The purpose of this bulletin is to make companies aware of the new requirements for Medicare Supplement policies and to ensure compliance with these requirements until Texas adopts conforming rules. The federal Balanced Budget Act (BBA) of 1997 revised the federal Public Health and Welfare Code regarding the issuance of Medicare Supplement insurance policies. These amendments, codified at 42 U.S.C. §1395ss, went into effect July 1, 1998. Accordingly, all companies must now comply with the BBA. Companies who have not already done so should submit all filings necessary to bring their forms into compliance, amend their procedures as necessary, and fulfill all notice requirements.
The Texas Department of Insurance (TDI) is drafting proposed amendments to the Medicare Supplement rules (28 TAC §§3.3301 et seq., relating to Minimum Standards for Medicare Supplement Policies), as well as other affected rules. Amendments to these rules will correspond to amendments made by the NAIC to its Model Medicare Supplement Regulation (Model Regulation) on April 29, 1998, reflecting the new federal statutory requirements. Federal law requires that states' laws and rules, at a minimum, incorporate the NAIC model requirements. All affected companies may utilize the Model Regulation as a guide in interpreting the requirements of the BBA until TDI completes the rule making process.
Some of the more significant modifications contained in the BBA include: guaranteed issuance of Medicare Supplement coverage for eligible individuals, waiver or reduction of limitations due to pre-existing conditions for individuals with creditable coverage, and the addition of two new high deductible plans. There are also changes in disclosure requirements and new notice requirements.
The NAIC Model Regulation addresses the BBA changes as follows: Section 11 addresses the changes relating to pre-existing conditions and creditable coverage. Section 4 (E and F) define continuous period of creditable coverage and creditable coverage. Section 12 covers guaranteed issuance to eligible persons and notice requirements. Sections 9 and 17 contain changes related to the new high deductible plans F and J. Additional disclosure requirements may be found in Appendix C of the Model Regulation. Other changes to the model rule reflecting changes generated by the BBA can be found throughout the Model Regulation.
Proposed amendments to the Texas Administrative Code will be completed in the near future. Publication in the Texas Register is anticipated in mid-December. Once published, the rules will be available on the Secretary of State´s web site at www.sos.state.tx.us/texreg/index.html. Prior to adoption of the required rule changes, all companies must, at a minimum, comply with federal law and inform agents of the significant changes in the BBA and the NAIC Model Regulation.
If you have any questions or concerns in assuring your compliance with the BBA of 1997, please contact a member of the Senior Team in the Life/Health Division at 512/322-3409 or the HMO Compliance Section at 512/322-4266.
Kim Stokes
Associate Commissioner
Life/Health and Managed Care