Title 3 . Commerce, Community, and Economic Development

Chapter 28 . Miscellaneous

Section 453. Minimum benefit standards for policies or certificates issued in this state

3 AAC 28.453. Minimum benefit standards for policies or certificates issued in this state

(a) Standards. Except as otherwise provided in 3 AAC 28.450, a policy or certificate may not be advertised, solicited, delivered, or issued for delivery in this state as a medicare supplement policy or certificate unless it complies with the benefit standards set out in this section.

(b) General Standards. The following standards apply to medicare supplement policies and certificates and are in addition to other requirements set out in 3 AAC 28.410 - 3 AAC 28.510:

(1) a medicare supplement policy or certificate may not exclude or limit benefits for a loss incurred more than six months from the effective date of coverage because the loss involved a preexisting condition; a policy or certificate 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 months before the effective date of coverage;

(2) a medicare supplement policy or certificate may not indemnify against losses resulting from sickness on a different basis than losses resulting from accidents;

(3) a medicare supplement policy or certificate must provide that benefits designed to cover cost-sharing amounts under medicare will be changed automatically to coincide with any changes in applicable medicare deductible amount and copayment percentage factors; premiums may be modified to correspond with the changes;

(4) a medicare supplement policy or certificate may not 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;

(5) a medicare supplement policy must be guaranteed renewable and

(A) the issuer may not cancel or nonrenew the policy solely on the ground of health status of the individual;

(B) the issuer may not cancel or nonrenew the policy for any reason other than nonpayment of premium or material misrepresentation by the individual;

(C) if the medicare supplement policy is terminated by the group policyholder and is not replaced under (E) of this paragraph, the issuer shall offer each certificate holder an individual medicare supplement policy that, at the option of the certificate holder, provides for

(i) continuation of the benefits contained in the group policy; or

(ii) benefits that otherwise meet the requirements of this subsection;

(D) if an individual is a certificate holder in a group medicare supplement policy and the individual terminates membership in the group, the issuer shall

(i) offer the certificate holder an opportunity to convert the group policy under (C) of this paragraph; or,

(ii) at the option of the group policyholder, offer the certificate holder continuation of coverage under the group policy;

(E) if a group medicare supplement policy is replaced by another group medicare supplement policy purchased by the same policyholder, the issuer of the replacement policy shall offer coverage to all individuals covered under the old group policy on its date of termination; coverage under the new policy may not result in any exclusion for preexisting conditions that would have been covered under the group policy that is being replaced;

(F) if an issuer modifies a medicare supplement policy to remove an outpatient prescription benefit as a result of requirements imposed by P.L. 108 - 173 (Medicare Prescription Drug, Improvement, and Modernization Act of 2003), the issuer's renewal of the modified policy satisfies the guaranteed renewal requirements under this paragraph;

(6) the termination of a medicare supplement policy or certificate must be without prejudice to a continuous loss that commenced while that policy was in force, but the extension of benefits beyond the period during which that policy was in force may be conditioned upon the continuous total disability of the insured, limited to the duration of the policy benefit period, if any, or the payment of the maximum benefits; receipt of medicare Part D benefits may not be considered in determining a continuous loss;

(7) a medicare supplement policy or certificate must provide that benefits and premiums under the policy or certificate must be suspended at the request of the policyholder or certificate holder for the period, not to exceed 24 months, in which the policyholder or certificate holder has applied for and is determined to be entitled to medicaid under 42 U.S.C. 1396 - 1396u (Title XIX of the Social Security Act), but only if that policyholder or certificate holder notifies the issuer of the policy or certificate within 90 days after the date that policyholder or certificate holder becomes entitled to the assistance;

(8) if a suspension occurs under (7) of this subsection and if the policyholder or certificate holder loses entitlement to medicaid, the policy or certificate must be automatically reinstated as of the date of the termination of that entitlement if the policyholder or certificate holder provides notice of loss of that entitlement within 90 days after the date of the loss and pays the premium attributable to the period, calculated from the date of termination of the entitlement to medicaid; and

(9) reinstatement of the coverage described in (8) and (10) of this subsection

(A) may not provide for any waiting period with respect to the treatment of preexisting conditions;

(B) must provide for the resumption of coverage that is substantially equivalent to coverage in effect before the date of the suspension, but may not include coverage for outpatient prescription drugs if the medicare supplement policy that was suspended included that coverage and the policyholder or certificate holder is enrolled in medicare Part D; and

(C) must provide for classification of premiums on terms at least as favorable to the policyholder or certificate holder as the premium classification terms that would have applied to the policyholder or certificate holder had the coverage not been suspended.

