Title: Senior Market Regulatory Issues for Agents 2005
1Senior Market Regulatory Issues for
Agents 2005
2- Disclaimer Persons who did not attend the
seminar would not have the benefit of the full
presentation and must be cautious about
generalizations of the statements in the slides
3Medicare Comparison of Options
4Medicare Cost
- Similar to Medicare Advantage HMO but
- Covers more out of network
- 90 day absence from service area requires
disrenrollment - Only disputes concerning Medicare services
subject to grievance process - No required disclosure for QA or UR
- Medica is only carrier currently offering
5Medicare Selectmanaged care for Medicare
supplement plans
- Select plans have provider networks
- Avera and Sioux Valley are the Medicare Select
plans in South Dakota - No Select plans currently that restrict coverage
for doctors - Must go to hospital networks except if emergency
or network care unavailable
6Medicare Select RulesExceptions to network
requirements
- Unforeseen medical emergencies
- Not appropriate given special circumstances such
as time and distance to go to network provider - Care not available through network providers
7Medicare Select disenrollment rights
- During 1st 12 months can disenroll and can get
same plan from carrier on a nonnetwork or
nonSelect basis
8Medicare Advantage alternatives
- Coordinated care plans i. e. HMOs with or w/o
POS, PSOs, PPOs - Medical Savings account plans
- private fee for service (only ones currently
marketed) - Multiple new applications for Medicare
Advantage pending with CMS
9Medicare Advantage
- Accept Medicare risk plus can add additional
benefits - 3 plans in SD currently
- United Healthcare (FFS)
- Sterling (FFS)
- Humana (FFS)
- Contract with CMS - set benefits and premiums
- Med sup on top of Medicare Advantage would be
duplication
10Permitted discontinuance of Medicare Advantage
- Plans certification terminated or no longer
providing coverage in area - Moved out of area
- Plan violated material provision of contract
- Material misrepresentation of plan
- Other situations as approved by Secretary of HHS
11Special Medicare Advantage replacement issues
- Medicare Advantage effective date coincides with
the 1st of the month depending upon whether apply
before or after the 10th of the month - If current Med sup insurer wont adjust paid to
date, then either duplication or gaps in coverage
will frequently occur when switch to Med Advantage
12Medicare supplement open enrollment
- Federal law regarding open enrollment/ guarantee
issue/portability became effective 7/1/98 - SD state rules also effective 7/1/98
- State rules require open enrollment but go beyond
minimum federal requirements - Any termination of coverage under an employer
group plan triggers open enrollment
13Portability during open enrollment
- Applicable to persons in open enrollment period
of 6 months after Part B enrollment - If continuous creditable coverage
- 6 months or more?no pre x waiting period
- less than 6 months?reduce pre x by length of
prior creditable coverage
14Creditable Coverages
- employer plans
- individual plans
- Medicare/Medicaid/Champus/ IHS
- church plans
- Peace Corp plan
- another states risk pool
- other public plans
- college plans
15Eligible Persons
- If eligible person applies within 63 days of
loss of coverage - May require submit evidence of termination with
the med sup application - Nondiscrimination in pricing based upon health
status, claims experience, receipt of health
care, or medical condition - May not use a pre x waiting period if have 6
months of prior creditable coverage
16Persons eligible for guaranteed issue
- Employee plan terminates or benefits end (broader
than federal) - Permitted discontinuance of Medicare Advantage,
Medicare risk, Medicare Select, and other allowed
prepayment plans - Loss of med sup if conditions met
- Opting out of a Medicare Advantage after 12
months
17Those entitled to Plan A,B,C or F (and soon K and
L)
- Eligible persons due to
- loss of employee benefits
- opting out of Medicare Advantage
- opting out of Medicare risk or Medicare Select
- plan insolvency
- involuntary loss of med sup coverage
- issuer materially violated policy
- agent materially misrepresented policy
18Other plans for eligible persons
- 1st enrolled in med sup
- then enrolled in Medicare Advantage or Medicare
risk - and disenrolls during 1st 12 months
- ?same plan as before
- When first eligible for Part A, enrolls in
Medicare Advantage - And disenrolls during 1st 12 months
- ?Any plan offered by any issuer
19Disabled Medicare population Medicare
supplements
- Eligible for open enrollment
- Within 6 months of Medicare eligibility
- To any plan offered by any Medicare supplement
carrier - At a rate no higher than Medicare supplement rate
for age 75 - Only for those that became eligible for Medicare
on or after 7/1/99
20Major changes in Medicare supplement coming soon
due to Medicare Modernization Act (MMA)
- Medicare Choice becomes Medicare Advantage or
Part C - New standardized plan changes 1/1/06
