SENATE BILL No. 749

October 18, 2001, Introduced by Senator BULLARD and referred to the Committee on

Financial Services.

A bill to amend 1980 PA 350, entitled

"The nonprofit health care corporation reform act,"

by amending sections 451, 455, 459, 461, 465, 469, and 479

(MCL 550.1451, 550.1455, 550.1459, 550.1461, 550.1465, 550.1469,

and 550.1479), as added by 1994 PA 40, and by adding sections 480

and 480a.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1 Sec. 451. As used in this part:

2 (a) "Applicant" means:

3 (i) For a nongroup medicare supplement certificate, the

4 person who seeks to contract for benefits.

5 (ii) For a group medicare supplement certificate, the pro-

6 posed certificate holder.

7 (B) "BANKRUPTCY" MEANS WHEN A MEDICARE+CHOICE ORGANIZATION

8 THAT IS NOT AN INSURER HAS FILED, OR HAS HAD FILED AGAINST IT, A

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1 PETITION FOR DECLARATION OF BANKRUPTCY AND HAS CEASED DOING

2 BUSINESS IN THIS STATE.

3 (C) (b) "Certificate" means any certificate delivered or

4 issued for delivery in this state under a medicare supplement

5 certificate.

6 (D) (c) "Certificate form" means the form on which the

7 certificate is delivered or issued for delivery.

8 (E) "CONTINUOUS PERIOD OF CREDITABLE COVERAGE" MEANS THE

9 PERIOD DURING WHICH AN INDIVIDUAL WAS COVERED BY CREDITABLE COV-

10 ERAGE, IF DURING THE PERIOD OF THE COVERAGE THE INDIVIDUAL HAD NO

11 BREAKS IN COVERAGE GREATER THAN 63 DAYS.

12 (F) "CREDITABLE COVERAGE" MEANS COVERAGE OF AN INDIVIDUAL

13 PROVIDED UNDER ANY OF THE FOLLOWING:

14 (i) A GROUP HEALTH PLAN.

15 (ii) HEALTH INSURANCE COVERAGE.

16 (iii) PART A OR PART B OF MEDICARE.

17 (iv) MEDICAID OTHER THAN COVERAGE CONSISTING SOLELY OF BENE-

18 FITS UNDER SECTION 1928 OF MEDICAID, 42 U.S.C. 1396s.

19 (v) CHAPTER 55 OF TITLE 10 OF THE UNITED STATES CODE, 10

20 U.S.C. 1071 TO 1109.

21 (vi) A MEDICAL CARE PROGRAM OF THE INDIAN HEALTH SERVICE OR

22 OF A TRIBAL ORGANIZATION.

23 (vii) A STATE HEALTH BENEFITS RISK POOL.

24 (viii) A HEALTH PLAN OFFERED UNDER CHAPTER 89 OF TITLE 5 OF

25 THE UNITED STATES CODE, 5 U.S.C. 8901 TO 8914.

26 (ix) A PUBLIC HEALTH PLAN AS DEFINED IN FEDERAL REGULATION.

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1 (x) HEALTH CARE UNDER SECTION 5(e) OF TITLE I OF THE PEACE

2 CORPS ACT, PUBLIC LAW 87-293, 22 U.S.C. 2504.

3 (G) (d) "Direct response solicitation" means solicitation

4 in which a health care corporation representative does not con-

5 tact the applicant in person and explain the coverage available,

6 such as, but not limited to, solicitation through direct mail or

7 through advertisements in periodicals and other media.

8 (H) "EMPLOYEE WELFARE BENEFIT PLAN" MEANS A PLAN, FUND, OR

9 PROGRAM OF EMPLOYEE BENEFITS AS DEFINED IN SECTION 3 OF SUBTITLE

10 A OF TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF

11 1974, PUBLIC LAW 93-406, 29 U.S.C. 1002.