(10) a medicare supplement policy or certificate must provide that benefits and premiums under the policy or certificate will be suspended at the request of the policyholder or certificate holder if the policyholder or certificate holder is entitled to benefits under 42 U.S.C. 426(b) (sec. 226(b) of the Social Security Act), and is covered under a group health plan as defined in 42 U.S.C. 1395y(b)(1)(A)(v) (sec. 1862(b)(1)(A)(v) of the Social Security Act); if suspension occurs and if the policyholder or certificate holder loses coverage under the group health plan, the policy must be automatically reinstated as of the date of loss of coverage if the policyholder or certificate holder provides notice of loss of coverage within 90 days after the date of the loss and pays the premium attributable to the period as of the date of termination of enrollment in the group health plan.

(c) Standards for Basic (Core) Benefits Common to Benefit Plans "A" through "J." An issuer shall make available a policy or certificate including only the basic core benefits to a prospective insured. An issuer may make available to a prospective insured medicare supplement insurance benefit plans "A" through "J" in addition to the basic core benefits, but not instead of it. The basic core benefits must contain

(1) coverage of medicare Part A eligible expenses for hospitalization to the extent not covered by medicare from the 61st day through the 90th day in any medicare benefit period;

(2) coverage of medicare Part A eligible expenses incurred for hospitalization to the extent not covered by medicare for each medicare lifetime inpatient reserve day used;

(3) upon exhaustion of the medicare hospital inpatient coverage, including the lifetime reserve days, coverage of 100 percent of the medicare Part A eligible expenses for hospitalization paid at the applicable prospective payment system (PPS) rate, or other appropriate medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days;

(4) coverage under medicare Parts A and B for the reasonable cost of the first three pints of blood, or equivalent quantities of packed red blood cells, as provided under federal regulations; and

(5) coverage for the coinsurance amount, or in the case of hospital outpatient department services paid under a prospective payment system, the copayment amount, of medicare eligible expenses under medicare Part B regardless of hospital confinement, subject to the medicare Part B deductible.

(d) Standards for Additional Benefits. The following additional benefits shall be included only in medicare supplement benefit plans "B" through "J", that are set out in 3 AAC 28.455(e) :

(1) coverage for all of the medicare Part A inpatient hospital deductible amount per benefit period;

(2) coverage for the actual billed charges up to the coinsurance amount from the 21st day through the 100th day in a medicare benefit period for post-hospital skilled nursing facility care eligible under medicare Part A;

(3) coverage for all of the medicare Part B deductible amount per calendar year regardless of hospital confinement;

(4) coverage for 80 percent of the difference between the actual medicare Part B charge as billed, not to exceed any charge limitation established by the medicare program or state law and the medicare-approved Part B charge;

(5) coverage for all of the difference between the actual medicare Part B charge as billed, not to exceed any charge limitation established by the medicare program or state law and the medicare-approved Part B charge;

(6) coverage for 50 percent of outpatient prescription drug charges, after a $250 calendar year deductible, to a maximum of $1,250 in benefits received by the insured per calendar year, to the extent not covered by medicare; but this benefit may not be included in a medicare supplement policy issued after December 31, 2005;

(7) coverage for 50 percent of outpatient prescription drug charges, after a $250 calendar year deductible, to a maximum of $3,000 in benefits received by the insured per calendar year, to the extent not covered by medicare; but this benefit may not be included in a medicare supplement policy issued after December 31, 2005;

(8) coverage to the extent not covered by medicare for 80 percent of the billed charges for medicare-eligible expenses for medically necessary emergency hospital, physician, and medical care received in a foreign country, if that care would have been covered by medicare if provided in the United States and that care began during the first 60 consecutive days of a trip outside the United States; that coverage is subject to a calendar year deductible of $250 and a lifetime maximum benefit of $50,000; for purposes of this benefit, "emergency care" means care needed immediately because of an injury or an illness of sudden and unexpected onset;

(9) coverage for the following preventative health services not covered by medicare:

(A) an annual clinical preventive medical history and physical examination that may include tests and services set out in (B) of this paragraph and patient education to address preventive health care measures;

(B) preventive screening tests or preventive services, the selection and frequency of which is determined to be medically appropriate by the attending physician; and

(C) reimbursement for preventive health services; reimbursement under this subparagraph must be for the actual charges up to 100 percent of the medicare-approved amount for each service, as though medicare were to cover the service as identified in American Medical Association Current Procedural Terminology (AMA CPT) codes, to a maximum of $120 annually under the benefit; this benefit may not include payment for any procedure covered by medicare;

(10) coverage for services by a care provider to provide short term at-home assistance with activities of daily living for those recovering from an illness, injury, or surgery, as follows:

(A) at-home recovery services provided must be primarily services that assist in activities of daily living;

