(A) of this section), a medicare supplemental
policy described in this subparagraph is such policy in which the
individual was most recently enrolled as modified under subsection
(v)(2)(C)(i) of this section or, at the election of the individual,
a policy referred to in subsection (v)(3)(A)(i) of this section.
(iii) Only for purposes of an individual described in
subparagraph (B)(vi) and subject to subsection (v)(1) of this
section, a medicare supplemental policy described in this
subparagraph shall include any medicare supplemental policy.
(iv) For purposes of applying this paragraph in the case of a
State that provides for offering of benefit packages other than
under the classification referred to in clause (i), the references
to benefit packages in such clause are deemed references to
comparable benefit packages offered in such State.
(D) At the time of an event described in subparagraph (B) because
of which an individual ceases enrollment or loses coverage or
benefits under a contract or agreement, policy, or plan, the
organization that offers the contract or agreement, the insurer
offering the policy, or the administrator of the plan,
respectively, shall notify the individual of the rights of the
individual under this paragraph, and obligations of issuers of
medicare supplemental policies, under subparagraph (A).
(E) For purposes of subparagraph (A), the time period specified
in this subparagraph is -
(i) in the case of an individual described in subparagraph
(B)(i), the period beginning on the date the individual receives
a notice of termination or cessation of all supplemental health
benefits (or, if no such notice is received, notice that a claim
has been denied because of such a termination or cessation) and
ending on the date that is 63 days after the applicable notice;
(ii) in the case of an individual described in clause (ii),
(iii), (v), or (vi) of subparagraph (B) whose enrollment is
terminated involuntarily, the period beginning on the date that
the individual receives a notice of termination and ending on the
date that is 63 days after the date the applicable coverage is
terminated;
(iii) in the case of an individual described in subparagraph
(B)(iv)(I), the period beginning on the earlier of (I) the date
that the individual receives a notice of termination, a notice of
the issuer's bankruptcy or insolvency, or other such similar
notice, if any, and (II) the date that the applicable coverage is
terminated, and ending on the date that is 63 days after the date
the coverage is terminated;
(iv) in the case of an individual described in clause (ii),
(iii), (iv)(II), (iv)(III), (v), or (vi) of subparagraph (B) who
disenrolls voluntarily, the period beginning on the date that is
60 days before the effective date of the disenrollment and ending
on the date that is 63 days after such effective date; and
(v) in the case of an individual described in subparagraph (B)
but not described in the preceding provisions of this
subparagraph, the period beginning on the effective date of the
disenrollment and ending on the date that is 63 days after such
effective date.
(F)(i) Subject to clause (ii), for purposes of this paragraph -
(I) in the case of an individual described in subparagraph
(B)(v) (or deemed to be so described, pursuant to this
subparagraph) whose enrollment with an organization or provider
described in subclause (II) of such subparagraph is involuntarily
terminated within the first 12 months of such enrollment, and
who, without an intervening enrollment, enrolls with another such
organization or provider, such subsequent enrollment shall be
deemed to be an initial enrollment described in such
subparagraph; and
(II) in the case of an individual described in clause (vi) of
subparagraph (B) (or deemed to be so described, pursuant to this
subparagraph) whose enrollment with a plan or in a program
described in such clause is involuntarily terminated within the
first 12 months of such enrollment, and who, without an
intervening enrollment, enrolls in another such plan or program,
such subsequent enrollment shall be deemed to be an initial
enrollment described in such clause.
(ii) For purposes of clauses (v) and (vi) of subparagraph (B), no
enrollment of an individual with an organization or provider
described in clause (v)(II), or with a plan or in a program
described in clause (vi), may be deemed to be an initial enrollment
under this clause after the 2-year period beginning on the date on
which the individual first enrolled with such an organization,
provider, plan, or program.
(4) Any issuer of a medicare supplemental policy that fails to
meet the requirements of this subsection is subject to a civil
money penalty of not to exceed $5,000 for each such failure. The
provisions of section 1320a-7a of this title (other than the first
sentence of subsection (a) and other than subsection (b)) shall
apply to a civil money penalty under the previous sentence in the
same manner as such provisions apply to a penalty or proceeding
under section 1320a-7a(a) of this title.
