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H0043........................................................by MR. SPEAKER
Requested by Department of Insurance
MEDICARE SUPPLEMENTAL INSURANCE - Repeals and adds to existing law to
authorize the Department of Insurance to regulate medicare supplemental
insurance, including providing minimum standards for policies and
disclosure; and to provide notice of the right to free examination.
01/11 House intro - 1st rdg - to printing
01/11 Rpt prt - to Bus
02/10 Rpt out - rec d/p - to 2nd rdg
02/11 2nd rdg - to 3rd rdg
02/15 3rd rdg - PASSED - 61-0-8
AYES -- Alltus, Barraclough, Barrett, Bell, Bieter, Black, Boe,
Bruneel, Callister, Campbell, Clark, Crow, Cuddy, Deal, Denney,
Ellsworth, Field(13), Field(20), Gagner, Geddes, Gould, Hammond,
Hansen(23), Hansen(29), Henbest, Hornbeck, Jaquet, Jones, Judd,
Kellogg, Kempton, Kunz, Lake, Limbaugh, Linford, Loertscher, McKague,
Meyer, Montgomery, Mortensen, Moyle, Pomeroy, Reynolds, Ridinger,
Ringo, Robison, Schaefer, Sellman, Smith, Stevenson, Stoicheff,
Stone, (Taylor)Taylor, Tilman, Tippets, Watson, Wheeler, Williams,
Wood, Zimmermann, Mr Speaker
NAYS -- None
Absent and excused -- Chase, Hadley, Kendell, Mader, Marley,
Pischner, Sali, Trail
Dist. 15, Seat A, Vacant
Floor Sponsor - Deal
Title apvd - to Senate
02/16 Senate intro - 1st rdg - to Com/HuRes
03/05 Rpt out - rec d/p - to 2nd rdg
03/08 2nd rdg - to 3rd rdg
03/10 3rd rdg - PASSED - 29-0-6
AYES--Andreason, Boatright, Branch, Bunderson, Cameron, Crow,
Danielson, Darrington, Davis, Deide, Dunklin, Frasure, Geddes,
Hawkins, Ingram, Ipsen, Keough, King, Lee, Richardson, Riggs, Risch,
Schroeder, Sorensen, Stegner, Stennett, Thorne, Wheeler, Whitworth
NAYS--None
Absent and excused--Burtenshaw, McLaughlin, Noh, Parry, Sandy, Twiggs
Floor Sponsor - Stegner
Title apvd - to House
03/11 To enrol
03/12 Rpt enrol - Sp signed
03/15 Pres signed
03/16 To Governor
03/18 Governor signed
Session Law Chapter 102
Effective: 01/01/99
H0043|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fifth Legislature First Regular Session - 1999IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 43 BY MR. SPEAKER Requested by: Department of Insurance 1 AN ACT 2 RELATING TO MEDICARE SUPPLEMENT INSURANCE MINIMUM STANDARDS; REPEALING CHAPTER 3 44, TITLE 41, IDAHO CODE; AMENDING TITLE 41, IDAHO CODE, BY THE ADDITION 4 OF A NEW CHAPTER 44, TITLE 41, IDAHO CODE, TO PROVIDE A STATEMENT OF PUR- 5 POSE, TO DEFINE TERMS, TO STATE THE APPLICABILITY AND SCOPE, TO PROVIDE 6 STANDARDS FOR POLICY PROVISIONS AND AUTHORITY TO PROMULGATE RULES, TO PRO- 7 VIDE LOSS RATIO STANDARDS, TO PROVIDE DISCLOSURE STANDARDS, TO PROVIDE 8 NOTICE OF FREE EXAMINATION, TO PROVIDE FILING REQUIREMENTS FOR ADVERTIS- 9 ING, TO PROVIDE APPLICATION OF CHAPTER 52, TITLE 67, IDAHO CODE, TO PRO- 10 VIDE PENALTIES AND TO PROVIDE SEPARABILITY; DECLARING AN EMERGENCY AND 11 PROVIDING RETROACTIVE APPLICATION. 12 Be It Enacted by the Legislature of the State of Idaho: 13 SECTION 1. That Chapter 44, Title 41, Idaho Code, be, and the same is 14 hereby repealed. 15 SECTION 2. That Title 41, Idaho Code, be, and the same is hereby amended 16 by the addition thereto of a NEW CHAPTER , to be known and desig- 17 nated as Chapter 44, Title 41, Idaho Code, and to read as follows: 18 CHAPTER 44 19 MEDICARE SUPPLEMENT INSURANCE MINIMUM STANDARDS 20 41-4401. PURPOSE. The purpose of this chapter shall be to provide rea- 21 sonable standardization and simplification of terms and coverages of medicare 22 supplement disability insurance policies and enrollee contracts of managed 23 care organizations, to facilitate public understanding and comparison, to 24 eliminate provisions contained in disability insurance policies and enrollee 25 contracts of managed care organizations which may be misleading or 26 unreasonably confusing in connection either with the purchase of such cover- 27 ages or with the settlement of claims, and to provide for full disclosure in 28 the sale of such coverages. 29 41-4402. DEFINITIONS. (1) "Applicant" means: 30 (a) In the case of an individual medicare supplement policy, the person 31 who seeks to contract for insurance benefits; and 32 (b) In the case of a group medicare supplement policy, the proposed cer- 33 tificate holder. 34 (2) "Certificate" means, for the purposes of this chapter, any certifi- 35 cate delivered or issued for delivery in this state under a group medicare 36 supplement policy. 37 (3) "Certificate form" means the form on which the certificate is deliv- 38 ered or issued for delivery by the issuer. 39 (4) "Issuer" includes insurance companies, fraternal benefit societies, 40 managed care organizations, and any other entity delivering or issuing for 2 1 delivery in this state medicare supplement policies or certificates. 2 (5) "Medicare" means the "Health Insurance for the Aged Act," title XVIII 3 of the social security amendments of 1965, as then constituted or later 4 amended. 