Commissioner’s Bulletin # B-0053-02

Several carriers are terminating their Medicare+Choice coverage effective December 31, 2002, resulting in thousands of Texas consumers going to the marketplace for health care coverage. The purpose of this bulletin is to remind carriers offering Medicare supplement and/or Medicare+Choice plans of their duties, and the coverage options available to Medicare beneficiaries, under both federal law and Texas regulations.

In order to facilitate the transition for Texans who are losing their Medicare+Choice coverage, carriers must ensure that Texans having this coverage involuntarily terminated have access to the proper information regarding coverage options. There are a number of coverage options available for these Texans due to guaranteed issue, open enrollment, and trial period provisions that apply to Medicare supplement and Medicare+Choice coverages. These options may require time-critical decisions. For example, some enrollees may have additional coverage options if they disenroll from their Medicare+Choice plan prior to the December 31, 2002 termination date.

In compliance with federal law, all Medicare+Choice carriers terminating coverage must, by October 2, 2002, provide their enrollees with a letter that outlines their individual options. It is extremely important that all Medicare supplement and Medicare+Choice carriers inform/educate their agents and administrative staff of the law's requirements to ensure full compliance. Additionally, it is essential that carriers prepare to handle anticipated increases in inquiries and/or applications. To assist in your efforts, we have outlined the coverage options available and the corresponding duties of carriers engaged in either the Medicare supplement or the Medicare+Choice business in Texas.

1. Carriers continuing Medicare+Choice plans - provide sufficient, informed staff to assist individuals contacting you regarding coverage options, costs and benefits for 2003, and/or application process for enrollment.
2. Carriers discontinuing Medicare+Choice plans - provide access to quality health care services and care coordination assistance through December 31, 2002. Provide, as required by the Centers for Medicare & Medicaid services (CMS), written notice to enrollees that their coverage is terminating and that outlines their available coverage options. Provide sufficient, informed staff to assist individuals contacting you requesting clarification regarding the letter, the termination process, and coverage options.
3. Carriers offering Medicare supplement coverage - provide sufficient, informed staff to assist individuals contacting you regarding coverage options, costs and benefits for 2003, and/or application process for enrollment.
4. Carriers continuing/discontinuing Medicare+Choice plans or offering Medicare supplement coverage - may direct an individual needing more information to understand their Medicare options for 2003 to the TDI's Consumer Protection division at 800-252-3439 or direct them to the TDI web site at www.tdi.state.tx.us. You may also refer an individual to the Texas State Health Insurance Assistance Program, known as Health Information, Counseling and Advocacy Program (HICAP), at 800-252-9240. In Texas, HICAP benefit counselors are familiar with the termination process.