12 (I) "INSOLVENCY" MEANS WHEN AN INSURER LICENSED TO TRANSACT

13 THE BUSINESS OF INSURANCE IN THIS STATE HAS HAD A FINAL ORDER OF

14 LIQUIDATION ENTERED AGAINST IT WITH A FINDING OF INSOLVENCY BY A

15 COURT OF COMPETENT JURISDICTION IN THE INSURER'S STATE OF

16 DOMICILE.

17 (J) "INSURER" INCLUDES ANY ENTITY, INCLUDING A HEALTH CARE

18 CORPORATION, DELIVERING OR ISSUING FOR DELIVERY IN THIS STATE

19 MEDICARE SUPPLEMENT POLICIES.

20 (K) (e) "Medicaid" means title XIX of the social security

21 act, chapter 531, 49 Stat. 620, 42 U.S.C. 1396 to 1396f, and

22 1396i to 1396u 1396r-6 AND 1396r-8 TO 1396v.

23 (l) (f) "Medicare" means title XVIII of the social secur-

24 ity act, chapter 531, 49 Stat. 620, 42 U.S.C. 1395 to 1395b,

25 1395b-2, 1395c to 1395i, 1395i-2 to 1395i-4, 1395j to 1395t,

26 1395u to 1395w-2, and 1395w-4 to 1395ccc 1395b-6 TO 1395b-7,

27 1395c TO 1395i, 1395i-2 TO 1395i-5, 1395j TO 1395t, 1395u TO

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1 1395w, 1395w-2 TO 1395w-4, 1395w-21 TO 1395w-28, 1395x TO 1395yy,

2 AND 1395bbb TO 1395ggg.

3 (M) "MEDICARE+CHOICE PLAN" MEANS A PLAN OF COVERAGE FOR

4 HEALTH BENEFITS UNDER MEDICARE PART C AS DEFINED IN SECTION 1859

5 OF PART C OF MEDICARE, 42 U.S.C. 1395w-28, AND INCLUDES ANY OF

6 THE FOLLOWING:

7 (i) COORDINATED CARE PLANS THAT PROVIDE HEALTH CARE SERV-

8 ICES, INCLUDING, BUT NOT LIMITED TO, HEALTH MAINTENANCE ORGANIZA-

9 TION PLANS WITH OR WITHOUT A POINT-OF-SERVICE OPTION, PLANS

10 OFFERED BY PROVIDER-SPONSORED ORGANIZATIONS, AND PREFERRED PRO-

11 VIDER ORGANIZATION PLANS.

12 (ii) MEDICAL SAVINGS ACCOUNT PLANS COUPLED WITH A CONTRIBU-

13 TION INTO A MEDICARE+CHOICE MEDICAL SAVINGS ACCOUNT.

14 (iii) MEDICARE+CHOICE PRIVATE FEE-FOR-SERVICE PLANS.

15 (N) (g) "Medicare supplement buyer's guide" means the doc-

16 ument entitled, "guide to health insurance for people with

17 medicare", developed by the national association of insurance

18 commissioners and the United States department of health and

19 human services or a substantially similar document as approved by

20 the commissioner.

21 (O) (h) "Medicare supplement certificate" means a nongroup

22 or group certificate that is advertised, marketed, or designed

23 primarily as a supplement to reimbursements under medicare for

24 the hospital, medical, or surgical expenses of persons eligible

25 for medicare and medicare select certificates under section 467.

26 Medicare supplement certificate does not include a certificate of

27 1 or more employers or labor organizations, or of the trustees of

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1 a fund established by 1 or more employers or labor organizations,

2 or both, for employees or former employees, or both, or for mem-

3 bers or former members, or both, of the labor organizations.

4 (P) "PACE" MEANS A PROGRAM OF ALL-INCLUSIVE CARE FOR THE

5 ELDERLY AS DESCRIBED IN THE SOCIAL SECURITY ACT.

6 (q) "Secretary" means the secretary of the United States

7 department of health and human services.

8 (r) "Social security act" means the social security act,

9 chapter 531, 49 Stat. 620.