- K and L are new plans
- H, I, and J will delete outpatient prescription
benefit but they can be sold with it until then - Medicare prescription drug benefit will be Part D
21MMA requirements
- Choices for insureds with current policies that
provide prescription drug benefits - 1. Keep policy as is but cannot enroll in
Medicare Part D (Medicare prescription drug
benefit) - OR
- 2. Remove outpatient prescription drug benefits
from current policy and enroll in Part D - This applies to both standardized and
pre-standardized plans
22MMA requirementsBenefit configurations
- Core benefit changes
- With respect to 100 coverage after exhaustion of
lifetime reserve days for 365 days, payment by
issuer must be considered by provider as payment
in full
- Additional benefit changes
- Basic and extended prescription drug benefits may
continued to be sold only until 1/1/06 - Preventive screening changes
- Would include any innovative benefit plan designs
23MMA requirementsRenewal
- A med sup policy may not
- terminate 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 - be cancelled or nonrenewed by the insurer solely
on the grounds of deterioration of health
24Effects of MMA on existing policies
- A person does not have to give up their existing
H, I or J or delete the prescription drug
benefits from those plans provided they do not
enroll in Part D - If enrolled in Part D, the enrollee must have an
amended policy deleting the prescription drug
benefit from the Medicare supplement policy or
buy a new policy without that benefit - Premiums must be adjusted accordingly
- Part D enrollees also have a guaranteed issue
right into Plans A,B,C, F,K, or L offered by the
same carrier - Prestandardized insureds are treated the same as
standardized if they have prescription drug
benefits they will be treated the same way as
those with H, I, or J.
25MMA requirementsGuaranteed issue
- New eligibles Those that enroll in Part D during
initial enrollment and were covered under a
policy with outpatient prescription drug
coverage, terminates that coverage and applies
for an A, B,C, F, K or L policy with the same
insurer - Those that previously qualified for guaranteed
issue for A,B,C, or F now also have K and L to
choose from
26Medicare supplement duplication prohibited
- No overlap allowed
- Make sure the paid to date of existing matches
the requested effective date of new policy - no mid term cancellations required by prior
carrier
27Duplication of Medicare Supplements
- Effective date must be designed to coincide with
paid to or expiration date of prior policy - Agent must make diligent effort to avoid overlaps
and gaps in coverage - Look at existing policy to determine effective
date and premium notices to determine lapse dates - If no paperwork, have the insured get the
information from the company
2820061343. Overinsurance.
- A health insurance policy issued to a Medicaid
recipient or to a person who already possesses
insurance substantially covering the same risk
and paying the same coverage is overinsurance. If
the director determines after investigation that
overinsurance exists, the duplicating insurer is
liable for a full refund less benefits paid. The
duplicating policy is void as of the date of
issue. Any sale of Medicare supplement coverage
that will provide an individual more than one
Medicare supplement policy or certificate is
prohibited.
2920061343.01. Misrepresentation
- An agent is presumed to have violated SDCL
58-33-5 when the agent knowingly solicits,
procures, or sells to any prospective insured who
has an existing policy in force a Medicare
supplement policy, long term care policy, or
other type of health insurance policy designed
specifically to be marketed to individuals who
qualify for Medicare because of their age unless
the agent informs the insured in writing either
separately or on the face of the application that
the new policy is intended to replace the
existing policy. The agent must ensure that the
prospective insured understands that the policy
is a replacement of an existing policy. - An agent who engages in the sale or solicitation
of such policies when the purchase is not
reasonable or prudent or is otherwise not in the
prospective insured's best interest has engaged
in an unfair or deceptive trade practice in
violation of SDCL 58-33-2.
3020061343.02. Determination of suitability
- To determine whether the sale or solicitation of
policies described in 20061343.01 is
reasonable, prudent, or in the prospective
insured's best interest, the agent, if any, shall
examine the totality of the prospective insured's
circumstances, including the following - (1) The prospective insured's financial
condition, i.e., is the person on a fixed income,
premium cost - (2) The prospective insured's need for insurance
at the time of sale, i.e., existing policies,
insured's finances and - (3) The values, benefits, and costs of the
prospective insured's existing insurance program,
if any, when compared to the values, benefits,
and costs of the recommended policy or policies.