1. Coverage under another Medicare+Choice plan - Enrollees wishing to remain in Medicare+Choice may enroll in another Medicare+Choice plan if they reside in the plan's service area. A carrier that offers Medicare+Choice coverage must make its coverage available to enrollees (including enrollees with End Stage Renal Disease) whose coverage is being terminated by another Medicare+Choice plan if the affected enrollee resides within its service area. The only exception to this requirement is if the Medicare+Choice carrier has an approved limit on the number of individuals the Medicare+Choice carrier can enroll.
2. Coverage under a Medicare supplement plan - Alternatively, enrollees may return to Original Medicare, in which case they may also purchase a Medicare supplement policy under rules related to Guaranteed Issue - Involuntary Termination. The time period for guaranteed issue begins October 2, 2002 and ends March 4, 2003 (63 days after Medicare + Choice coverage ended). Enrollees who wish to purchase a Medicare supplement policy have various options available depending on certain criteria. The various options are outlined below:
   1. Enrollees who are 65 years of age or older and enrolled in Medicare Part B whose coverage in Medicare+Choice is being involuntarily discontinued as of December 31, 2002, have the right to guaranteed issuance of Medicare supplement Plans A, B, C, and F from any carrier issuing these Medicare supplement plans in Texas. Individuals may apply for coverage anytime between the date they receive the termination letter from the Medicare+Choice carrier and/or by the 63rd day after coverage under the Medicare+Choice plan ends.
   2. Enrollees who are under 65 years of age and enrolled in Medicare Part B whose coverage in Medicare+Choice is being involuntarily discontinued as of December 31, 2002, have the right to guaranteed issuance of Medicare supplement Plan A from any carrier issuing Medicare supplement coverage in Texas (See RANGE OF PLANS AVAILABLE TO UNDER-65 MEDICARE BENEFICIARIES, below). Individuals may apply for coverage anytime between the date they receive the official termination letter from the Medicare+Choice carrier and/or by the 63rd day after coverage under the Medicare+Choice Plan ends. These enrollees also have a guaranteed issue right to Medicare supplement Plans B, C, and F if the carrier offers these plans to Medicare beneficiaries under age 65 provided the enrollees apply for coverage anytime between the date they receive the official termination letter from the Medicare+Choice carrier and/or by the 63rd day after coverage under the Medicare+Choice plan ends.
   3. Enrollees in their open enrollment to Medicare (i.e., those who have been on Medicare Part B for less than six months) have additional rights as explained below. Medicare+Choice carriers are required by CMS to advise eligible enrollees of their special rights and timelines in their final notification letter. These rights are explained below:
   4. 1. Open enrollment for individuals age 65 or older - An individual age 65 or older who is within the six-month open enrollment period may purchase any Medicare supplement plan (A - J) offered in Texas, so long as the individual applies for coverage within his/her six-month open enrollment period (See "GUARANTEED ISSUE" VS. "OPEN ENROLLMENT," below). An individual who wants to purchase Medicare Supplement coverage before the end of the year must disenroll from the Medicare+Choice plan prior to Medicare supplement coverage becoming effective.
      2. Open enrollment for individuals under age 65 - An individual under age 65 who is within the six-month open enrollment period (beginning when the individual under age 65 first enrolls in Medicare Part B) may purchase any Medicare supplement plan offered to Medicare individuals under age 65. Texas regulations require Medicare supplement carriers to offer at least Plan A to individuals who qualify for Medicare before attaining age 65 during this open enrollment period.
   5. Enrollees in their initial or extended trial period whose Medicare+Choice coverage will be terminating will lose certain rights if they do not disenroll from the Medicare+Choice plan before the December 31, 2002 termination date. These rights are explained below:
   6. 1. Trial period for an individual who left a Medicare supplement plan to enroll in a Medicare+Choice plan for the first time - This individual can purchase, on a guaranteed issue basis, the same Medicare supplement plan that the individual had prior to enrolling in the Medicare+Choice, if the carrier is still offering the Medicare supplement plan and if the individual: (a) left the Medicare supplement plan to enroll in the Medicare+Choice plan; (b) was never enrolled in another Medicare+Choice plan, Medicare Select or PACE program; (c) disenrolls within one year of initial enrollment in the alternative plan (Medicare+Choice plan, Medicare Select plan or PACE) program; and (d) reapplies for the Medicare supplement plan he/she previously had no later than 63 days after the effective date of disenrollement from the Medicare+Choice plan. If the carrier is no longer offering the same Medicare supplement plan or the individual does not disenroll before the end of the year, the individual may purchase Medicare supplement Plans A, B, C, or F offered by any carrier issuing Medicare supplement coverage in Texas.
      2. Trial period for an individual age 65 or older who enrolled in a Medicare+Choice plan upon first becoming eligible for Medicare Part B - This individual (who may no longer be in his/her six-month open enrollment period) may purchase, on a guaranteed issue basis, any Medicare supplement plan (A - J) offered in Texas if the individual: (a) enrolled in the Medicare+Choice plan upon first becoming eligible for Medicare; (b) disenrolls within one year of initial enrollment in the Medicare+Choice plan; and (c) applies for the Medicare supplement plan no later than 63 days after the effective date of disenrollement from the Medicare+Choice plan.
      3. Trial period for an individual under age 65 who enrolled in a Medicare+Choice plan upon first becoming eligible for Medicare Part B - This individual (who may no longer be in his/her six-month open enrollment period) may purchase, on a guaranteed issue basis, any Medicare supplement plan (A - J) offered to individuals under age 65 in Texas if the individual: (a) enrolled in the Medicare+Choice plan upon first becoming eligible for Medicare; (b) disenrolls within one year of initial enrollment in the Medicare+Choice plan; and (c) applies for the Medicare supplement plan no later than 63 days after the effective date of disenrollement from the Medicare+Choice plan.
   7. Individuals who want to extend their initial trial period. An individual may extend his/her initial trial period if the individual: (a) enrolled in the Medicare+Choice plan upon first becoming eligible for Medicare Part B or left a Medicare supplement plan and enrolled in a Medicare+Choice, Medicare Select or PACE Program for the first time; and (b) enrolls in another Medicare+Choice plan immediately. This individual will have a new 12-month period to try out the new Medicare+Choice plan. During this extended trial period, the individual will have all the same rights the individual had during the initial trial period. The maximum time the individual can be in a trial period is two years after the individual first enrolled in a Medicare+Choice plan.