10 Sec. 455. Every health care corporation issuing a medicare

11 supplement certificate in this state shall make available a medi-

12 care supplement certificate that includes only a basic core pack-

13 age of benefits to each prospective member. A health care corpo-

14 ration issuing a medicare supplement certificate in this state

15 may make available to prospective members benefits pursuant to

16 section 459 that are in addition to, but not instead of, the

17 basic core package. The basic core package of benefits shall

18 include all of the following:

19 (a) Coverage of part A medicare eligible expenses for hospi-

20 talization to the extent not covered by medicare from the 61st

21 day through the 90th day in any medicare benefit period.

22 (b) Coverage of part A medicare eligible expenses incurred

23 for hospitalization to the extent not covered by medicare for

24 each medicare lifetime inpatient reserve day used.

25 (c) Upon exhaustion of the medicare hospital inpatient cov-

26 erage including the lifetime reserve days, coverage of the

27 medicare part A eligible expenses for hospitalization paid at the

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1 diagnostic related group day outlier per diem or other

2 appropriate standard of payment, subject to a lifetime maximum

3 benefit of an additional 365 days.

4 (d) Coverage under medicare parts A and B for the reasonable

5 cost of the first 3 pints of blood or equivalent quantities of

6 packed red blood cells, as defined under federal regulations

7 unless replaced in accordance with federal regulations.

8 (e) Coverage for the coinsurance amount, OR THE COPAYMENT

9 AMOUNT PAID FOR HOSPITAL OUTPATIENT DEPARTMENT SERVICES UNDER A

10 PROSPECTIVE PAYMENT SYSTEM, of medicare eligible expenses under

11 part B regardless of hospital confinement, subject to the medi-

12 care part B deductible.

13 Sec. 459. (1) In addition to the basic core package of ben-

14 efits required under section 455, the following benefits may be

15 included in a medicare supplement certificate and if included

16 shall conform to section 461(5)(b) to (j):

17 (a) Medicare part A deductible: coverage for all of the

18 medicare part A inpatient hospital deductible amount per benefit

19 period.

20 (b) Skilled nursing facility care: coverage for the actual

21 billed charges up to the coinsurance amount from the 21st day

22 through the 100th day in a medicare benefit period for posthospi-

23 tal skilled nursing facility care eligible under medicare part

24 A.

25 (c) Medicare part B deductible: coverage for all of the

26 medicare part B deductible amount per calendar year regardless of

27 hospital confinement.

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1 (d) Eighty percent of the medicare part B excess charges:

2 coverage for 80% of the difference between the actual medicare

3 part B charge as billed, not to exceed any charge limitation

4 established by medicare or state law, and the medicare-approved

5 part B charge.

6 (e) One hundred percent of the medicare part B excess

7 charges: coverage for all of the difference between the actual

8 medicare part B charge as billed, not to exceed any charge limi-

9 tation established by medicare or state law, and the

10 medicare-approved part B charge.

11 (f) Basic outpatient prescription drug benefit: coverage

12 for 50% of outpatient prescription drug charges, after a $250.00

13 calendar year deductible, to a maximum of $1,250.00 in benefits

14 received by the member per calendar year, to the extent not cov-

15 ered by medicare.

16 (g) Extended outpatient prescription drug benefit: coverage

17 for 50% of outpatient prescription drug charges, after a $250.00

18 calendar year deductible, to a maximum of $3,000.00 in benefits

19 received by the member per calendar year, to the extent not cov-

20 ered by medicare.

21 (h) Medically necessary emergency care in a foreign

22 country: coverage to the extent not covered by medicare for 80%

23 of the billed charges for medicare-eligible expenses for medi-

24 cally necessary emergency hospital, physician, and medical care

25 received in a foreign country, which care would have been covered

26 by medicare if provided in the United States and which care began

27 during the first 60 consecutive days of each trip outside the

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1 United States, subject to a calendar year deductible of $250.00,

2 and a lifetime maximum benefit of $50,000.00. For purposes of

3 this benefit, "emergency care" means care needed immediately

4 because of an injury or an illness of sudden and unexpected

5 onset.

