Changes to Wisconsin's Medicare Supplement Rule
Wisconsin adopted amendments to its Medicare supplement rule, Ins 3.39, Wis. Adm. Code, that apply to Medicare supplement, Medicare select and Medicare cost (Medigap) policies issued or renewed beginning January 1, 2006. Wisconsin's Medicare supplement rule was amended in order to comply with the requirements of the federal Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA).
The MMA creates Medicare Part D, outpatient prescription drug coverage that will be provided through private prescription drug plans (PDPs). The MMA also requires that Wisconsin and other states amend their existing laws applying to Medigap policies, including prohibiting Medigap policies from providing outpatient prescription drug coverage for new policies issued after January 1, 2006.
Wisconsin has long had in place standardization requirements for its Medigap policies. It is one of three states that has a waiver from the prior federal standardization requirements that created standardized Medicare supplement categories Plans A to L. Wisconsin requires that Medigap insurers offer basic standardized policies with optional riders that provide coverage for Medicare Part A deductible, Medicare Part B deductible, additional home health care, Medicare Part B excess charges and foreign travel.
Ins 3.39, Wis. Adm. Code, has been amended to:
- Create two cost-sharing Medicare supplement policies and two cost-sharing Medicare select policies,
- Eliminate outpatient prescription drug coverage under existing Medigap policies after December 31, 2005, for those policyholders who apply for Medicare Part D PDPs,
- Prohibit the sale of outpatient prescription drug coverage under Medigap policies after December 31, 2005,
- Allow Medigap policyholders to renew and maintain the outpatient prescription drug coverage in their existing Medigap, if they choose not to enroll in Medicare Part D PDP plans, and
- Expand guaranteed issue rights for individuals who lose medical assistance, and for individuals who terminate coverage under an employee welfare benefit to enroll in Medicare Advantage but disenroll in the Medicare Advantage plan within 12 months of enrollment.
Beginning January 1, 1992, Wisconsin Medigap policy applicants had the option of purchasing an optional outpatient drug rider. The optional riders covered at least 50% of the charges for outpatient prescription drugs after a deductible of no greater than $250 per year to a maximum of at least $3,000 in benefit per year. Beginning September 1, 1994, all Medigap policies were required to cover catastrophic outpatient drug coverage. The mandated catastrophic drug benefit provided coverage for at least 80% of the charges for outpatient prescription drugs after a drug deductible of no more than $6,250 per calendar year. Some Medigap policies issued prior to these dates included outpatient prescription drug coverage.
In order to comply with the MMA, the amendments to s. Ins 3.39, Wis. Adm. Code, require that Medigap policies issued beginning January 1, 2006, cannot include any outpatient prescription drug coverage.
Medigap policyholders who have outpatient prescription drug coverage under policies issued prior to December 31, 2005, have several options:
- Continue with their current policy without loss of prescription drug coverage. (Insureds will be informed that if they choose this option, they will have to pay a "penalty" for future enrollment in Medicare Part D after the initial enrollment period.)
- Enroll in Medicare Part D, and keep their current policy without prescription drug coverage.
- Enroll in Medicare Part D, drop their plan, and elect to guarantee issue into a Medigap policy from the same issuer.
- Enroll in Medicare Advantage to obtain Medicare PDP coverage.
In order to comply with the MMA, the amendments to s. Ins 3.39, Wis. Adm. Code, affecting outpatient prescription drug coverage also apply to Wisconsin's mandate regarding equipment and supplies for the treatment of diabetes. Wisconsin's diabetes mandate requires that Medigap policies cover equipment and supplies, including insulin, and prescription medications for the treatment of diabetes. Medigap policies issued after January 1, 2006, will not cover prescription medications, insulin or medical supplies associated with the injection of insulin for the treatment of diabetes. The MMA provides that Medigap policies are not allowed to provide this coverage because it duplicates the coverage available under Medicare Part D. Medigap policies issued prior to January 1, 2006, to policyholders who choose to enroll in Medicare Part D will be amended with an exclusionary rider indicating that outpatient prescription drugs, including prescription medications for the treatment of diabetes, insulin and medical supplies associated with the injection of insulin are no longer covered. Medigap policies issued prior to January 1, 2006, to policyholders who choose not to enroll in Medicare Part D will continue to cover equipment, supplies, including insulin, and prescription medications as provided under Wisconsin's diabetes mandate.