TIMING OF APPLICATION/EFFECTIVE DATE OF MEDICARE SUPPLEMENT COVERAGE - To ensure that there is no gap in coverage for benefits, an enrollee (of any age) whose coverage under a Medicare+Choice plan is being terminated on December 31, 2002, and who elects to apply for Medicare supplement coverage, may request the replacing Medicare supplement coverage to be made effective following the date the Medicare+Choice coverage terminates or may ask for an earlier effective date if they elect to disenroll prior to December 31, 2002. While law prohibits the sale of a health insurance policy that duplicates benefits, including a Medicare supplement plan that duplicates benefits an individual has under a Medicare+Choice plan, Medicare supplement carriers can and should sell Medicare+Choice enrollees Medicare supplement plans that will take effect as soon as their Medicare+Choice coverage ends. Accordingly, you should clarify this issue with your agents and staff and amend your procedures, if necessary. If the enrollee elects to make the replacing coverage effective prior to the termination of the Medicare+Choice coverage, the enrollee must request the Medicare+Choice carrier to disenroll the enrollee from the Medicare+Choice coverage prior to the end of a month for the disenrollment to be made effective the first of the following month (e.g., request disenrollment by November 30, 2002, for a December 1, 2002 disenrollment date). To ensure continuous coverage, the enrollee must request the Medicare supplement carrier to make the replacement coverage effective the same date the enrollee was disenrolled from the Medicare+Choice plan (e.g., if Medicare+Choice disenrollment is December 1, 2002, the replacement coverage should be made effective December 1, 2002).

- In evaluating the coverage options outlined above, your staff should be aware that Medicare beneficiaries should consider not only the different enrollment rights, but also the different protections offered by guaranteed issue and open enrollment. For example, when you issue coverage to an individual under their guaranteed issue rights, the following protections apply:

1. You cannot impose a waiting period or preexisting condition exclusion; and
2. You cannot discriminate in the price of the policy based on the individual's health status, claim experience, receipt of health care or an existing medical condition.

When you issue coverage to an individual under open enrollment you may apply a preexisting condition exclusion; however, for an individual age 65 or older you must credit the individual's prior health coverage against the exclusion.

RANGE OF PLANS AVAILABLE TO UNDER-65 MEDICARE BENEFICIARIES - Texas regulations require Medicare supplement carriers to offer at least Plan A to individuals who qualify for Medicare before attaining age 65; therefore, all carriers offering Medicare supplement coverage in Texas are required to offer Plan A to individuals under age 65 whose coverage under the Medicare+Choice plan is being terminated. Additionally, if you offer Plans B, C, or F to Medicare beneficiaries under age 65, even on an underwritten basis, you must offer those plans on a guaranteed issue basis to individuals under age 65 whose Medicare+Choice plan is terminating December 31, 2002. If you do not offer Medicare supplement Plans B, C, or F to Medicare beneficiaries under age 65, you are not required to begin offering those plans to individuals under age 65 whose Medicare+Choice plan is being terminated.

If you have any questions or concerns in determining compliance with state and federal law in this area, please contact a member of the Accident and Health Section at 512-322-3409 or the HMO Compliance Section at 512-322-4266.

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Kimberly Stokes
Senior Associate Commissioner
Life, Health & Licensing Program