NAC687B.227. Policy or certificate advertised, solicited, delivered or issued for delivery or renewed on or after July 30, 1992, and effective before June 1, 2010: General requirements.

     1. A policy or certificate must not be advertised, solicited, originally delivered or issued for delivery, or renewed in this State as a policy or certificate to supplement Medicare on or after July 30, 1992, and with an effective date for coverage before June 1, 2010, if it fails to comply with the requirements set forth in this section.

     2. A policy to supplement Medicare or a certificate originally delivered or issued for delivery, or renewed, in this State on or after July 30, 1992, and with an effective date for coverage before June 1, 2010, must not:

     (a) Exclude or limit benefits for losses incurred more than 6 months after the effective date of coverage because of a preexisting condition.

     (b) Define a preexisting condition more restrictively than as a condition for which medical advice was given or treatment recommended by or received from a physician during the 6 months immediately preceding the effective date of coverage.

     (c) Indemnify against any loss resulting from sickness on a different basis than for a loss resulting from an accident.

     3. A policy to supplement Medicare or a certificate must 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. Premiums may be modified to correspond with such changes.

     4. A policy to supplement Medicare or a certificate must not provide for the termination of coverage of a spouse solely because of the occurrence of an event specified for the termination of coverage for the insured, other than the nonpayment of premiums.

     5. A policy to supplement Medicare or a certificate must be guaranteed renewable. The issuer may not cancel or refuse to renew the policy or certificate solely because of the health of the insured or for any other reason than the nonpayment of premiums or for a material misrepresentation.

     6. Termination of a policy to supplement Medicare or a certificate must be without prejudice to any continuous loss that commenced while the policy was in force, but the extension of benefits beyond the period during which the policy was in force may be predicated upon the continuous total disability of the insured, and limited to the duration of the policy benefit period, if any, or to the payment of the maximum benefits. Receipt of Medicare Part D benefits will not be considered in determining a continuous loss.

     7. Benefits and premiums must be suspended at the request of the policyholder or certificate holder for the period, not to exceed 24 months, during which the holder has applied for and is determined to be eligible for medical assistance under Title XIX of the Social Security Act, 42 U.S.C. §§ 1396 et seq., if the holder notifies the issuer of the policy or certificate within 90 days after the date he or she becomes eligible for such assistance.

     8. If benefits and premiums are suspended pursuant to subsection 7 and the policyholder or certificate holder loses his or her eligibility for assistance under Title XIX of the Social Security Act, 42 U.S.C. §§ 1396 et seq., the policy to supplement Medicare or the certificate must be automatically reinstated effective as of the date the holder is no longer eligible for assistance if he or she:

     (a) Gives notice of his or her loss of eligibility to the issuer within 90 days; and

     (b) Pays the premium attributable to his or her period of eligibility.

     9. Benefits and premiums must be suspended at the request of the policyholder or certificate holder for any period that may be provided by federal regulation, during which the holder is entitled to benefits under section 226(b) of the Social Security Act, 42 U.S.C. § 426, and is covered under a group health plan, as that term is defined in section 1862(b)(1)(A)(v) of the Social Security Act, 42 U.S.C. § 1395y(b)(1)(A)(v). If benefits and premiums are suspended pursuant to this subsection and the policyholder or certificate holder loses coverage under the group health plan, the policy to supplement Medicare or the certificate must be automatically reinstated effective as of the date of loss of coverage if the policyholder or certificate holder provides notice of loss of coverage within 90 days after the date of the loss and pays the premium attributable to the period, effective as of the date of termination of enrollment in the group health plan.

     10. If a policy to supplement Medicare or a certificate is reinstated pursuant to subsection 8 or 9:

     (a) A waiting period for the treatment of any preexisting condition must not be required;

     (b) The coverage provided must be substantially equivalent to the coverage in effect before the benefits and premiums were suspended, and, if the suspended policy to supplement Medicare provided coverage for outpatient prescription drugs, reinstatement of the policy for Medicare Part D enrollees must be without coverage for outpatient prescription drugs and must otherwise provide substantially equivalent coverage to the coverage in effect before the benefits and premiums were suspended; and

     (c) The terms for the classification of premiums must be at least as favorable to the policyholder or certificate holder as the terms in effect before the benefits and premiums were suspended.

     11. If an issuer makes a written offer to the Medicare Supplement policyholder or certificate holder of one or more of its plans to exchange, during a specified period, from his or her 1990 standardized benefit plan, as described in NAC 687B.295, to a 2010 standardized benefit plan, as described in NAC 687B.323, the offer and subsequent exchange must comply with the following requirements:

     (a) The issuer need not provide justification to the Commissioner if the insured replaces a 1990 standardized benefit plan or certificate with an issue age rated 2010 standardized benefit plan or certificate at the insured’s original issue age and duration;

     (b) If an insured’s policy or certificate to be replaced is priced on an issue age rate schedule at the time of such offer, the rate charged to the insured for the new exchanged policy must recognize the policy reserve buildup, due to the prefunding inherent in the use of an issue age rate basis, for the benefit of the insured;

     (c) The method proposed to be used by the issuer must be filed with the Commissioner pursuant to NAC 687B.229;

     (d) The rating class of the new policy or certificate must be the class closest to the class of the replaced coverage;

     (e) The issuer may not apply new limitations on preexisting conditions or a new incontestability period to the new policy for those benefits contained in the exchanged 1990 standardized benefit plan or certificate of the insured, but may apply limitations of not more than 6 months on preexisting conditions to any added benefits contained in the new 2010 standardized benefit plan or certificate not contained in the exchanged policy; and

     (f) The new policy or certificate must be offered to all policyholders or certificate holders within a given plan, except where the offer or issue would be in violation of state or federal law.

     (Added to NAC by Comm’r of Insurance, 7-16-92, eff. 7-30-92; A 5-13-96; R075-02, 9-20-2002; A by Div. of Insurance by R078-05, 11-17-2005, eff. 9-8-2005 for Plans K and L, and 1-1-2006 for Medicare Part D Prescription Drug Benefit; A by Comm’r of Insurance by R049-09, 10-27-2009)