(t) Medicare select policies
(1) If a medicare supplemental policy meets the 1991 NAIC Model
Regulation or 1991 Federal Regulation and otherwise complies with
the requirements of this section except that benefits under the
policy are restricted to items and services furnished by certain
entities (or reduced benefits are provided when items or services
are furnished by other entities), the policy shall nevertheless be
treated as meeting those standards if -
(A) full benefits are provided for items and services furnished
through a network of entities which have entered into contracts
or agreements with the issuer of the policy;
(B) full benefits are provided for items and services furnished
by other entities if the services are medically necessary and
immediately required because of an unforeseen illness, injury, or
condition and it is not reasonable given the circumstances to
obtain the services through the network;
(C) the network offers sufficient access;
(D) the issuer of the policy has arrangements for an ongoing
quality assurance program for items and services furnished
through the network;
(E)(i) the issuer of the policy provides to each enrollee at
the time of enrollment an explanation of (I) the restrictions on
payment under the policy for services furnished other than by or
through the network, (II) out of area coverage under the policy,
(III) the policy's coverage of emergency services and urgently
needed care, and (IV) the availability of a policy through the
entity that meets the standards in the 1991 NAIC Model Regulation
or 1991 Federal Regulation without reference to this subsection
and the premium charged for such policy, and
(ii) each enrollee prior to enrollment acknowledges receipt of
the explanation provided under clause (i); and
(F) the issuer of the policy makes available to individuals, in
addition to the policy described in this subsection, any policy
(otherwise offered by the issuer to individuals in the State)
that meets the standards in the 1991 NAIC Model Regulation or
1991 Federal Regulation and other requirements of this section
without reference to this subsection.
(2) If the Secretary determines that an issuer of a policy
approved under paragraph (1) -
(A) fails substantially to provide medically necessary items
and services to enrollees seeking such items and services through
the issuer's network, if the failure has adversely affected (or
has substantial likelihood of adversely affecting) the
individual,
(B) imposes premiums on enrollees in excess of the premiums
approved by the State,
(C) acts to expel an enrollee for reasons other than nonpayment
of premiums, or
(D) does not provide the explanation required under paragraph
(1)(E)(i) or does not obtain the acknowledgment required under
paragraph (1)(E)(ii),
the issuer is subject to a civil money penalty in an amount not to
exceed $25,000 for each such violation. The provisions of section
1320a-7a of this title (other than the first sentence of subsection
(a) and other than subsection (b)) shall apply to a civil money
penalty under the previous sentence in the same manner as such
provisions apply to a penalty or proceeding under section 1320a-
7a(a) of this title.
(3) The Secretary may enter into a contract with an entity whose
policy has been certified under paragraph (1) or has been approved
by a State under subsection (b)(1)(H) of this section to determine
whether items and services (furnished to individuals entitled to
benefits under this subchapter and under that policy) are not
allowable under section 1395y(a)(1) of this title. Payments to the
entity shall be in such amounts as the Secretary may determine,
taking into account estimated savings under contracts with carriers
and fiscal intermediaries and other factors that the Secretary
finds appropriate. Paragraph (1), the first sentence of paragraph
(2)(A), paragraph (2)(B), paragraph (3)(C), paragraph (3)(D), and
paragraph (3)(E) (!3) of section 1395u(b) of this title shall apply
to the entity.
(u) Additional rules relating to individuals enrolled in MSA plans
and in private fee-for-service plans
(1) It is unlawful for a person to sell or issue a policy
described in paragraph (2) to an individual with knowledge that the
individual has in effect under section 1395w-21 of this title an
election of an MSA plan or a Medicare+Choice private fee-for-
service plan.
(2)(A) A policy described in this subparagraph is a health
insurance policy (other than a policy described in subparagraph
(B)) that provides for coverage of expenses that are otherwise
required to be counted toward meeting the annual deductible amount
provided under the MSA plan.
(B) A policy described in this subparagraph is any of the
following:
(i) A policy that provides coverage (whether through insurance
or otherwise) for accidents, disability, dental care, vision
care, or long-term care.
(ii) A policy of insurance to which substantially all of the
coverage relates to -
(I) liabilities incurred under workers' compensation laws,
(II) tort liabilities,
(III) liabilities relating to ownership or use of property,
or
(IV) such other similar liabilities as the Secretary may
specify by regulations.
(iii) A policy of insurance that provides coverage for a
specified disease or illness.
(iv) A policy of insurance that pays a fixed amount per day (or
other period) of hospitalization.
(v) Rules relating to medigap policies that provide prescription
drug coverage
(1) Prohibition on sale, issuance, and renewal of new policies
that provide prescription drug coverage
(A) In general
Notwithstanding any other provision of law, on or after
January 1, 2006, a medigap Rx policy (as defined in paragraph
(6)(A)) may not be sold, issued, or renewed under this section -

(i) to an individual who is a part D enrollee (as defined
in paragraph (6)(B)); or
(ii) except as provided in subparagraph (B), to an
individual who is not a part D enrollee.