(B) the insured's attending physician shall certify that the specific type and frequency of at-home recovery services are necessary because of a condition for which a home care plan of treatment was approved by medicare;

(C) coverage is limited to

(i) no more than the number and type of at-home recovery visits certified as necessary by the insured's attending physician; the total number of at-home recovery visits may not exceed the number of medicare approved home health care visits under a medicare approved home care plan of treatment;

(ii) the actual charges for each visit up to a maximum reimbursement of $40 per visit;

(iii) $1,600 per calendar year;

(iv) seven visits in one week;

(v) care furnished on a visiting basis in an insured's home;

(vi) services provided by a care provider as defined in this paragraph;

(vii) at-home recovery visits while an insured is covered under the policy or certificate and not otherwise excluded; and

(viii) at-home recovery visits received during the period an insured is receiving medicare approved home care services or no more than eight weeks after the service date of the last medicare approved home health care visit;

(D) coverage is excluded for

(i) home care visits paid by medicare or other government programs; and

(ii) care provided by family members, unpaid volunteers, or providers who are not care providers;

(E) repealed 9/4/2005;

(F) for purposes of the benefit described in this paragraph, the following definitions shall apply:

(i) "activities of daily living" include bathing, dressing, personal hygiene, transferring, eating, ambulating, assistance with drugs that are normally self-administered, and changing bandages or other dressings;

(ii) "care provider" means a duly qualified or licensed home health aide or homemaker, personal care aide, or nurse provided through a licensed home health care agency or referred by a licensed referral agency or licensed nurses' registry;

(iii) "home" means a place used by an insured as a place of residence, if the place would qualify as a residence for home health care services covered by medicare; a hospital or skilled nursing facility may not be considered an insured's place of residence;

(iv) "at-home recovery visit" means the period of a visit required to provide at home recovery care, without limit on the duration of the visit, except that each consecutive four hours in a 24-hour period of services provided by a care provider is considered one visit.

(e) Standards for Benefit Plan "K." Standardized medicare supplement benefit plan "K" must consist of the following benefits:

(1) coverage of 100 percent of the medicare Part A hospital coinsurance amount for each day used from the 61st through the 90th day in any medicare benefit period;

(2) coverage of 100 percent of the medicare Part A hospital coinsurance amount for each medicare lifetime inpatient reserve day used from the 91st through the 150th day in any medicare benefit period;

(3) upon exhaustion of the medicare hospital inpatient coverage, including the lifetime reserve days, coverage of 100 percent of the medicare Part A eligible expenses for hospitalization paid at the applicable prospective payment system (PPS) rate or other appropriate medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days;

(4) coverage for 50 percent of the medicare Part A inpatient hospital deductible amount per benefit period until the out-of-pocket limitation is met as described in (10) of this subsection;

(5) coverage for 50 percent of the coinsurance amount for each day used from the 21st day through the 100th day in a medicare benefit period for post-hospital skilled nursing facility care eligible under medicare Part A until the out-of-pocket limitation is met as described in (10) of this subsection;

(6) coverage for 50 percent of cost sharing for all medicare Part A eligible expenses and respite care until the out-of-pocket limitation is met as described in (10) of this subsection;

(7) coverage for 50 percent under medicare Part A or Part B of the reasonable cost of the first three pints of blood, or an equivalent quantity of packed red blood cells as defined under federal regulations, unless replaced in accordance with federal regulations until the out-of-pocket limitation is met as described in (10) of this subsection;

(8) except for coverage provided under (9) of this subsection, coverage for 50 percent of the cost sharing otherwise applicable under medicare Part B after the policyholder pays the Part B deductible until the out-of-pocket limitation is met as described in (10) of this subsection;

(9) coverage of 100 percent of the cost sharing for medicare Part B preventive services after the policyholder pays the Part B deductible;

(10) coverage of 100 percent of all cost sharing under medicare Part A and Part B for the balance of the calendar year after the individual has reached the out-of-pocket limitation on annual expenditures under medicare Part A and Part B of $4,000 in 2006, indexed each year by the appropriate inflation adjustment specified by the secretary.

(f) Standards for Benefit Plan "L." Standardized medicare supplement benefit plan "L" must consist of the benefits described in

(1) the provisions of (e)(1), (2), (3), and (9) of this section;

(2) the provisions of (e)(4), (5), (6), (7), and (8) of this section, but substituting 75 percent for 50 percent in each of those paragraphs; and

(3) the provisions of (e)(10) of this section, but substituting $2,000 for $4,000 in that paragraph.

History: Eff. 7/1/92, Register 122; am 7/12/96, Register 139; am 7/12/2000, Register 155; am 9/17/2003 Register 167; am 9/4/2005, Register 175

Authority: AS 21.06.090

AS 21.42.130

AS 21.89.060