20 CSR 400-3.500 - Medicare Supplement Insurance Minimum Standards-December 31, 1990 to July 29, 1992

PURPOSE: This rule provides for the reasonable standardization of coverage and simplification of terms and benefits of Medicare supplement policies; facilitates public understanding and comparison of these policies; eliminates provisions contained in the policies which may be misleading or confusing in connection with the purchase of the policies or with the settlement of claims; and provides for full disclosures in the sale of accident and sickness insurance coverages to persons eligible for Medicare by reason of age.

(1) Applicability and Scope. Except as otherwise specifically provided in sections (8) and (9), this rule shall-

(A) Apply to all Medicare supplement policies and subscriber contracts delivered or issued for delivery in this state on or after the effective date of this rule, December 31, 1990 and before July 30, 1992 except to the extent modified by 20 CSR 400-3.600(5);

(B) Apply to all certificates delivered or issued for delivery in this state under group Medicare supplement policies or subscriber contracts; and

(C) Not apply to a policy or contract of one (1) or more employers or labor organizations, or of the trustees of a fund established by one (1) or more employers or labor organizations, or a combination of them, for employees or former employees or a combination of them, or for members or former members, or a combination of them, of the labor organizations.

(2) Definitions. For the purposes of this rule-

(A) Applicant means-

1. In the case of an individual Medicare supplement policy or subscriber contract, the person who seeks to contract for insurance benefits; and

2. In the case of a group Medicare supplement policy or subscriber contract, the proposed certificate holder;

(B) Certificate means any certificate delivered or issued for delivery in this state under a group Medicare supplement policy or subscriber contract; and

(C) Medicare supplement policy means a group or individual policy of accident and sickness insurance or a subscriber contract of a health service corporation or health maintenance organization (HMO) which is advertised, marketed or designed primarily as a supplement to reimbursements under Medicare for the hospital, medical or surgical expenses of persons eligible for Medicare by reason of age. A contract or certificate of an HMO which provides coverage to Medicare enrollees in connection with the HMO's contract with the Health Care Financing Administration (HCFA) is not considered a Medicare supplement policy for the purposes of this regulation.

(3) Policy Definitions and Terms. No insurance policy or subscriber contract may be advertised, solicited or issued for delivery in this state as a Medicare supplement policy unless the policy or subscriber contract contains definitions or terms which conform to the requirements of this section.

(A) Accident or accidental injury shall be defined to employ result language and shall not include words which establish an accidental means test or use words such as external, violent, visible wounds or similar words of description or characterization.

1. The definition shall not be more restrictive than the following: Injury(ies) for which benefits are provided means accidental bodily injury sustained by the insured person which is the direct result of an accident, independent of disease or bodily infirmity or any other cause and occurs while insurance coverage is in force.

2. The definition may provide that injuries shall not include injuries for which benefits are provided or available under any Workers' Compensation, employer's liability or similar law, or motor vehicle no-fault plan, unless prohibited by law.

(B) Benefit period or Medicare benefit period shall not be defined more restrictively than it is defined in the Medicare program.

(C) Convalescent nursing home, extended care facility or skilled nursing facility shall be defined in relation to its status, facilities and available services.

1. No definition shall be more restrictive than one requiring that it-

A. Be operated pursuant to law;

B. Be primarily engaged in providing, in addition to room and board accommodations, skilled nursing care under the supervision of a duly licensed physician;

C. Provide continuous twenty-four (24)-hour-a-day nursing service by or under the supervision of a registered graduate professional nurse (RN); and

D. Maintain a daily medical record of each patient.

2. The definition may exclude-

A. Any home, facility or any part of a home or facility used primarily for rest;

B. A home or facility for the aged or for the care of drug addicts or alcoholics; or

C. A home or facility primarily used for the care and treatment of mental diseases or disorders, or custodial or educational care.