Beginning September 15, 2005, through November 15, 2005, the MMA requires that Medigap insurers and retiree plans provide to existing policy and certificate holders notice of their rights to continue existing drug coverage or to enroll in a Medicare PDP.
The amendments to s. Ins 3.39, Wis. Adm. Code, also provide that insurers may offer Medicare supplement or Medicare select policies that supplement benefits on a 25% and 50% cost-sharing basis. These cost-sharing Medigap policies provide that the insurer pays only 75% or 50% of supplemental benefits historically covered by Medicare supplement or Medicare select policies and that the policyholder pays coinsurance of 25% or 50%. As a result of the addition of new cost-sharing plans, the existing Medicare supplement insurance high deductible plan and high deductible drug plan will no longer be permitted to be sold after December 31, 2005.
The amendments to s. Ins 3.39, Wis. Adm. Code, include a provision that allow Medicare cost insurers to offer a Medicare cost basic policy that supplements only those benefits covered by Medicare. The Centers for Medicare and Medicaid Services (CMS), the federal agency that regulates Medicare and Medicare replacement policies, has indicated that Medicare cost insurers must offer basic cost plans in addition to the Medicare cost enhanced plans. Historically, Medicare cost policies have been required to provide coverage for Wisconsin mandated benefits, such as equipment and supplies for the treatment of diabetes, mammograms, home health care benefits, and chiropractic care.
The amendments to s. Ins 3.39, Wis. Adm. Code, extend guaranteed issue rights, which allow eligible Medicare beneficiaries the right to buy Medigap policies outside of their open enrollment period if they lose or change their health coverage under certain conditions. These rights have been extended to individuals eligible for benefits under Medicare Parts A and B and covered under the medical assistance program who subsequently lose eligibility in the medical assistance program. Guaranteed issue rights have also been extended to individuals covered by employee welfare benefit plans that are either primary to Medicare or provide health benefits that supplement the benefits of Medicare and these individuals terminate coverage under the employee welfare benefit plans to enroll in Medicare Advantage plans, but subsequently disenroll from a Medicare Advantage plan but not later than 12 months after the effective date of enrollment.
Wisconsin's Medicare supplement rule requires that advertisements used by agents to market Medigap policies be filed with the Office of the Commissioner of Insurance (OCI) prior to use. The definition of an advertisement under Wisconsin insurance law is very broad and includes printed and published material, audio visual material and descriptive literature used in periodicals, on the Web and for radio and TV advertisements regarding Medicare, Medigap policies or directed to Medicare beneficiaries. Advertisements developed by licensed insurance companies and filed with the OCI need not be filed by insurance agents using advertisements. The transmittal form, certificate of compliance and instructions are available on the OCI's Web site at: oci.wi.gov/ociforms/26-042.doc (opens in new window
The OCI will be providing periodic updates regarding the MMA, Medicare PDPs and issues arising because of the amendments to s. Ins 3.39, Wis. Adm. Code, in the Senior Issues section of our Web site at oci.wi.gov/srissues.htm and through Bulletins for insurers and agents. In addition, the OCI publications Wisconsin Guide to Health Insurance for People with Medicare and Medicare Supplement Insurance Approved Policies will include information for consumers on the changes to Medigap policies required by the MMA. We encourage agents that market Medigap policies to periodically check our Web site at: oci.wi.gov/oci_home.htm for updates regarding Medigap policies in Wisconsin.
If you have questions regarding the Medicare Part D Prescription Drug Program, e-mail OCI at email@example.com or call 266-0103 (In Madison) or 1-800-236-8517 (Statewide).