6 (i) Preventive medical care benefit: coverage for the fol-

7 lowing preventive health services:

8 (i) An annual clinical preventive medical history and physi-

9 cal examination that may include tests and services from

10 subparagraph (ii) and patient education to address preventive

11 health care measures.

12 (ii) Any 1 or a combination of the following preventive

13 screening tests or preventive services, the frequency of which is

14 considered medically appropriate:

15 (A) Fecal occult blood test and digital DIGITAL rectal

16 examination.

17 (B) Mammogram.

18 (B) (C) Dipstick urinalysis for hematuria, bacteriuria,

19 and proteinuria.

20 (C) (D) Pure tone, air only, hearing screening test,

21 administered or ordered by a physician.

22 (D) (E) Serum cholesterol screening every 5 years.

23 (E) (F) Thyroid function test.

24 (F) (G) Diabetes screening.

25 (G) (H) Influenza vaccine administered at any appropriate

26 time during the year and tetanus TETANUS and diphtheria booster

27 every 10 years.

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1 (H) (I) Any other tests or preventive measures determined

2 appropriate by the attending physician.

3 (j) At-home recovery benefit: coverage for services to pro-

4 vide short term, at-home assistance with activities of daily

5 living for those recovering from an illness, injury, or surgery.

6 At-home recovery services provided shall be primarily services

7 that assist in activities of daily living. The member's attend-

8 ing physician shall certify that the specific type and frequency

9 of at-home recovery services are necessary because of a condition

10 for which a home care plan of treatment was approved by

11 medicare. Coverage is excluded for home care visits paid for by

12 medicare or other government programs and care provided by family

13 members, unpaid volunteers, or providers who are not care

14 providers. Coverage is limited to:

15 (i) No more than the number of at-home recovery visits cer-

16 tified as necessary by the member's attending physician. The

17 total number of at-home recovery visits shall not exceed the

18 number of medicare approved home health care visits under a medi-

19 care approved home care plan of treatment.

20 (ii) The actual charges for each visit up to a maximum reim-

21 bursement of $40.00 per visit.

22 (iii) One thousand six hundred dollars per calendar year.

23 (iv) Seven visits in any 1 week.

24 (v) Care furnished on a visiting basis in the member's

25 home.

26 (vi) Services provided by a care provider as defined in this

27 section.

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1 (vii) At-home recovery visits while the member is covered

2 under the certificate and not otherwise excluded.

3 (viii) At-home recovery visits received during the period

4 the member is receiving medicare approved home care services or

5 no more than 8 weeks after the service date of the last medicare

6 approved home health care visit.

7 (k) New or innovative benefits: a health care corporation

8 may, with the prior approval of the commissioner, offer new or

9 innovative benefits in addition to the benefits provided in a

10 certificate that otherwise complies with the applicable

11 standards. These benefits may include benefits that are appro-

12 priate to medicare supplement coverage, new or innovative, not

13 otherwise available, cost-effective, and offered in a manner that

14 is consistent with the goal of simplification of medicare supple-

15 ment certificates.

16 (2) Reimbursement for the preventive screening tests and

17 services under subsection (1)(i)(ii) shall be for the actual

18 charges up to 100% of the medicare-approved amount for each test

19 or service, as if medicare were to cover the test or service as

20 identified in the American medical association current procedural

21 terminology codes, to a maximum of $120.00 annually under this

22 benefit. This benefit shall not include payment for any proce-

23 dure covered by medicare.

24 (3) As used in subsection (1)(j):

25 (a) "Activities of daily living" include, but are not

26 limited to, bathing, dressing, personal hygiene, transferring,

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1 eating, ambulating, assistance with drugs that are normally

2 self-administered, and changing bandages or other dressings.

3 (b) "Care provider" means a duly qualified or licensed home

4 health aide/homemaker, personal care aide, or nurse provided

5 through a licensed home health care agency or referred by a

6 licensed referral agency or licensed nurses registry.

7 (c) "Home" means any place used by the member as a place of

8 residence, provided that it qualifies as a residence for home

9 health care services covered by medicare. A hospital or skilled

10 nursing facility shall not be considered the member's home.

