Section 1358.81 Of Article 3.5. Additional Requirements For Medicare Supplement Contracts From California Health And Safety Code >> Division 2. >> Chapter 2.2. >> Article 3.5.
1358.81
. The following standards are applicable to all Medicare
supplement contracts delivered or issued for delivery in this state
with an effective date on or after June 1, 2010. No contract may be
advertised, solicited, delivered, or issued for delivery in this
state as a Medicare supplement contract unless it complies with these
benefit standards. No issuer may offer any 1990 standardized
Medicare supplement contract for sale with an effective date on or
after June 1, 2010. Benefit standards applicable to Medicare
supplement contracts issued with an effective date before June 1,
2010, remain subject to the requirements of Section 1358.8.
(a) The following general standards apply to Medicare supplement
contracts and are in addition to all other requirements of this
article.
(1) A Medicare supplement contract shall not exclude or limit
benefits for losses incurred more than six months from the effective
date of coverage because it involved a preexisting condition. The
contract shall 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 contract shall not indemnify against
losses resulting from sickness on a different basis than losses
resulting from accidents.
(3) A Medicare supplement contract 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, copayment, or coinsurance amounts. Prepaid or
periodic charges may be modified to correspond with those changes.
(4) A Medicare supplement contract shall not provide for
termination of coverage of a spouse solely because of the occurrence
of an event specified for termination of coverage of the enrollee or
subscriber, other than the nonpayment of prepaid or periodic charges.
(5) Each Medicare supplement contract shall be guaranteed
renewable.
(A) The issuer shall not cancel or nonrenew the contract solely on
the ground of health status of the individual.
(B) The issuer shall not cancel or nonrenew the contract for any
reason other than nonpayment of prepaid or periodic charges or
misrepresentation of the risk by the applicant that is shown by the
plan to be material to the acceptance for coverage. The
contestability period for Medicare supplement contracts shall be two
years.
(C) If the Medicare supplement contract is terminated by the group
contractholder and is not replaced as provided under subparagraph
(E), the issuer shall offer enrollees or subscribers an individual
Medicare supplement contract which, at the option of the enrollee or
subscriber, does one of the following:
(i) Provides for continuation of the benefits contained in the
group contract.
(ii) Provides for benefits that otherwise meet the requirements of
one of the standardized contracts defined in this article.
(D) If an individual is an enrollee or subscriber in a group
Medicare supplement contract and the individual terminates membership
in the group, the issuer shall do one of the following:
(i) Offer the enrollee or subscriber the conversion opportunity
described in subparagraph (C).
(ii) At the option of the group contractholder, offer the enrollee
or subscriber continuation of coverage under the group contract.
(E) (i) If a group Medicare supplement contract is replaced by
another group Medicare supplement contract purchased by the same
group contractholder, the issuer of the replacement contract shall
offer coverage to all persons covered under the old group contract on
its date of termination. Coverage under the new contract shall not
result in any exclusion for preexisting conditions that would have
been covered under the group contract being replaced.
(ii) If a Medicare supplement contract replaces another Medicare
supplement contract that has been in force for six months or more,
the replacing issuer shall not impose an exclusion or limitation
based on a preexisting condition. If the original coverage has been
in force for less than six months, the replacing issuer shall waive
any time period applicable to preexisting conditions, waiting
periods, elimination periods, or probationary periods in the new
contract to the extent the time was spent under the original
coverage.
(6) Termination of a Medicare supplement contract shall be without
prejudice to any continuous loss that commenced while the contract
was in force, but the extension of benefits beyond the period during
which the contract was in force may be predicated upon the continuous
total disability of the enrollee or subscriber, limited to the
duration of the contract benefit period, if any, or payment of the
maximum benefits. Receipt of Medicare Part D benefits shall not be
considered in determining a continuous loss.
(7) (A) (i) A Medicare supplement contract shall provide that
benefits and prepaid or periodic charges under the contract shall be
suspended at the request of the enrollee or subscriber for the
period, not to exceed 24 months, in which the enrollee or subscriber
has applied for, and is determined to be entitled to, medical
assistance under Medi-Cal under Title XIX of the federal Social
Security Act, but only if the enrollee or subscriber notifies the
issuer of the contract within 90 days after the date the individual
becomes entitled to assistance. Upon receipt of timely notice, the
insurer shall return directly to the enrollee or subscriber that
portion of the prepaid or periodic charge attributable to the period
of Medi-Cal eligibility, subject to adjustment for paid claims.
(ii) If suspension occurs and if the enrollee or subscriber loses
entitlement to medical assistance under Medi-Cal, the Medicare
supplement contract shall be automatically reinstituted (effective as
of the date of termination of entitlement) as of the termination of
entitlement if the enrollee or subscriber provides notice of loss of
entitlement within 90 days after the date of loss and pays the
prepaid or periodic charge attributable to the period, effective as
of the date of termination of entitlement or equivalent coverage
shall be provided if the prior contract is no longer available.
(iii) Each Medicare supplement contract shall provide that
benefits and prepaid or periodic charges under the contract shall be
suspended (for any period that may be provided by federal regulation)
at the request of the enrollee or subscriber if the enrollee or
subscriber is entitled to benefits under Section 226(b) of the Social
Security Act and is covered under a group health plan (as defined in
Section 1862(b)(1)(A)(v) of the Social Security Act). If suspension
occurs and if the enrollee or subscriber loses coverage under the
group health plan, the contract shall be automatically reinstituted
(effective as of the date of loss of coverage) if the enrollee or
subscriber provides notice of loss of coverage within 90 days after
the date of the loss and pays the applicable prepaid or periodic
charge.
(B) Reinstitution of coverages shall comply with all of the
following requirements:
(i) Not provide for any waiting period with respect to treatment
of preexisting conditions.
(ii) Provide for resumption of coverage that is substantially
equivalent to coverage in effect before the date of suspension.
(iii) Provide for classification of prepaid or periodic charges on
terms at least as favorable to the enrollee or subscriber as the
classification of the prepaid or periodic charge that would have
applied to the enrollee or subscriber had the coverage not been
suspended.