(D) Health care expenses means expenses of HMOs associated with the delivery of health care services which are analogous to incurred losses of insurers. These expenses shall not include:

1. Home office or overhead costs;

2. Advertising costs;

3. Commissions and other acquisition costs;

4. Taxes;

5. Capital costs;

6. Administrative costs; or

7. Claims processing costs.

(E) Hospital may be defined in relation to its status, facilities and available services or to reflect its accreditation by the Joint Commission on Accreditation of Hospitals.

1. The definition of the term hospital shall not be more restrictive than one requiring that the hospital-

A. Operate pursuant to law;

B. Primarily and continuously engage in providing or operating, either on its premises or in facilities available to the hospital on a prearranged basis and under the supervision of a staff of duly licensed physicians, medical, diagnostic and major surgical facilities for the medical care and treatment of sick or injured persons on an inpatient basis for which a charge is made; and

C. Provide twenty-four (24)-hour nursing service by or under the supervision of RNs.

2. The definition of the term hospital may state that the term shall not include:

A. Convalescent homes, convalescent, rest or nursing facilities;

B. Facilities primarily affording custodial, educational or rehabilitory care;

C. Facilities for the aged, drug addicts or alcoholics; or

D. Any military or veterans' hospital or soldiers' home or any hospital contracted for or operated by any national government or its agency for the treatment of members or ex-members of the armed forces, except for services rendered on an emergency basis where a legal liability exists for charges made to the individual for those services.

(F) Medicare shall be defined in the policy. Medicare may be substantially defined as The Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 or Title I, Part I of P.L. 89-97, as enacted by the Eighty-Ninth Congress of the United States of America and popularly known as The Health Insurance for the Aged Act.

(G) Medicare-eligible expenses shall mean health care expenses of the kinds covered by Medicare, to the extent recognized as reasonable by Medicare. Payment of benefits by insurers for Medicare-eligible expenses may be conditioned upon the same or less restrictive payment conditions, including determinations of medical necessity as are applicable to Medicare claims.

(H) Mental or nervous disorders shall not be defined more restrictively than a definition including neurosis, psychoneurosis, psychopathy, psychosis or mental or emotional disease, or disorder of any kind.

(I) Nurses may be defined so that the description of nurse is restricted to a type of nurse, such as an RN, a licensed practical nurse (LPN) or a licensed vocational nurse (LVN). If the words nurse, trained nurse or registered nurse are used without specific instruction, then the use of those terms requires the insurer to recognize the services of any individual who qualified under the terminology in accordance with the applicable statutes or administrative rules of the State Board of Nursing.

(J) Physician may be defined by including words such as duly qualified physician or duly licensed physician. The use of these terms requires an insurer to recognize and to accept, to the extent of its obligation under the contract, all providers of medical care and treatment when those services are within the scope of the provider's licensed authority and are provided pursuant to applicable laws.

(K) Sickness shall not be defined to be more restrictive than the following: Sickness means sickness or disease of an insured person which first manifests itself after the effective date of insurance and while the insurance is in force. The definition may be further modified to exclude sicknesses or diseases for which benefits are provided under any Workers' Compensation, occupational disease, employer's liability or similar law.

(4) Prohibited Policy Provisions.

(A) No insurance policy or subscriber contract may be advertised, solicited or issued for delivery in this state as a Medicare supplement policy if that policy or subscriber contract limits or excludes coverage by type of illness, accident, treatment or medical condition, except as follows:

1. Foot care in connection with corns, calluses, flat feet, fallen arches, weak feet, chronic foot strain or symptomatic complaints of the feet;

2. Mental or emotional disorders, alcoholism and drug addiction;

3. Illness, treatment or medical condition arising out of-

A. War or act of war (whether declared or undeclared); participation in a felony, riot or insurrection; service in the armed forces or their auxiliary units;

B. Suicide or attempted suicide, while sane, or intentionally self-inflicted injury; or

C. Aviation;

4. Cosmetic surgery, except that cosmetic surgery shall not include reconstructive surgery when that service is incidental to or follows surgery resulting from trauma, infection or other diseases of the involved part;

