NAIC Revises Model Reg To Reflect Medicare Prescription Drug Law

By

The National Association of Insurance Commissioners recently adopted revisions to a model regulation to implement changes brought about by the new Medicare prescription drug law.

On Dec. 8, 2003, the Medicare Prescription Drug, Improvement Modernization Act of 2003 was signed into law by President Bush, necessitating changes in state insurance regulations.

The revisions to the Model Regulation to Implement the NAIC Medicare Supplement Insurance Minimum Standards Model Act were adopted electronically by the NAIC on Sept. 8, successfully meeting a statutory deadline to put a regulatory mechanism in place to meet requirements of the law. In general, states have a year to enact the model.

The revisions include the addition of two plans, K and L, and the removal of drug prescription coverage from Plans H, I, and J.

Plan participants will need to make decisions including whether to retain Medigap plans H, I, and J with the current drug plans; to sign on for Medicare Part D and strip out those drug benefits from the plans; or sign on to guaranteed issue plans A, B, C, F, K and L from the same insurer.

The regulation to which the prescription drug changes were added seeks to standardize and simplify terms and benefits of Medicare supplement policies; eliminate confusing or misleading language in such policies; and provide full disclosures in the sale of accident and sickness insurance coverage to Medicare-eligible persons.

The models requirements apply prospectively to all Medicare supplement policies issued after the model is enacted in a state. The regulation does not apply to a contract of one or more employers or labor organizations, or to employees or members, both current and former.

Additional provisions to the model state that a Medicare supp policy with benefits for outpatient prescription drugs that is in existence prior to Jan. 1, 2006, must be renewed for current policyholders who do not enroll in the new Part D Medicare Drug benefit at the option of the policyholder.

The model also states that a Med supp policy with benefits for outpatient prescription drugs cannot be issued after Dec. 31, 2005, and cannot be renewed unless the policy is modified to eliminate outpatient prescription coverage for expenses of outpatient prescription drugs incurred after an individual is covered by Medicare Part D. The premiums also must be adjusted to reflect the elimination of the outpatient prescription drug coverage.

Among the minimum benefit standards cited is a provision that if a company eliminates an outpatient prescription drug benefit, the modified policy satisfies the guaranteed renewal requirements of the model.


Reproduced from National Underwriter Edition, September 23, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.