5 (6) "Medicare supplement policy" means a group or individual policy of 6 accident and sickness insurance or an enrollee contract under a managed care 7 organization, other than a policy issued pursuant to a contract under section 8 1876 of the federal social security act (42 U.S.C. section 1395 et seq.), or 9 an issued policy under a demonstration project specified in 42 U.S.C. section 10 1395ss(g)(1), which is advertised, marketed or designed primarily as a supple- 11 ment to reimbursements under medicare for the hospital, medical or surgical 12 expenses of persons eligible for medicare. 13 (7) "Policy form" means the form on which the policy is delivered or 14 issued for delivery by the issuer. 15 41-4403. APPLICABILITY AND SCOPE. (1) Except as otherwise specifically 16 provided this chapter shall apply to: 17 (a) All medicare supplement policies delivered or issued for delivery in 18 this state on or after the effective date of this act; and 19 (b) All certificates issued under group medicare supplement policies, 20 which certificates have been delivered or issued for delivery in this 21 state. 22 (2) This chapter shall not apply to a policy of one (1) or more employers 23 or labor organizations, or of the trustees of a fund established by one (1) or 24 more employers or labor organizations, or combination thereof, for employees 25 or former employees or a combination thereof, or for members or former mem- 26 bers, or a combination thereof, of the labor organizations. 27 (3) Except as otherwise specifically provided in section 41-4406(4), 28 Idaho Code, the provisions of this chapter are not intended to prohibit or 29 apply to insurance policies or health care benefit plans, including group con- 30 version policies, provided to medicare eligible persons when the policies are 31 not marketed or held to be medicare supplement policies or benefit plans. 32 41-4404. STANDARDS FOR POLICY PROVISIONS AND AUTHORITY TO PROMULGATE 33 RULES. (1) No medicare supplement policy or certificate in force in this 34 state shall contain benefits that duplicate benefits provided by medicare. 35 (2) Notwithstanding any other provision of law of this state, a medicare 36 supplement policy or certificate shall not exclude or limit benefits for loss 37 incurred more than six (6) months from the effective date of coverage because 38 it involved a preexisting condition. The policy or certificate shall not 39 define a preexisting condition more restrictively than a condition for which 40 medical advice was given or treatment was recommended by or received from a 41 physician within six (6) months before the effective date of coverage. 42 (3) The director may adopt reasonable rules to establish specific stan- 43 dards for policy provisions of medicare supplement policies and certificates. 44 The standards shall be in addition to and in accordance with applicable laws 45 of this state, including chapter 21, title 41, Idaho Code, disability insur- 46 ance policies. No requirement of the insurance code relating to minimum 47 required policy benefits, other than the minimum standards contained in this 48 chapter, shall apply to medicare supplement policies and certificates. The 49 standards may cover, but not be limited to: 50 (a) Terms of renewability; 51 (b) Initial and subsequent conditions of eligibility; 52 (c) Nonduplication of coverage; 53 (d) Probationary periods; 3 1 (e) Benefit limitations, exceptions and reductions; 2 (f) Elimination periods; 3 (g) Requirements for replacement; 4 (h) Recurrent conditions; 5 (i) Definition of terms; 6 (j) Open enrollment; 7 (k) Attained age rating prohibited. 8 (4) The director may adopt reasonable rules to establish minimum stan- 9 dards for benefits, claims payment, marketing practices and compensation 10 arrangements and reporting practices, for medicare supplement policies and 11 certificates. 12 (5) The director may adopt from time to time reasonable rules necessary 13 to conform medicare supplement policies and certificates to the requirements 14 of federal law and regulations promulgated thereunder including, but not lim- 15 ited to: 16 (a) Requiring refunds or credits if the policies or certificates do not 17 meet loss ratio requirements; 18 (b) Establishing a uniform methodology for calculating and reporting loss 19 ratios; 20 (c) Assuring public access to all policies, premiums and loss ratio 21 information of issuers of medicare supplement insurance; 22 (d) Establishing a process for approving or disapproving policy forms and 23 certificate forms and proposed premium increases; 24 (e) Establishing a policy for holding public hearings prior to approval 25 of premium increases; and 26 (f) Establishing standards for medicare select policies and certificates. 27 (6) The director may adopt reasonable rules that specify prohibited pol- 28 icy provisions not otherwise specifically authorized by statute which, in the 29 opinion of the director, are unjust, unfair or unfairly discriminatory to any 30 person insured or proposed to be insured under a medicare supplement policy or 31 certificate. 32 41-4405. LOSS RATIO STANDARDS. Medicare supplement policies shall return 33 to policyholders benefits which are reasonable in relation to the premium 34 charged. The director may issue reasonable rules to establish minimum stan- 35 dards for loss ratios of medicare supplement policies on the basis of incurred 36 claims experience, or incurred health care expenses where coverage is provided 37 by a managed care organization on a service rather than reimbursement basis, 38 and earned premiums in accordance with accepted actuarial principles and prac- 39 tices. 