(B) Continuation permitted for non-part D enrollees
Subparagraph (A)(ii) shall not apply to the renewal of a
medigap Rx policy that was issued before January 1, 2006.
(C) Construction
Nothing in this subsection shall be construed as preventing
the offering on and after January 1, 2006, of "H", "I", and "J"
policies described in paragraph (2)(D)(i) if the benefit
packages are modified in accordance with paragraph (2)(C).
(2) Elimination of duplicative coverage upon part D enrollment
(A) In general
In the case of an individual who is covered under a medigap
Rx policy and enrolls under a part D plan -
(i) before the end of the initial part D enrollment period,
the individual may -
(I) enroll in a medicare supplemental policy without
prescription drug coverage under paragraph (3); or
(II) continue the policy in effect subject to the
modification described in subparagraph (C)(i); or
(ii) after the end of such period, the individual may
continue the policy in effect subject to such modification.
(B) Notice required to be provided to current policyholders
with medigap Rx policy
No medicare supplemental policy of an issuer shall be deemed
to meet the standards in subsection (c) of this section unless
the issuer provides written notice (in accordance with
standards of the Secretary established in consultation with the
National Association of Insurance Commissioners) during the 60-
day period immediately preceding the initial part D enrollment
period, to each individual who is a policyholder or certificate
holder of a medigap Rx policy (at the most recent available
address of that individual) of the following:
(i) If the individual enrolls in a plan under part D of
this subchapter during the initial enrollment period under
section 1395w-101(b)(2)(A) of this title, the individual has
the option of -
(I) continuing enrollment in the individual's current
plan, but the plan's coverage of prescription drugs will be
modified under subparagraph (C)(i); or
(II) enrolling in another medicare supplemental policy
pursuant to paragraph (3).
(ii) If the individual does not enroll in a plan under part
D of this subchapter during such period, the individual may
continue enrollment in the individual's current plan without
change, but -
(I) the individual will not be guaranteed the option of
enrollment in another medicare supplemental policy pursuant
to paragraph (3); and
(II) if the current plan does not provide creditable
prescription drug coverage (as defined in section 1395w-
113(b)(4) of this title), notice of such fact and that
there are limitations on the periods in a year in which the
individual may enroll under a part D plan and any such
enrollment is subject to a late enrollment penalty.
(iii) Such other information as the Secretary may specify
(in consultation with the National Association of Insurance
Commissioners), including the potential impact of such
election on premiums for medicare supplemental policies.
(C) Modification
(i) In general
The policy modification described in this subparagraph is
the elimination of prescription coverage for expenses of
prescription drugs incurred after the effective date of the
individual's coverage under a part D plan and the appropriate
adjustment of premiums to reflect such elimination of
coverage.
(ii) Continuation of renewability and application of
modification
No medicare supplemental policy of an issuer shall be
deemed to meet the standards in subsection (c) of this
section unless the issuer -
(I) continues renewability of medigap Rx policies that it
has issued, subject to subclause (II); and
(II) applies the policy modification described in clause
(i) in the cases described in clauses (i)(II) and (ii) of
subparagraph (A).
(D) References to Rx policies
(i) H, I, and J policies
Any reference to a benefit package classified as "H", "I",
or "J" (including the benefit package classified as "J" with
a high deductible feature, as described in subsection (p)(11)
of this section) under the standards established under
subsection (p)(2) of this section shall be construed as
including a reference to such a package as modified under
subparagraph (C) and such packages as modified shall not be
counted as a separate benefit package under such subsection.
(ii) Application in waivered States
Except for the modification provided under subparagraph
(C), the waivers previously in effect under subsection (p)(2)
of this section shall continue in effect.
(3) Availability of substitute policies with guaranteed issue
(A) In general
The issuer of a medicare supplemental policy -
(i) may not deny or condition the issuance or effectiveness
of a medicare supplemental policy that has a benefit package
classified as "A", "B", "C", or "F" (including the benefit
package classified as "F" with a high deductible feature, as
described in subsection (p)(11) of this section), under the
standards established under subsection (p)(2) of this
section, or a benefit package described in subparagraph (A)
or (B) of subsection (w)(2) of this section and that is
offered and is available for issuance to new enrollees by
such issuer;
(ii) may not discriminate in the pricing of such policy,
because of health status, claims experience, receipt of
health care, or medical condition; and
(iii) may not impose an exclusion of benefits based on a
pre-existing condition under such policy,
in the case of an individual described in subparagraph (B) who
seeks to enroll under the policy not later than 63 days after
the effective date of the individual's coverage under a part D
plan.