5. Care in connection with the detection and correction by manual or mechanical means of structural imbalance, distortion or subluxation in the human body for purposes of removing nerve interference and its effect, where that interference is the result of or related to distortion, misalignment or subluxation of, or in, the vertebral column;

6. Treatment provided in a governmental hospital; benefits provided under Medicare or other governmental program (except Medicaid), any state or federal Workers' Compensation, employer's liability or occupational disease law, or any motor vehicle no-fault law; services rendered by employees of hospitals, laboratories or other institutions; services performed by a member of the covered person's immediate family and services for which no charge is normally made in the absence of insurance;

7. Dental care or treatment;

8. Eye glasses, hearing aids and examination for prescribing or fitting them;

9. Rest cures, custodial care, transportation and routine physical examinations; and

10. Territorial limitations outside the United States.

(B) Medicare supplement policies may not contain limitations or exclusions of the type enumerated in paragraph (4)(A)1., 2., 5., 7. or 10. that are more restrictive than those of Medicare. Medicare supplement policies may exclude coverage for any expense to the extent of any benefit available to the insured under Medicare.

(C) No Medicare supplement policy may use waivers to exclude, limit or reduce coverage or benefits for specifically named or described preexisting diseases or physical conditions.

(D) The terms Medicare supplement, Medigap and words of similar import shall not be used unless the policy is issued in compliance with this rule.

(5) Benefit Conversion Requirements.

(A) Effective January 1, 1990 no Medicare supplement insurance policy, contract or certificate in force in this state shall contain benefits which duplicate benefits provided by Medicare.

(B) Benefits eliminated by operation of the Medicare Catastrophic Coverage Act of 1988 transition provisions shall be restored.

(C) For Medicare supplement policies subject to the minimum standards adopted by the states pursuant to Medicare Catastrophic Coverage Act of 1988, the minimum benefits shall be-

1. Coverage of Part A Medicare-eligible expenses for hospitalization to the extent not covered by Medicare from the sixty-first through the ninetieth day in any Medicare benefit period;

2. Coverage for either all or none of the Medicare Part A inpatient hospital deductible amount;

3. Coverage of Part A Medicare-eligible expenses incurred as daily hospital charges during use of Medicare's lifetime hospital inpatient reserve days;

4. Upon exhaustion of all Medicare hospital inpatient coverage including the lifetime reserve days, of ninety percent (90%) of all Medicare Part A-eligible expenses for hospitalization not covered by Medicare subject to a lifetime maximum benefit of an additional three hundred sixty-five (365) days;

5. Coverage under Medicare Part A for the reasonable cost of the first three (3) pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations) unless replaced in accordance with federal regulations or already paid for under Part A;

6. Coverage for the coinsurance amount of Medicare-eligible expenses under Part B regardless of hospital confinement subject to a maximum calendar year out-of-pocket amount equal to the Medicare Part B deductible (seventy-five dollars ($75)); and

7. Effective January 1, 1990, under Medicare Part B for the reasonable cost of the first three (3) pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations), unless replaced in accordance with federal regulations or already paid for under Part A, subject to the Medicare deductible amount.

(6) Minimum Standards. No insurance policy or subscriber contract may be advertised, solicited or issued for delivery in this state as a Medicare supplement policy which does not meet the following minimum standards. These are minimum standards and do not preclude the inclusion of other provisions or benefits which are not inconsistent with these standards:

(A) General Standards. The following standards apply to Medicare supplement policies and are in addition to all other requirements of this rule:

1. A Medicare supplement policy may not deny a claim for losses incurred more than six (6) months from the effective date of coverage for a preexisting condition. The policy may not define a preexisting condition more restrictively than a condition for which medical advice was given or treatment was recommended by or received from a physician within six (6) months before the effective date of coverage;

2. A Medicare supplement policy may not indemnify against losses resulting from sickness on a different basis than losses resulting from accidents;