31Suitability of Medicare supplements
- Responsibility on agent to ensure suitable sale
regardless of circumstance - Fair comparisons required
- Replacements without significant cost or benefit
differentials automatically suspect - Incontestability
3220061403 The following are general
requirements for health and life insurance
solicitation
- (5) A solicitation may not directly or
indirectly make unfair or incomplete comparisons
of policies or benefits or comparisons of
noncomparable policies of other insurers may not
disparage competitors, their policies, services,
or business methods and may not disparage or
unfairly minimize competing methods of marketing
insurance - (7) In recommending the purchase of a policy to
a consumer, an agent must determine at the time
of sale that the placement of the policy is not
inappropriate for the consumer. The agent shall
determine the appropriateness of a recommended
purchase of insurance by examination of the
totality of the particular consumer's
circumstances, including the following - (a) The consumer's financial
condition, i.e., if a person is on a fixed
income, premium costs - (b) The consumer's need for
insurance at the time of sale, i.e., existing
policies, insured's finances - (c) The values, benefits, and
costs of the consumer's existing insurance
program, if any, when compared to the values,
benefits, and cost of the recommended policy or
policies.
33How to avoid Med sup duplication
- Verify the paid-to or expiration date of existing
policy - Look at billings/premium payments
- Have customer check with company
- Look at existing policy
- Request an effective date that coincides with the
prior policy paid to date
- Explain need to match up dates to applicant
- Basis for asking for billings etc.
- Explain there is law against issuing duplicate
coverage
34Med sup comparisons
- Fair and accurate comparison of benefits is
required - You can not make a legitimate comparison unless
you look at the existing policy - This applies to any life or health policy
solicitation that involves a replacement - 2 Standardized Med sups may be the only exception
- Do not state
- F for an F is better benefits
- A small differential in is the reason of
reduced premiums when switching rating
methodologies - Better benefits just because older is
pre-standardized - Better service is increased benefit
35Proposed Med sup rules
- Clarifies that renewal commission limit on
replacements also includes loans and advances - Clarifies that any duplication regardless of the
number of days is impermissible - Disallows attained age rating
36Clean Sheeting Prohibited for any kind of policy
- Omission of health history from an application
- Serious issue that could result in significant
penalties against an agent who clean sheets an
application - Some insurers are having insureds complete, not
agent
37Limited Benefit plans
- Can be sold in addition to Med sup but still must
be suitable - The more coverage the person has the less
probability that it is suitable - Outline of Coverage required
- 12 month pre ex effective for all new plans
issued after 7/1/97
38Med Sup Advertising and solicitation taboos
- Scare tactics
- Tendency or capacity to mislead
- Understandability-average person standard
- Misleading statistics
39Customer loansRequirements applicable to all
insurance customers
- Not absolutely prohibited but
- Must be written agreement
- Must be filed with the Division
- If not filed with Division or re-paid ? licensing
consequences and could be considered insurance
fraud, and if so, could be prosecuted
40Long-Term Care Insurance
41Types of Plans
- Non-tax qualified plans
- May have tax implications
- Tax qualified plans
- More difficult to collect benefits
42Tax Qualified Plans Benefit Requirements
- Assessment at least yearly that you are
chronically ill - Expected to be unable to perform 2 ADLs for 90
days - Activities of daily living (ADL) include bathing,
eating, toileting, dressing, continence, and
transferring - Plan of care
- S.D. rules provide that insured has option to use
personal physician or allow plan or designated
care coordinator
43Tax Qualified Plans - Issues
- Does the plan require a 90 day period of being
chronically ill? - HIPAA ?90 days not waiting period
- HIPAA ?expected to be ill versus actually ill
- Does the policy require that the plan or a
designated care coordinator develop the plan of
care? - S.D. requires that it must be at the option of
the insured and it can be the personal physician - How are certifications of chronic illness
handled? - HIPAA requires that cant be longer than 12
months - Assessment of chronic illness by plan or provider
of patients choice - DOIs rule requires choice
44Medical Necessity
- Appropriate consistent cant be omitted
without adversely affecting patient - Some level of care plans without ADLs
- Insureds physician may certify
- Old plans with prior hospitalization
- Plans that use ADLs
45Minimum Benefit Standards
- 2 years of nursing home coverage
- 1 year of assisted living center coverage
(licensed by Dept of Health) - 100 day maximum elimination period
