The National Association of Insurance Commissioners has updated one of its model regulations to conform with the new federal Medicare prescription drug program law.[@@]
The changes will help states that adopt the model phase out the Medicare supplement, or “Medigap,” plans that now offer prescription drug benefits.
The NAIC model affected is the Model Regulation to Implement the NAIC Medicare Supplement Insurance Minimum Standards Model Act.
State insurance regulators, insurers, consumer advocates and actuaries began working with the staff of the Kansas City, Mo.-based NAIC on revisions to the Medigap model soon after President Bush signed the Medicare Prescription Drug, Improvement Modernization Act of 2003.
In general, states have a year to enact the model, NAIC officials say.
The model regulation does not apply to union health plans or retiree plans or to multi-employer health plans or retiree health plans.
The law that led to the changes, MPDIMA, is creating a new, voluntary Medicare program, Medicare Part D, that will offer Medicare beneficiaries subsidized prescription drug coverage. The authors of the act have tried to hold down beneficiaries’ drug spending by restricting and eliminating existing Medicare drug benefits options.
Today, in most states, Medigap sellers now pick the plan designs they offer from a menu of standard products designated by the letters A through J.
The Medigap plans that include outpatient prescription drug coverage go by the letters H, I and J.
- Add 2 plan designs, Plan K and Plan L.
- Prohibit insurers from issuing new H, I and J plans with outpatient prescription drug benefits after 2005.
- Prohibit beneficiaries who already have H, I or J Medigap plans from using existing H, I or J plan drug coverage along with the new Medicare Part D prescription coverage.
- Force beneficiaries who now own H, I or J policies to decide whether to sign up for Part D drug coverage and strip the drug benefits from their existing policies or to buy guaranteed-issue A, B, C, F, K or L policies from the same insurers who sold them their original policies.
Some of the new provisions in the amended NAIC model state that:
- Policyholders who own Medigap policies with outpatient prescription drug benefits before Jan. 1, 2006, and do not sign up for Medicare Part D have a right to keep and renew their existing drug benefits.
- Insurers cannot issue new Medigap policies with outpatient prescription drug benefits after Dec. 31, 2005, and insurers cannot renew existing Medigap policies that offer outpatient drug benefits unless they change the policies to eliminate outpatient prescription coverage for expenses of outpatient prescription drugs incurred after an individual is covered by Medicare Part D. The premiums must be adjusted to reflect the elimination of the outpatient prescription drug coverage.
- A company that eliminates an outpatient drug benefit to comply with the new laws satisfies the model’s guaranteed renewal requirements.
- An individual who is enrolled in a Medigap policy because of disability and suspends coverage after receiving employment-based or union-based coverage can reinstitute that coverage if the employer or union coverage is lost. A request for reinstitution of coverage must be made within 90 days after the individual has lost the employer or union coverage.