3. A Medicare supplement policy may not contain a provision which reduces benefit payments due to the existence of other Medicare supplement coverage. Coverage must provide that insureds are entitled to a return of all premiums paid for duplicate coverage with the same insurer;

4. A Medicare supplement policy shall provide that benefits designed to cover cost sharing amounts under Medicare will be changed automatically to coincide with any changes in the applicable Medicare deductible amount and copayment percentage factors. Premiums may be modified to correspond with the changes;

5. A noncancelable, guaranteed renewable or noncancelable and guaranteed renewable Medicare supplement policy shall not-

A. Provide for termination of coverage of a spouse solely because of the occurrence of an event specified for termination of coverage of the insured, other than the nonpayment of premium; or

B. Be cancelled or nonrenewed by the insurer solely on the grounds of deterioration of health;

6. An insurer shall neither cancel nor nonrenew an individual Medicare supplement policy or group certificate for any reason other than nonpayment of premium or material misrepresentation. If a group Medicare supplement insurance policy is terminated by the group policyholder and not replaced as provided in subsection (5)(D), the insurer shall offer certificate holders an individual Medicare supplement policy. The insurer shall offer the certificate holder at least the following choices:

A. An individual Medicare supplement policy which provides for continuation of the benefits contained in the group policy;

B. An individual Medicare supplement policy which provides only benefits required to meet the minimum standards;

C. If membership in a group is terminated, the insurer shall offer-

(I) The certificate holder conversion opportunities such as those described in subsections (6)(A) and (B); or

(II) The certificate holder continuation of coverage under the group policy, at the option of the group policyholder; and

D. If a group Medicare supplement policy is replaced by another group Medicare supplement policy purchased by the same policyholder, the succeeding insurer 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; and

7. Termination of a Medicare supplement policy shall be without prejudice to any continuous loss which commenced while the policy was in force, but the extension of benefits beyond the period during which the policy was in force may be predicated upon the continuous total disability of the insured, limited to the duration of the policy benefit period, if any, or payment of the maximum benefits; and

(B) Minimum Benefit Standards.

1. Coverage of Part A Medicare-eligible expenses for hospitalization to the extent not covered by Medicare from the sixty-first through the ninetieth day in any Medicare benefit period.

2. Coverage for either all or none of the Medicare Part A inpatient hospital deductible amount.

3. Coverage of Part A Medicare-eligible expenses incurred as daily hospital charges during use of Medicare's lifetime hospital inpatient reserve days.

4. Upon exhaustion of all Medicare hospital inpatient coverage including the lifetime reserve days, coverage of ninety percent (90%) of all Medicare Part A-eligible expenses for hospitalization not covered by Medicare, subject to a lifetime maximum benefit of an additional three hundred sixty-five (365) days.

5. Coverage under Medicare Part A for the reasonable cost of the first three (3) pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations) unless replaced in accordance with federal regulations or already paid for under Part B.

6. Coverage for the coinsurance amount of Medicare-eligible expenses under Part B regardless of hospital confinement, subject to a maximum calendar year out-of-pocket amount equal to the Medicare Part B deductible (seventy-five dollars ($75)) maximum benefit.

7. Effective January 1, 1990 coverage under Medicare Part B for the reasonable cost of the first three (3) pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations), unless replaced in accordance with federal regulations or already paid for under Part A, subject to the Medicare deductible amount.

(7) Standards for Claims Payment.

(A) Every entity providing Medicare supplement policies or contracts shall comply with all provisions of Section 4081 of the Omnibus Budget Reconciliation Act of 1987 ( P.L. 100-203 ).

(B) Compliance with the requirements set forth in subsection (7)(A) must be certified on the Medicare supplement insurance experience reporting form.

(8) Loss Ratio Standards.

