Several HMOs are terminating their Medicare+Choice coverage effective 12/31/99, resulting in thousands of Texas consumers going to the marketplace for health care coverage. The purpose of this bulletin is to remind insurers offering Medicare Supplement and Medicare Select coverage and HMOs offering Medicare+Choice plans of their duties and the coverage options available to these individuals under federal law, as well as Texas regulations 28 TAC §§3.3301-3.3325 (relating to Minimum Standards for Medicare Supplement Policies) and 28 TAC §21.2107 (relating to Mandatory Notice Requirements).
In order to facilitate the transition for Texans who are losing their Medicare+Choice coverage, we must all ensure they have access to the proper information regarding coverage options. The various open enrollment and guaranteed issue provisions applying to Medicare Supplement coverage create a number of coverage options for individuals whose Medicare+Choice plan is terminating coverage. These options may require time-critical decisions. For example, some individuals will lose available coverage options if they disenroll from their Medicare+Choice plan prior to the 12/31/99 termination date; others, however, may enhance their available coverage options if they disenroll prior to the 12/31/99 termination date. It is extremely important that you inform/educate your agents and administrative staff of the law´s requirements so that you may fully comply. Additionally, you should prepare to handle anticipated additional inquiries and/or applications. To assist in your effort, we have outlined the coverage options available and the corresponding duties of carriers engaged in either the Medicare supplement/Medicare Select business or the Medicare+Choice business.
DUTIES OF CARRIERS:
I. HMOs continuing Medicare+Choice plans - provide sufficient, informed staff to assist individuals contacting you regarding coverage options and/or enrollment.
II. HMOs discontinuing Medicare+Choice plans - provide written notice to enrollees that their coverage is terminating and that explains available coverage options. Provide sufficient, informed staff to assist enrollees contacting you requesting clarification regarding the letter, termination and coverage options.
42 CFR §422.74(d)(7); 28 TAC §21.2107
III. Insurers offering Medicare Supplement (including Medicare Select coverage) - provide sufficient, informed staff to assist individuals contacting you regarding coverage options and/or enrollment.
COVERAGE OPTIONS AVAILABLE:I. Coverage under another Medicare+Choice Plan - individuals wishing to remain in Medicare+Choice may enroll in another Medicare+Choice plan if one is offered in their service area. An HMO that offers Medicare+Choice coverage must make their coverage available to enrollees whose coverage is being terminated by another Medicare+Choice plan if the affected enrollee resides within the HMO´s service area. The only exception to this requirement is that beneficiaries with ESRD cannot enroll in a plan offered by another managed care company. 42 CFR §422.50; 422.62(a)(3).
II. Coverage under a Medicare Supplement (including Medicare Select plan) - Alternatively, individuals can return to original Medicare, in which case they may purchase a Medicare supplement policy. The following paragraphs outline various scenarios resulting in different coverage options for individuals whose Medicare+Choice plan is terminating coverage on 12/31/99.
- Enrollees who should consider allowing the Medicare+Choice plan to terminate on 12/31/99
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Certain individuals, described in the following paragraphs, must allow their Medicare+Choice plan to terminate coverage on 12/31/99 to have a right to guaranteed issue Medicare supplement coverage options. These individuals can, however, apply for Medicare supplement coverage prior to 12/31/99.
1. An individual age 65 and over whose coverage in a Medicare+Choice plan is being terminated on 12/31/99, and who makes no prior election to join another Medicare+Choice organization, will be reenrolled in original Medicare upon the plan´s termination of coverage. The individual has the option of enrolling, on a guaranteed issue basis, in Medicare supplement plans A, B, C or F offered to new Medicare enrollees by any insurer offering Medicare supplement coverage in Texas. To qualify for this guaranteed issuance of coverage, the individual must apply for the Medicare supplement coverage no later than 63 days following the termination of the Medicare+Choice plan. 28 TAC §3.3312(a)(1), (b)(2)(A), (c)(1).
2. An individual under age 65 whose coverage under a Medicare+Choice plan is being terminated on 12/31/99, and who make no prior election to join another Medicare+Choice organization, will be reenrolled in original Medicare upon the plan´s termination of coverage. This individual has the option of enrolling, on a guaranteed issue basis, in Medicare supplement plans A, B, C or F offered by any insurer offering Medicare supplement coverage in Texas to Medicare beneficiaries under age 65 (See section entitled "RANGE OF PLANS AVAILABLE TO UNDER-65 MEDICARE BENEFICIARIES" below). To qualify for this guaranteed issuance of coverage, the individual must apply for the Medicare supplement coverage no later than 63 days following the termination of the Medicare+Choice plan. 28 TAC §3.3312(a)(1), (b)(2)(A), (c)(1).