11 (d) "At-home recovery visit" means the period of a visit

12 required to provide at home recovery care, without limit on the

13 duration of the visit, except each consecutive 4 hours in a

14 24-hour period of services provided by a care provider is 1

15 visit.

16 Sec. 461. (1) A health care corporation shall make avail-

17 able to each prospective medicare supplement certificate holder a

18 certificate form containing only the basic core benefits as pro-

19 vided in section 455.

20 (2) Groups, packages, or combinations of medicare supplement

21 benefits other than those listed in this section shall not be

22 offered for sale in this state except as may be permitted in sec-

23 tion 459(1)(k).

24 (3) Benefit plans shall contain the appropriate a through j

25 designations, shall be uniform in structure, language, and format

26 to the standard benefit plans in subsection (5), and shall

27 conform to the definitions in this part. Each benefit shall be

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1 structured in accordance with sections 455 and 459 and list the

2 benefits in the order shown in subsection (5). For purposes of

3 this section, "structure, language, and format" means style,

4 arrangement, and overall content of a benefit.

5 (4) In addition to the benefit plan designations a through j

6 as provided under subsection (5), a health care corporation may

7 use other designations to the extent permitted by law.

8 (5) A medicare supplement benefit plan shall conform to 1 of

9 the following:

10 (a) A standardized medicare supplement benefit plan A shall

11 be limited to the basic core benefits common to all benefit plans

12 as defined in section 455.

13 (b) A standardized medicare supplement benefit plan B shall

14 include only the following: the core benefits as defined in sec-

15 tion 455 and the medicare part A deductible as defined in section

16 459(1)(a).

17 (c) A standardized medicare supplement benefit plan C shall

18 include only the following: the core benefits as defined in sec-

19 tion 455, the medicare part A deductible, skilled nursing facil-

20 ity care, medicare part B deductible, and medically necessary

21 emergency care in a foreign country as defined in section

22 459(1)(a), (b), (c), and (h).

23 (d) A standardized medicare supplement benefit plan D shall

24 include only the following: the core benefits as defined in sec-

25 tion 455, the medicare part A deductible, skilled nursing facil-

26 ity care, medically necessary emergency care in a foreign

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1 country, and the at-home recovery benefit as defined in section

2 459(1)(a), (b), (h), and (j).

3 (e) A standardized medicare supplement benefit plan E shall

4 include only the following: the core benefits as defined in sec-

5 tion 455, the medicare part A deductible, skilled nursing facil-

6 ity care, medically necessary emergency care in a foreign coun-

7 try, and preventive medical care as defined in section 459(1)(a),

8 (b), (h), and (i).