(A) For the purposes of this section, policy forms shall be deemed to comply with the loss ratio standards if-

1. For the most recent year, the ratio of the incurred losses to earned premiums for policies or certificates which have been in force for three (3) years or more is greater than or equal to the applicable percentages contained in this section; and

2. The expected losses in relation to premiums over the entire period for which the policy is rated comply with the requirements of this section. An expected third-year loss ratio which is greater than or equal to the applicable percentage shall be demonstrated for policies or certificates in force less than three (3) years.

(B) Medicare supplement policies shall return to policyholders in the form of aggregate benefits under the policy, for the entire period for which rates are computed to provide coverage, on the basis of incurred claims experience or incurred health care expenses where coverage is provided by an HMO on a service rather than reimbursement basis, and earned premiums for the period and in accordance with accepted actuarial principles and practices at least-

1. Seventy-five percent (75%) of the aggregate amount of premiums earned in the case of group policies; and

2. Sixty percent (60%) of the aggregate amount of premiums earned in the case of individual policies.

(C) All filings of rates and rating schedules shall demonstrate that actual and expected losses in relation to premiums comply with the requirements of this section. In determining compliance with the loss ratio standards in section (8), the actual and expected incurred losses shall not include:

1. Loss adjustment expenses;

2. Active life reserves; and

3. Other claim reserves that would be found excessive or inconsistent with accepted actuarial standards.

(D) Every entity providing Medicare supplement policies in this state annually shall file its rates, rating schedules and supporting documentation on a form prescribed by the director including ratios of incurred losses-to-earned premiums by number of years of policy duration demonstrating that it is in compliance with the foregoing applicable loss ratio standards and that the period for which the policy is rated is reasonable in accordance with accepted actuarial principles and experience.

(E) Any change to a rate schedule must be filed and approved by the director. The rate change request must be accompanied by supporting documentation as set forth in subsection (8)(D).

(F) As soon as practicable, but prior to the effective date of Medicare benefit changes, every insurer, health care service plan or other entity providing Medicare supplement insurance or contracts in this state shall file with the director-

1. Appropriate premium adjustments necessary to produce loss ratios as originally anticipated for the applicable policies or contracts. Supporting documents necessary to justify the adjustment shall accompany the filing, and every insurer, health care service plan or other entity providing Medicare supplement insurance or benefits to a resident of this state pursuant to sections 376.850- 376.890, RSMo shall make the premium adjustments necessary to produce an expected loss ratio under the standards for Medicare supplement policies and which are expected to result in a loss ratio at least as great as that originally anticipated in the rates used to produce current premiums by the insurer, health care service plan or other entity for the Medicare supplement insurance policies or contracts. No premium adjustment which would modify the loss ratio experience under the policy other than the adjustments described in this rule should be made with respect to a policy at any time other than upon its renewal date or anniversary date; and

2. Any appropriate riders, endorsements or policy forms needed to accomplish the Medicare supplement insurance modifications necessary to eliminate benefit duplications with Medicare. Any riders, endorsements or policy forms shall provide a clear description of the Medicare supplement benefits provided by the policy or contract.

(9) Filing Requirements for Out-of-State Group Policies. Every insurer providing group Medicare supplement insurance benefits to a resident of this state pursuant to sections 376.850-376.890, RSMo shall file a copy of the master policy and any certificate used in this state in accordance with the filing requirements and procedures applicable to group Medicare supplement policies issued in this state; however, no insurer shall be required to make a filing earlier than thirty (30) days after insurance was provided to a resident of this state under a master policy issued for delivery outside this state.

(10) Permitted Compensation Arrangements.

(A) An insurer or other entity may provide commission or other compensation to an agent or other representative for the sale of a Medicare supplement policy or certificate only if the first year commission or other first year compensation is no more than two hundred percent (200%) of the commission or other compensation paid for selling or servicing the policy or certificate in the second year or period.

(B) The commission or other compensation provided in subsequent (renewal) years must be the same as that provided in the second year or period and must be provided for no less than three (3) renewal years.