- Enrollees who should consider disenrolling from the Medicare+ Choice Plan before the 12/31/99 termination date.
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Certain individuals, described in the following paragraphs, need not wait until 12/31/99 to disenroll from their Medicare+Choice plan and may actually lose enrollment options if they do wait until that date to disenroll:
1. An individual age 65 and older who left a Medicare supplement plan to enroll in Medicare+Choice plan for the first time can enroll, on a guaranteed issue basis, in the same Medicare supplement policy in which the individual was most recently enrolled, 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 in a another Medicare+Choice plan, (c) disenrolls within one year of initial enrollment in the Medicare+Choice plan, and (d) reapplies for the Medicare supplement plan they previously had no later than 63 days after disenrolling from the Medicare+Choice plan. 28 TAC §3.3312(b)(5), (c)(2).
2. An individual age 65 and older who enrolled in a Medicare+Choice plan upon first becoming eligible for Medicare Parts A & B can enroll, on a guaranteed issue basis, in any Medicare supplement plan offered in Texas if the individual (a) enrolled in the Medicare+Choice plan upon first becoming eligible for Medicare, (b) disenrolls from the Medicare+Choice plan within one year of initial enrollment, and (c) applies for the Medicare supplement plan no later than 63 days after disenrolling from the Medicare+Choice plan. 28 TAC §3.3312(b)(6), (c)(3).
3. An individual age 65 or older who is within the 6 month open enrollment period may enroll in any Medicare supplement plan offered in Texas so long as the individual applies for coverage within the 6 month open enrollment period. An individual´s open enrollment period begins the first date the individual is both (a) age 65 or older and (b) enrolled in Medicare Part B. The individual must disenroll from the Medicare+Choice prior to Medicare supplement coverage becoming effective. 28 TAC §3.3324(a).
4. An individual under age 65 who is within the 6 month open enrollment period (beginning when the individual is under age 65 and first enrolls in Medicare Part B) may enroll in any Medicare supplement plan offered to new Medicare enrollees under age 65 by insurers offering Medicare supplement in Texas. To qualify for this coverage, the individual must apply for Medicare supplement coverage within the 6 month open enrollment period . An individual would only want to exercise this option if an insurer is offering Medicare supplement plans D, E, G, H, I, or J to Medicare beneficiaries in Texas under age 65 . 28 TAC §3.3324(b).
RANGE OF PLANS AVAILABLE TO UNDER-65 MEDICARE BENEFICIARIES
28 TAC ' 3.3324(b) requires issuers of Medicare supplement coverage to offer at least Plan A to individuals who qualify for Medicare before attaining age 65; therefore, all insurers 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 the 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 coverage is terminating 12/31/99. 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.
TIMING OF APPLICATION
To ensure that there is no gap in coverage for supplement benefits, individuals may be applying for Medicare supplement coverage prior to 12/31/99 and requesting an effective date of 01/01/2000. While law prohibits the sale of a health insurance policy that duplicates benefits, including a Medicare supplement policy that duplicates benefits a person has under a Medicare+Choice plan, Medicare supplement issuers can and should sell Medicare+Choice enrollees policies that will take effect as soon as the Medicare+Choice plan ends. Accordingly, you should clarify this issue with your agents and staff and amend your procedures if necessary.
"OPEN ENROLLMENT" VS. "GUARANTEED ISSUE"
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 open enrollment and guaranteed issue. For example, when you issue coverage to an individual under their guaranteed issue rights, the following additional protections apply:
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a) You cannot impose a waiting period or preexisting condition limitation, and
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b) You cannot discriminate in the price of the policy based on the beneficiary´s health status, claim experience, receipt of health care or an existing medical. 28 TAC §3.3312(a)(2).
When you issue coverage to an individual under open enrollment (see II(B)(3) and (4) above), you may apply a preexisting condition exclusion; however, for an individual age 65 and older you must credit the individual´s prior health coverage credit against the exclusion. 28 TAC §3.3324(c).
For example, an individual turned 65 on August 1, 1999, and enrolled in a Medicare+Choice plan that is leaving the market. He would like to enroll in original Medicare as well as Medicare supplement plan J. He has been diagnosed with cancer and has no creditable coverage prior to the Medicare+Choice plan. Although the individual could enroll in Medicare supplement plan J under open enrollment by disenrolling from his Medicare+Choice plan early, because of the potential of a preexisting condition exclusion, the individual should consider allowing the Medicare+Choice plan to terminate and enroll in Medicare supplement plan A, B, C, or F under guaranteed issue provisions with no preexisting condition exclusion.
If you have any questions or concerns in assuring compliance with state and federal law in this area, 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.
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Kim Stokes
Associate Commissioner
Life/Health and Managed Care