(B) Individual covered
An individual described in this subparagraph with respect to
the issuer of a medicare supplemental policy is an individual
who -
(i) enrolls in a part D plan during the initial part D
enrollment period;
(ii) at the time of such enrollment was enrolled in a
medigap Rx policy issued by such issuer; and
(iii) terminates enrollment in such policy and submits
evidence of such termination along with the application for
the policy under subparagraph (A).
(C) Special rule for waivered States
For purposes of applying this paragraph in the case of a
State that provides for offering of benefit packages other than
under the classification referred to in subparagraph (A)(i),
the references to benefit packages in such subparagraph are
deemed references to comparable benefit packages offered in
such State.
(4) Enforcement
(A) Penalties for duplication
The penalties described in subsection (d)(3)(A)(ii) of this
section shall apply with respect to a violation of paragraph
(1)(A).
(B) Guaranteed issue
The provisions of paragraph (4) of subsection (s) of this
section shall apply with respect to the requirements of
paragraph (3) in the same manner as they apply to the
requirements of such subsection.
(5) Construction
Any provision in this section or in a medicare supplemental
policy relating to guaranteed renewability of coverage shall be
deemed to have been met with respect to a part D enrollee through
the continuation of the policy subject to modification under
paragraph (2)(C) or the offering of a substitute policy under
paragraph (3). The previous sentence shall not be construed to
affect the guaranteed renewability of such a modified or
substitute policy.
(6) Definitions
For purposes of this subsection:
(A) Medigap Rx policy
The term "medigap Rx policy" means a medicare supplemental
policy -
(i) which has a benefit package classified as "H", "I", or
"J" (including the benefit package classified as "J" with a
high deductible feature, as described in subsection (p)(11)
of this section) under the standards established under
subsection (p)(2) of this section, without regard to this
subsection; and
(ii) to which such standards do not apply (or to which such
standards have been waived under subsection (p)(6) of this
section) but which provides benefits for prescription drugs.
Such term does not include a policy with a benefit package as
classified under clause (i) which has been modified under
paragraph (2)(C)(i).
(B) Part D enrollee
The term "part D enrollee" means an individual who is
enrolled in a part D plan.
(C) Part D plan
The term "part D plan" means a prescription drug plan or an
MA-PD plan (as defined for purposes of part D of this
subchapter).
(D) Initial part D enrollment period
The term "initial part D enrollment period" means the initial
enrollment period described in section 1395w-101(b)(2)(A) of
this title.
(w) Development of new standards for medicare supplemental policies
(1) In general
The Secretary shall request the National Association of
Insurance Commissioners to review and revise the standards for
benefit packages under subsection (p)(1) of this section, taking
into account the changes in benefits resulting from enactment of
the Medicare Prescription Drug, Improvement, and Modernization
Act of 2003 and to otherwise update standards to reflect other
changes in law included in such Act. Such revision shall
incorporate the inclusion of the 2 benefit packages described in
paragraph (2). Such revisions shall be made consistent with the
rules applicable under subsection (p)(1)(E) of this section with
the reference to the "1991 NAIC Model Regulation" deemed a
reference to the NAIC Model Regulation as published in the
Federal Register on December 4, 1998, and as subsequently updated
by the National Association of Insurance Commissioners to reflect
previous changes in law (and subsection (v) of this section) and
the reference to "date of enactment of this subsection" deemed a
reference to December 8, 2003. To the extent practicable, such
revision shall provide for the implementation of revised
standards for benefit packages as of January 1, 2006.
(2) New benefit packages
The benefit packages described in this paragraph are the
following (notwithstanding any other provision of this section
relating to a core benefit package):
(A) First new benefit package
A benefit package consisting of the following:
(i) Subject to clause (ii), coverage of 50 percent of the
cost-sharing otherwise applicable under parts A and B of this
subchapter, except there shall be no coverage of the part B
deductible and coverage of 100 percent of any cost-sharing
otherwise applicable for preventive benefits.
(ii) Coverage for all hospital inpatient coinsurance and
365 extra lifetime days of coverage of inpatient hospital
services (as in the current core benefit package).
(iii) A limitation on annual out-of-pocket expenditures
under parts A and B of this subchapter to $4,000 in 2006 (or,
in a subsequent year, to such limitation for the previous
year increased by an appropriate inflation adjustment
specified by the Secretary).
(B) Second new benefit package
A benefit package consisting of the benefit package described
in subparagraph (A), except as follows:
(i) Substitute "75 percent" for "50 percent" in clause (i)
of such subparagraph.
(ii) Substitute "$2,000" for "$4,000" in clause (iii) of
such subparagraph.