(C) No entity shall provide compensation to its agents or other producers and no agent or producer shall receive compensation greater than the renewal compensation payable by the replacing insurer on renewal policies or certificates if an existing policy or certificate is replaced unless benefits of the new policy or certificate are clearly and substantially greater than the benefits under the replaced policy.

(D) An agent writing a replacement policy shall complete a form substantially similar to that attached as Appendix B at the time of solicitation. The form shall be maintained in the company's underwriting file.

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(E) For purposes of this section, compensation includes pecuniary or nonpecuniary remuneration of any kind relating to the sale or renewal of the policy or certificate including, but not limited to, bonuses, gifts, prizes, awards and finders' fees.

(11) Required Disclosure Provisions.

(A) General Rules.

1. Medicare supplement policies shall include a renewal or continuation provision. The language or specifications of the provision must be consistent with the type of contract issued. The provision shall be appropriately captioned and shall appear on the first page of the policy.

2. Except for riders or endorsements by which the insurer effectuates a request made in writing by the insured, exercises a specifically reserved right under a Medicare supplement policy or is required to reduce or eliminate benefits to avoid duplication of Medicare benefits, all riders or endorsements added to a Medicare supplement policy after date of issue or at reinstatement or renewal which reduce or eliminate benefits or coverage in the policy shall require a signed acceptance by the insured. After the date of policy issue, any rider or endorsement which increases benefits or coverage together with an increase in premium during the policy term must be agreed to in writing signed by the insured, unless the benefits are required by the minimum standards for Medicare supplement insurance policies or if the increased benefits or coverage are required by law. Where a separate additional premium is charged for benefits provided in connection with riders or endorsements, that premium charge shall be set forth in the policy.

3. A Medicare supplement policy which provides for the payment of benefits based on standards described as usual and customary, reasonable and customary, or words of similar import shall include a definition of those terms and an explanation of them in the policy's accompanying outline of coverage.

4. If a Medicare supplement policy contains any limitations with respect to preexisting conditions, those limitations must appear as a separate paragraph of the policy and be labeled as preexisting condition limitations.

5. Medicare supplement policies or certificates shall have a notice prominently printed on the first page of the policy or certificate, or attached to it, stating in substance that the policyholder or certificate holder shall have the right to return the policy or certificate within thirty (30) days of its delivery and to have the premium refunded if, after examination of the policy or certificate, the insured person is not satisfied for any reason.

6. Insurers issuing accident and sickness policies, certificates or subscriber contracts which provide hospital or medical expense coverage on an expense-incurred or indemnity basis, other than incidentally, to a per-son(s) eligible for Medicare by reason of age shall provide to all applicants a Medicare Supplement Buyer's Guide in the form developed jointly by the National Association of Insurance Commissioners and the HCFA. Delivery of the Buyer's Guide shall be made whether or not the policies, certificates or subscriber contracts are advertised, solicited or issued as Medicare supplement policies as defined in this regulation. Except in the case of direct response insurers, delivery of the Buyer's Guide shall be made to the applicant at the time of application. Acknowledgment of receipt of the Buyer's Guide shall be obtained by the insurer. Direct response insurers shall deliver the Buyer's Guide to the applicant upon request but not later than at the time the policy is delivered.

(B) Notice Requirements.

1. As soon as practicable, but no later than thirty (30) days prior to the annual effective date of any Medicare benefit changes, every insurer, health care service plan or other entity providing Medicare supplement insurance or benefits to a resident of this state shall notify its policyholders, contract holders and certificate holders of modifications it has made to Medicare supplement insurance policies or contracts in the format prescribed in Appendix A if no other format is prescribed by the director. This notice shall-

A. Include a description of revisions to the Medicare program and a description of each modification made to the coverage provided under the Medicare supplement insurance policy or contract; and

B. Inform each covered person as to when any premium adjustment is to be made due to changes in Medicare.

2. The notice of benefit modifications and any premium adjustments shall be in outline form and in clear and simple terms so as to facilitate comprehension.