9 (f) A standardized medicare supplement benefit plan F shall

10 include only the following: the core benefits as defined in sec-

11 tion 455, the medicare part A deductible, skilled nursing facil-

12 ity care, medicare part B deductible, 100% of the medicare part B

13 excess charges, and medically necessary emergency care in a for-

14 eign country as defined in section 459(1)(a), (b), (c), (e), and

15 (h). A STANDARDIZED MEDICARE SUPPLEMENT PLAN F HIGH DEDUCTIBLE

16 SHALL INCLUDE ONLY THE FOLLOWING: 100% OF COVERED EXPENSES FOL-

17 LOWING THE PAYMENT OF THE ANNUAL HIGH DEDUCTIBLE PLAN F

18 DEDUCTIBLE. THE COVERED EXPENSES INCLUDE THE CORE BENEFITS AS

19 DEFINED IN SECTION 455, PLUS THE MEDICARE PART A DEDUCTIBLE,

20 SKILLED NURSING FACILITY CARE, THE MEDICARE PART B DEDUCTIBLE,

21 100% OF THE MEDICARE PART B EXCESS CHARGES, AND MEDICALLY NECES-

22 SARY EMERGENCY CARE IN A FOREIGN COUNTRY AS DEFINED IN SECTION

23 459(1)(A), (B), (C), (E), AND (H). THE ANNUAL HIGH DEDUCTIBLE

24 PLAN F DEDUCTIBLE SHALL CONSIST OF OUT-OF-POCKET EXPENSES, OTHER

25 THAN PREMIUMS, FOR SERVICES COVERED BY THE MEDICARE SUPPLEMENT

26 PLAN F CERTIFICATE, AND SHALL BE IN ADDITION TO ANY OTHER

27 SPECIFIC BENEFIT DEDUCTIBLES. THE ANNUAL HIGH DEDUCTIBLE PLAN F

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1 DEDUCTIBLE IS $1,580.00 FOR CALENDAR YEAR 2001, AND THE SECRETARY

2 SHALL ADJUST IT ANNUALLY THEREAFTER TO REFLECT THE CHANGE IN THE

3 CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS FOR THE 12-MONTH

4 PERIOD ENDING WITH AUGUST OF THE PRECEDING YEAR, ROUNDED TO THE

5 NEAREST MULTIPLE OF $10.00.

6 (g) A standardized medicare supplement benefit plan G shall

7 include only the following: the core benefits as defined in sec-

8 tion 455, the medicare part A deductible, skilled nursing facil-

9 ity care, 80% of the medicare part B excess charges, medically

10 necessary emergency care in a foreign country, and the at-home

11 recovery benefit as defined in section 459(1)(a), (b), (d), (h),

12 and (j).

13 (h) A standardized medicare supplement benefit plan H shall

14 include only the following: the core benefits as defined in sec-

15 tion 455, the medicare part A deductible, skilled nursing facil-

16 ity care, basic outpatient prescription drug benefit, and medi-

17 cally necessary emergency care in a foreign country as defined in

18 section 459(1)(a), (b), (f), and (h).

19 (i) A standardized medicare supplement benefit plan I shall

20 include only the following: the core benefits as defined in sec-

21 tion 455, the medicare part A deductible, skilled nursing facil-

22 ity care, 100% of the medicare part B excess charges, basic out-

23 patient prescription drug benefit, medically necessary emergency

24 care in a foreign country, and at-home recovery benefit as

25 defined in section 459(1)(a), (b), (e), (f), (h), and (j).

26 (j) A standardized medicare supplement benefit plan J shall

27 include only the following: the core benefits as defined in

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1 section 455, the medicare part A deductible, skilled nursing