- If ADL based, 6 mandatory of which no more than ½
standard - Alzheimers and senile dementia
- COLA mandatory offer
46Optional LTC Benefits to Consider
- Home health care
- Adult day care
- Respite care
- Cost of living adjustments (required to be
offered) - Multiple variations typically available
- Minimum nonforfeiture
47Cost of Living Adjustments (COLAs)
- Mandated offer
- Offered at time of purchase
- Offer must include an alternative to purchase a
plan that pays a specific of actual or UCR and
doesnt include a maximum indemnity amount or
limit
48COLA Requirements
- Required offer based upon either the medical cost
component of CPI or at least 5 annually for 10
years or to age 85 whichever is sooner - Other intervals allowed (3 years or less)
- Others may also be offered if approved
- No requirement to have benefits exceed 500K
49Home Health Care (HHC)
- Not a required benefit, but if offered the
following are not allowed - Requiring institutional care in lieu of receiving
HHC - Limiting services to RN or LPN
- Excluding personal service from HH aide
- Limiting services to Medicare approved HHC
agencies - At least 1 year of benefits
- Not the same as alternative care where company
has option
50Elderly LTC Applicants
- If age 80 or older, plan must do one of the
following - Report of physical examination
- Assessment of functional capability
- Attending physicians statement
- Copies of medical records
51LTC Lapse Requirements
- Cant be issued unless there is designation of at
least one person in addition to insured to
received lapse notices - Alternative to designation written waiver
- Insurer must notify insured every 2 years of
option to change designation
52LTC Applications Questions
- Notice about incorrect answers (disclaimers)
- Clear and unambiguous questions
- If ask about medication, must ask for listing
- If insurer knew or should have known about
medications, can not rescind - Replacement questions required
53LTC Incontestability
- Rescission reporting to DOI
- lt6 months material misrepresentation
- 6-24 months material pertains to condition
for which benefits sought - gt24 months insured knowingly intentionally
misrepresented material facts - If benefits paid before rescission then benefits
may not be recovered by company
54LTC Marketing Standards on Plans Carriers
- Establish marketing procedures to
- Ensure fair comparison
- Ensure excessive insurance isnt sold
- Inquire and make every reasonable effort to
identify other health insurance - Establish auditable procedures
55LTC Rate Stabilization
- Relaxed up front actuarial justifications but
increased consumer standards for rate increases - Higher loss ratios required for rate increases
- Encourages adequate pricing at time of sale
- Disclosure of rate increase histories required
during solicitation of LTC products - Contingent benefit on lapse
56LTC Agent Responsibilities
- Suitability requirements similar to Medicare
supplements - Ex will save person money, increase benefits by
a replacement or in need of more coverage through
additional policy - Need to question whether person is candidate for
LTC insurance based upon assets - Do not use phrase granny goes to jail with
clients
57LTC Advertising Solicitation Taboos
- Scare tactics
- Tendency or capacity to mislead
- Understandability average person standard
- Misleading statistics
58Bed Reservation Benefits
- New law (SB 139) allows temporary leave from LTC
facility of up to 14 days if policy does not
otherwise specify - Applies to waiver of premium provisions as well
- Proposed rule 20062126.01
- Current plans not affected by SB 139
- Carriers must advise whether or not benefits are
provided within 30 days of notice that LTC
facility being utilized
59Overinsurance Proposed ARSD 20062153.05
- Policy issued when insurance substantially
covering the same risk and paying the same
coverage - Any sale of coverage that will result in
overinsurance is prohibited - Duplicating insurer must remove the duplication
and refund or credit premiums toward future
coverage accordingly - The duplicating policy is void as of the issue
date until the prior coverage terminated
60Other proposed rules
- Signed acknowledgements on life illustrations
exception to be submitted with application for
electronic illustrations - Proposed rules would allow electronic versions to
be mailed to applicant no later than 3 business
days after application is submitted to insurer - This longer time frame will also apply to life
replacement notices - Life insurance exclusions can apply to insured
while committing a felony
6120061343. Overinsurance.
- A health insurance policy issued to a Medicaid
recipient or to a person who already possesses
insurance substantially covering the same risk
and paying the same coverage is overinsurance. If
the director determines after investigation that
overinsurance exists, the duplicating insurer is
liable for a full refund less benefits paid. The
duplicating policy is void as of the date of
issue. Any sale of Medicare supplement coverage
that will provide an individual more than one
Medicare supplement policy or certificate is
prohibited.