3. These notices shall not contain or be accompanied by any solicitation.

(C) Outline of Coverage Requirements for Medicare Supplement Policies.

1. Insurers issuing Medicare supplement policies or certificates for delivery in this state shall provide an outline of coverage to all applicants at the time application is made and, except for direct response policies, shall obtain an acknowledgment of receipt of the outline from the applicant.

2. If an outline of coverage is provided at the time of application and the Medicare supplement policy or certificate is issued on a basis which would require revision of the outline, a substitute outline of coverage properly describing the policy or certificate must accompany the policy or certificate when it is delivered. The substitute outline shall contain the following statement, in no less than twelve (12)-point type, immediately above the company name: NOTICE: Read this outline of coverage carefully. It is not identical to the outline of coverage provided upon application and the coverage originally applied for has not been issued.

3. The outline of coverage provided to applicants pursuant to paragraphs (11)(B)1. and 2. shall be in the following form:

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(D) Notice Regarding Policies or Subscriber Contracts Which Are Not Medicare Supplement Policies. Any accident and sickness insurance policy or subscriber contract, other than a Medicare supplement policy; or a policy issued pursuant to a contract under Section 1876 of the Federal Social Security Act ( 42 USC Section 1395 ), disability income policy; basic, catastrophic or major medical expense policy; single premium non-renewable policy or other policy identified in subsection (1)(B) of this rule, issued for delivery in this state to persons eligible for Medicare by reason of age shall notify insureds under the policy or subscriber contract that the policy or subscriber contract is not a Medicare supplement policy. This notice shall either be printed or attached to the first page of the outline of coverage delivered to insureds under the policy or subscriber contract or, if no outline of coverage is delivered, to the first page of the policy, certificate or subscriber contract delivered to insureds. This notice shall be in no less than twelve (12)-point type and shall contain the following language: THIS (POLICY, CERTIFICATE OR SUBSCRIBER CONTRACT) IS NOT A MEDICARE SUPPLEMENT (POLICY OR CONTRACT). If you are eligible for Medicare, review the Medicare Supplement Buyer's Guide available from the company.

(12) Requirements for Application Forms and Replacement Coverage.

(A) Application forms shall include the following questions designed to elicit information as to whether, as of the date of the application, the applicant has another Medicare supplement insurance policy or certificate in force or whether a Medicare supplement policy or certificate is intended to replace any other accident and sickness policy or certificate presently in force. A supplementary application or other form to be signed by the applicant and agent, except where the coverage is sold without an agent, containing these questions may be used.

1. Do you have another Medicare supplement insurance policy or certificate in force (including a health care service contract or HMD contract)?

2. Did you have another Medicare supplement policy or certificate in force during the last twelve (12) months?

A. If so, with which company?

B. If that policy lapsed, when did it lapse?

3. Are you covered by Medicaid?

4. Do you intend to replace any of your medical or health insurance coverage with this policy (certificate)?

(B) Agents shall list any other health insurance policies they have sold to the applicant.

1. List policies sold which are still in force.

2. List policies sold in the past five (5) years which are no longer in force.

(C) Upon determining that a sale will involve replacement, an insurer, other than a direct response insurer or its agent, shall furnish the applicant, prior to issuance or delivery of the Medicare supplement policy or certificate, a notice regarding replacement of accident and sickness coverage. One (1) copy of the notice signed by the applicant and the agent, except where the coverage is sold without an agent, shall be provided to the applicant and an additional signed copy shall be retained by the insurer. A direct response insurer shall deliver to the applicant at the time of the issuance of the policy the notice regarding replacement of accident and sickness coverage.

(D) The notice required by subsection (12)(C) for an insurer, other than a direct response insurer, shall be provided in substantially the following form:

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(13) Filing Requirements for Advertising. Every insurer, health care service plan or other entity providing Medicare supplement insurance or benefits in this state shall provide a copy of any Medicare supplement advertisement intended for use in this state whether through written, radio or television medium to the director of insurance of this state for review.