2 facility care, medicare part B deductible, 100% of the medicare

3 part B excess charges, extended outpatient prescription drug ben-

4 efit, medically necessary emergency care in a foreign country,

5 preventive medical care, and at-home recovery benefit as defined

6 in section 459(1)(a), (b), (c), (e), (g), (h), (i), and (j). A

7 STANDARDIZED MEDICARE SUPPLEMENT BENEFIT PLAN J HIGH DEDUCTIBLE

8 PLAN SHALL CONSIST OF ONLY THE FOLLOWING: 100% OF COVERED

9 EXPENSES FOLLOWING THE PAYMENT OF THE ANNUAL HIGH DEDUCTIBLE PLAN

10 J DEDUCTIBLE. THE COVERED EXPENSES INCLUDE THE CORE BENEFITS AS

11 DEFINED IN SECTION 455, PLUS THE MEDICARE PART A DEDUCTIBLE,

12 SKILLED NURSING FACILITY CARE, MEDICARE PART B DEDUCTIBLE, 100%

13 OF THE MEDICARE PART B EXCESS CHARGES, EXTENDED OUTPATIENT PRE-

14 SCRIPTION DRUG BENEFIT, MEDICALLY NECESSARY EMERGENCY CARE IN A

15 FOREIGN COUNTRY, PREVENTIVE MEDICAL CARE BENEFIT AND AT-HOME

16 RECOVERY BENEFIT AS DEFINED IN SECTION 459(1)(A), (B), (C), (E),

17 (G), (H), (I), AND (J). THE ANNUAL HIGH DEDUCTIBLE PLAN J

18 DEDUCTIBLE SHALL CONSIST OF OUT-OF-POCKET EXPENSES, OTHER THAN

19 PREMIUMS, FOR SERVICES COVERED BY THE MEDICARE SUPPLEMENT PLAN J

20 CERTIFICATE, AND SHALL BE IN ADDITION TO ANY OTHER SPECIFIC BENE-

21 FIT DEDUCTIBLES. THE ANNUAL DEDUCTIBLE SHALL BE $1,580.00 FOR

22 CALENDAR YEAR 2001, AND THE SECRETARY SHALL ADJUST IT ANNUALLY

23 THEREAFTER TO REFLECT THE CHANGE IN THE CONSUMER PRICE INDEX FOR

24 ALL URBAN CONSUMERS FOR THE 12-MONTH PERIOD ENDING WITH AUGUST OF

25 THE PRECEDING YEAR, ROUNDED TO THE NEAREST MULTIPLE OF $10.00.

26 Sec. 465. (1) A health care corporation that offers a

27 medicare supplement certificate shall provide an outline of

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1 coverage to the applicant at the time of application and, except

2 for direct response solicitation certificates, shall obtain an

3 acknowledgment of receipt of the outline of coverage from the

4 applicant. The outline of coverage provided to applicants pursu-

5 ant to this section shall consist of the following 4 parts:

6 (a) A cover page.

7 (b) Premium information.

8 (c) Disclosure pages.

9 (d) Charts displaying the features of each benefit plan

10 offered by the health care corporation.

11 (2) If an outline of coverage is provided at the time of

12 application and the medicare supplement certificate is issued on

13 a basis that would require revision of the outline, a substitute

14 outline of coverage properly describing the certificate shall be

15 delivered with the certificate and contain the following state-

16 ment, in no less than 12-point type, immediately above the com-

17 pany name:

18 NOTICE: READ THIS OUTLINE OF COVERAGE CAREFULLY. IT IS NOT

19 IDENTICAL TO THE OUTLINE OF COVERAGE PROVIDED UPON APPLICA-

20 TION AND THE COVERAGE ORIGINALLY APPLIED FOR HAS NOT BEEN

21 ISSUED.

22 (3) An outline of coverage under subsection (1) or (2)

23 shall be in the language and format prescribed in this section

24 and in not less than 12-point type. The A through J letter des-

25 ignation of the plan shall be shown on the cover page and the

26 plans offered by the health care corporation shall be prominently

27 identified. Premium information shall be shown on the cover page

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1 or immediately following the cover page and shall be prominently

2 displayed. The premium and method of payment shall be stated for

3 all plans that are offered to the applicant. All possible premi-

4 ums for the applicant shall be illustrated. The following items

5 shall be included in the outline of coverage in the order pre-

6 scribed below and in substantially the following form, as

7 approved by the commissioner:

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1 (Health Care Corporation Name)

2 Medicare Supplement Coverage

3 Outline of Medicare Supplement Coverage-Cover Page:

4 Benefit Plan(s)_______ [insert letter(s) of plan(s) being offered]

5 Medicare supplement coverage can be sold in only 10 standard plans PLUS 2 HIGH DEDUCTIBLE

6 PLANS. This chart shows the benefits included in each plan. Every health care corpora-

7 tion shall make available Plan "A". Some plans may not be available in your state.

8 BASIC BENEFITS: Included in All Plans.

9 Hospitalization: Part A coinsurance plus coverage for 365 additional days after Medicare

10 benefits end.

11 Medical Expenses: Part B coinsurance (20% of Medicare-approved expenses) OR, FOR HOSPITAL

12 OUTPATIENT DEPARTMENT SERVICES UNDER A PROSPECTIVE PAYMENT SYSTEM, APPLICABLE COPAYMENTS.

13 Blood: First three pints of blood each year.

14 ______________________________________________________________________________ ____________

15 | A | B | C | D | E | F | G | H | I | J

16 ______________________________________________________________________________ ____________

17 Basic Benefits | x | x | x | x | x | x | x | x | x | x

18 ______________________________________________________________________________ ____________

19 Skilled Nursing | | | | | | | | | |

20 Co-Insurance | | | x | x | x | x | x | x | x | x

21 ______________________________________________________________________________ ____________