40 41-4406. DISCLOSURE STANDARDS. (1) In order to provide for full and fair 41 disclosure in the sale of medicare supplement policies, no medicare supplement 42 policy or certificate shall be delivered in this state unless an outline of 43 coverage is delivered to the applicant at the time application is made. 44 (2) The director may prescribe the format and content of the outline of 45 coverage required by this section. For purposes of this section, "format" 46 means style, arrangements and overall appearance, including such items as the 47 size, color and prominence of type and arrangement of text and captions. The 48 outline of coverage shall include: 49 (a) A description of the principal benefits and coverage provided in the 50 policy; 51 (b) A statement of the renewal provisions, including any reservation by 52 the issuer of a right to change premiums; 53 (c) A statement that the outline of coverage is a summary of the policy 4 1 issued or applied for and that the policy should be consulted to determine 2 governing contractual provisions. 3 (3) The director may prescribe by rule a standard form and the contents 4 of an informational brochure for persons eligible for medicare, which is 5 intended to improve the buyer's ability to select the most appropriate cover- 6 age and improve the buyer's understanding of medicare. Except in the case of 7 direct response insurance policies, the director may require by rule that the 8 informational brochure be provided to any prospective insureds eligible for 9 medicare concurrently with delivery of the outline of coverage. With respect 10 to direct response insurance policies, the director may require by rule that 11 the prescribed brochure be provided upon request to any prospective insureds 12 eligible for medicare, but in no event later than the time of policy delivery. 13 (4) The director may adopt rules for captions or notice requirements, 14 determined to be in the public interest and designed to inform prospective 15 insureds that particular insurance coverages are not medicare supplement cov- 16 erages, for all accident and sickness insurance policies sold to persons eli- 17 gible for medicare, other than: 18 (a) Medicare supplement policies; or 19 (b) Disability income policies. 20 (5) The director may adopt reasonable rules to govern the full and fair 21 disclosure of the information in connection with the replacement of accident 22 and sickness policies, or certificates by persons eligible for medicare. 23 41-4407. NOTICE OF FREE EXAMINATION. Medicare supplement policies and 24 certificates shall have a notice prominently printed on the first page of the 25 policy or certificate or attached thereto stating in substance that the appli- 26 cant shall have the right to return the policy or certificate within thirty 27 (30) days of its delivery and to have the premium refunded if, after examina- 28 tion of the policy or certificate, the applicant is not satisfied for any rea- 29 son. A refund made pursuant to this section shall be paid directly to the 30 applicant by the issuer in a timely manner. 31 41-4408. FILING REQUIREMENTS FOR ADVERTISING. Every issuer of medicare 32 supplement insurance policies or certificates in this state shall provide a 33 copy of any medicare supplement advertisement intended for use in this state 34 whether through written, radio or television medium to the director of the 35 Idaho department of insurance for review or approval by the director to the 36 extent it may be required under state law. 37 41-4409. ADMINISTRATIVE PROCEDURES. Rules adopted pursuant to this chap- 38 ter shall be subject to the provisions of chapter 52, title 67, Idaho Code. 39 41-4410. PENALTIES. In addition to any other applicable penalties for 40 violations of the insurance code, the director may require issuers violating 41 any provision of this chapter or rules promulgated pursuant to this chapter to 42 cease marketing any medicare supplement policy or certificate in this state 43 which is related directly or indirectly to a violation or may require the 44 issuer to take actions necessary to comply with the provisions of this chap- 45 ter, or both. 46 41-4411. SEPARABILITY. If any provision of this act or the application of 47 it to any person or circumstances is for any reason held to be invalid, the 48 remainder of the act and the application of the provision to other persons or 49 circumstances shall not be affected. 5 1 SECTION 3. An emergency existing therefor, which emergency is hereby 2 declared to exist, this act shall be in full force and effect on and after its 3 passage and approval, and retroactively to January 1, 1999.
STATEMENT OF PURPOSE
RS08334C1
This act repeals the existing Chapter 44, Title 41, Idaho Code, and
replaces it with a new Chapter 44, setting forth minimum standards
for Medicare supplement insurance products. The new act is based
on model legislation created to address changes in federal law
relating to Medicare supplement insurance products.
FISCAL IMPACT
None.
CONTACT
Name: Joan Krosch
Agency: Department of Insurance
Phone: 334-4300
Statement of Purpose/Fiscal Impact H 4