(14) Standards for Marketing.

(A) Every insurer, health care service plan or other entity marketing Medicare supplement insurance coverage in this state, directly or through its producers, shall-

1. Establish marketing procedures to assure that any comparison of policies by its agents or other producers will be fair and accurate;

2. Establish marketing procedures to assure that excessive insurance is not sold or issued;

3. Display prominently by type, stamp or other appropriate means, on the first page of the outline of coverage and policy the following: "Notice to buyer: This policy may not cover all of the costs associated with medical care incurred by the buyer during the period of coverage. The buyer is advised to review carefully all policy limitations";

4. Inquire and otherwise make every reasonable effort to identify whether a prospective applicant or enrollee for Medicare supplement insurance already has accident and sickness insurance and the types and amounts of the insurance; and

5. Establish auditable procedures for verifying compliance with subsection (14)(A).

(B) In addition to the practices prohibited in sections 375.930-375.948, RSMo, the following acts and practices are prohibited:

1. Twisting-knowingly making any misleading representation, or incomplete or fraudulent comparison of any insurance policies or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on or convert any insurance policy or to take out a policy of insurance with another insurer;

2. High pressure tactics-employing any method of marketing having the effect of or tending to induce the purchase of insurance through force, fright, threat, whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance; and

3. Cold lead advertising-making use directly or indirectly of any method of marketing which fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance agent or insurance company.

(15) Appropriateness of Recommended Purchase and Excessive Insurance.

(A) In recommending the purchase or replacement of any Medicare supplement policy or certificate, an agent shall make reasonable efforts to determine the appropriateness of a recommended purchase or replacement.

(B) Any sale of Medicare supplement coverage which will provide an individual more than one (1) Medicare supplement policy or certificate is prohibited; provided, however, that additional Medicare supplement coverage may be sold if, when combined with that individual's health coverage already in force, it would insure no more than one hundred percent (100%) of the individual's actual medical expenses covered under the combined policies.

(16) Reporting of Multiple Policies.

(A) On or before March 1, every insurer or other entity providing Medicare supplement insurance coverage in this state shall report the following information for every individual resident of this state for which the insurer or entity has in force more than one (1) Medicare supplement insurance policy or certificate:

1. Policy and certificate number; and

2. Date of issuance.

(B) The items set forth in paragraphs (16)(A)1. and 2. must be grouped by individual policyholder.

(17) Prohibition Against Preexisting Conditions, Waiting Periods, Elimination Periods and Probationary Periods in Replacement Policies or Certificates. If a Medicare supplement policy or certificate replaces another Medicare supplement policy or certificate, the replacing insurer shall waive any time periods applicable to preexisting conditions, waiting periods, elimination periods and probationary periods in the new Medicare supplement policy for similar benefits to the extent the time was spent under the original policy.

(18) Separability. If any provision of this rule or its application to any person or circumstance is for any reason held to be invalid, the remainder of the regulation and the application of the provision to other persons or circumstances shall not be affected by it.

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Notes

20 CSR 400-3.500

AUTHORITY: sections 374.045.1(2), RSMo 1986 and 376.869, RSMo Supp. 1990.* This rule was previously filed as 4 CSR 190-14.625. Original rule filed July 17, 1990, effective Dec. 31, 1990. Emergency amendment filed July 6, 1992, effective July 30, 1992, expired Nov. 26, 1992. Amended: Filed July 6, 1992, effective April 8, 1993.

The secretary of state has determined that the publication of this rule in its entirety would be unduly cumbersome or expensive. The entire text of the material referenced has been filed with the secretary of state. This material may be found at the Office of the Secretary of State or at the headquarters of the agency and is available to any interested person at a cost established by state law.

*Original authority: 374.045.1, RSMo 1967 and 376.869, RSMo 1989, amended 1992.