22 Part A Deductible | | x | x | x | x | x | x | x | x | x

23 ______________________________________________________________________________ ____________

24 Part B Deductible | | | x | | | x | | | | x

25 ______________________________________________________________________________ ____________

26 Part B Excess | | | | | | x | x | | x | x

27 | | | | | |100% | 80% | |100% | 100%

28 ______________________________________________________________________________ ____________

29 Foreign Travel | | | | | | | | | |

30 Emergency | | | x | x | x | x | x | x | x | x

31 ______________________________________________________________________________ ____________

32 At-Home Recovery | | | | x | | | x | | x | x

33 ______________________________________________________________________________ ____________

34 | | | | | | | | x | x | x

35 Drugs | | | | | | | |$1,250 |$1,250 |$3,000

36 | | | | | | | |Limit |Limit |Limit

37 ______________________________________________________________________________ ____________

38 Preventive Care | | | | | x | | | | | x

39 ______________________________________________________________________________ ____________

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1 PREMIUM INFORMATION

2 We (insert health care corporation's name) can only raise

3 your premium if we raise the premium for all certificates like

4 yours in this state. (If the premium is based on the increasing

5 age of the member, include information specifying when premiums

6 will change).

7 DISCLOSURES

8 Use this outline to compare benefits and premiums among pol-

9 icies, certificates, and contracts.

10 READ YOUR POLICY VERY CAREFULLY

11 This is only an outline describing your certificate's most

12 important features. The certificate is your contract. You must

13 read the certificate itself to understand all of the rights and

14 duties of both you and your health care corporation.

15 RIGHT TO RETURN CERTIFICATE

16 If you find that you are not satisfied with your certifi-

17 cate, you may return it to (insert health care corporation's

18 address). If you send the certificate back to us within 30 days

19 after you receive it, we will treat the certificate as if it had

20 never been issued and return all of your payments.

21 CERTIFICATE REPLACEMENT

22 If you are replacing another health insurance policy, con-

23 tract, or certificate, do not cancel it until you have actually

24 received your new certificate and are sure you want to keep it.

25 NOTICE

26 This certificate may not fully cover all of your medical

27 costs.

03086'01 *

20

1 [For agent issued certificates]

2 Neither (insert health care corporation's name) nor its

3 agents are connected with medicare.

4 [For direct response issued certificates]

5 (Insert health care corporation's name) is not connected

6 with medicare.

7 This outline of coverage does not give all the details of medi-

8 care coverage. Contact your local social security office or con-

9 sult "the medicare handbook" for more details.

10 COMPLETE ANSWERS ARE VERY IMPORTANT

11 When you fill out the application for the new certificate,

12 be sure to answer truthfully and completely all questions about

13 your medical and health history. The company may cancel your

14 certificate and refuse to pay any claims if you leave out or fal-

15 sify important medical information. [If the certificate is guar-

16 anteed issue, this paragraph need not appear.]

17 Review the application carefully before you sign it. Be

18 Certain that all information has been properly recorded.

19 [Include for each plan offered by the health care corpora-

20 tion a chart showing the services, medicare payments, plan pay-

21 ments, and member payments using the same language, in the same

22 order, and using uniform layout and format as shown in the charts

23 that follow. A health care corporation may use additional bene-

24 fit plan designations on these charts pursuant to

25 section 461(4). Include an explanation of any innovative bene-

26 fits on the cover page and in the chart, in a manner approved by

27 the commissioner. The health care corporation issuing the

03086'01 *

21

1 certificate shall change the dollar amounts each year to reflect

2 current figures. No more than 4 plans may be shown on 1 chart.]

3 Charts for each plan are as follows:

03086'01 *

22

1 PLAN A

2 MEDICARE (PART A)--HOSPITAL SERVICES--PER BENEFIT PERIOD

3 *A benefit period begins on the first day you receive service as an inpa-

4 tient in a hospital and ends after you have been out of the hospital and

5 have not received skilled care in any other facility for 60 days in a

6 row.

7 _________________________________________________________________________