SECTION 3.3308. Required Disclosure Provisions

(a) General rules.

(1) Medicare supplement policies and certificates must include a renewal or continuation provision. The language or specifications of the renewal or continuation provision must be consistent with the type of contract issued. The provision must be appropriately captioned, appear on the first page of the policy, and include any reservation by the issuer of the right to change premiums and any automatic renewal premium increases based on the age of the policyholder.

(2) Except for riders or endorsements by which the issuer effectuates a request made in writing by the policyholder, or by which the issuer exercises a specifically reserved right under a Medicare supplement policy, or by which the issuer is required to reduce or eliminate benefits to avoid duplication of Medicare benefits, all riders or endorsements added to a Medicare supplement policy after the date of issue or at reinstatement or renewal that reduce or eliminate benefits or coverage in the policy must require signed acceptance by the policyholder. After the date of issue of the policy or certificate, any rider or endorsement that increases benefits or coverage with concomitant increase in premium during the policy term must be agreed to in writing and signed by the policyholder unless the benefits are required by the minimum standards for Medicare supplement insurance policies, or unless the increased benefits or coverage is required by law. Where a separate additional premium is charged for benefits provided in connection with riders or endorsements, the additional premium charge must be set forth in the policy.

(3) Medicare supplement policies may not provide for the payment of benefits based on standards described as "usual and customary," "reasonable and customary," or similar words and phrases.

(4) If a Medicare supplement policy or certificate contains any limitations with respect to preexisting conditions:

(A) the limitations must appear as a separate paragraph of the policy or certificate and be labeled as "Preexisting Condition Limitations;"

(B) the policy or certificate must define the term "preexisting condition" and must provide an explanation of the term in its accompanying outline of coverage; and

(C) the policy or certificate must include a provision explaining the reduction of the preexisting condition limitation for individuals who qualify under §3.3306(b)(1)(A) of this title (relating to Minimum Benefit Standards), §3.3312(a)(2) of this title (relating to Guaranteed Issue for Eligible Persons), or §3.3324(c) and (d) of this title (relating to Open Enrollment).

(5) Medicare supplement policies and certificates must have a notice prominently printed on the first page or attached to the first page stating in substance that the policyholder or certificate holder has the right to return the policy or certificate within 30 days of its delivery and to have the premium refunded if, after examination, the insured person is not satisfied for any reason.

(6) Issuers of accident and sickness policies, certificates, or subscriber contracts that provide hospital or medical-expense coverage on an expense-incurred or indemnity basis, to persons eligible for Medicare must provide to those applicants a Guide to Health Insurance for People with Medicare (Guide) in the form developed jointly by the National Association of Insurance Commissioners and the Centers for Medicare and Medicaid Services of the United States Department of Health and Human Services in no smaller than 12-point type.

(A) For purposes of this section, "form" means the language, format, style, type size, type proportional spacing, bold character, and line spacing.

(B) If a Guide incorporating the latest statutory changes is not available from a government agency, companies may comply with this provision by modifying the latest available Guide to the extent required by applicable law.

(C) Except as provided in this section, delivery of the Guide must be made whether or not any policies, certificates, subscriber contracts, or evidences of coverage are advertised, solicited, or issued as Medicare supplement policies or certificates as defined in this regulation.

(D) Except in the case of direct response issuers, delivery of the Guide must be made to the applicant at the time of application, and acknowledgment of receipt of the Guide must be obtained from the applicant by the issuer. Issuers must deliver the Guide to the applicant for a direct response Medicare supplement policy on request, but not later than at the time the policy is delivered.

(7) Except as otherwise provided in this section, the terms "Medicare Supplement," "Medigap," "Medicare Wrap-Around," and similar words or phrases may not be used unless the policy is issued in compliance with §3.3306 of this title.

(b) Outline of coverage requirements for Medicare supplement policies.

(1) Issuers of Medicare supplement coverage in this state must provide an outline of coverage to all applicants, including certificate holders under group policies, at the time application is presented to the prospective applicant and, except for direct-response policies, must obtain an acknowledgment of receipt of the outline from the applicant.

(2) If a Medicare supplement policy or certificate is issued on a basis that would require revision of the outline of coverage delivered at the time of application, a substitute outline of coverage properly describing the policy or certificate actually issued must accompany the policy or certificate when it is delivered. The outline of coverage must contain the following statement in no less than 12-point type, immediately above the company name: "Notice: Read this outline of coverage carefully. It is not identical to the outline of coverage provided upon application and the coverage originally applied for has not been issued."

(c) Form for outline of coverage. In providing outlines of coverage to applicants under the requirements of subsection (b)(1) of this section, insurers must use a form that complies with the requirements of this subsection. The outline of coverage must contain each of the following four parts in the following order: a cover page, premium information, disclosure pages, and charts displaying the features of each benefit plan offered by the issuer. The outline of coverage must be in the language and format prescribed in paragraphs (1) and (2) of this subsection in no less than 12-point type.

(1) All plans must be shown on the cover page, and the plans that are offered by the issuer must be prominently identified. Premium information for plans that are offered must be shown on the cover page or immediately following the cover page and must be prominently displayed. The premium and mode must be stated for all plans that are offered to the prospective applicant. All possible premiums for the prospective applicant must be illustrated.

(2) The items in subparagraphs (A) - (C) of this paragraph must be included in the outline of coverage in addition to the items specified in the plan-specific outline-of-coverage forms.

(A) Dollar amounts that are shown in parentheses for each of the plan-specific charts on the following pages are for the calendar year in which the charts were published. Issuers must, for each plan offered, appropriately complete outline-of-coverage-chart statements about amounts to be paid by Medicare, the plan, and the covered person by replacing the amount in parentheses with the dollar amount corresponding to each covered service for the applicable calendar year benefit period.

(B) The outline of coverage must include an explanation of any limitations and exclusions. Those limitations and exclusions resulting from Medicare program provisions may be disclosed by reference and need not be explained in their entirety. All limitations and exclusions related to preexisting conditions and all other limitations and exclusions not resulting from Medicare regulations must be fully explained in the outline of coverage.

(C) The outline of coverage must include a statement that the policy either does or does not contain provisions providing for a refund or partial refund of premium on the death of an insured or on the surrender of the policy or certificate. If the policy contains these provisions, a description of the provisions must be included.

(D) The outline of coverage for Medicare Select policies or certificates must include information regarding grievance procedures that meet the requirements of §3.3325(m) of this title (relating to Medicare Select Policies, Certificates, and Plans of Operation).

(E) The Commissioner adopts the Outline of Coverage form, LHL 050 Rev. 06/18. This form contains a chart of benefits for each of the standard Medicare supplement plans and required disclosures applicable to policies sold with an effective date for coverage of June 1, 2010, or later. Issuers must begin using form LHL 050 Rev. 06/18 no later than July 1, 2019.

Attached Graphic

(d) Notice requirements.

(1) As soon as practicable, but no later than 30 days before the annual effective date of any Medicare benefit changes, every issuer providing Medicare supplement coverage to a resident of this state must notify its policyholders, contract holders, and certificate holders of modifications it has made to Medicare supplement insurance policies, contracts, or certificates. The notice must:

(A) include a description of revisions to the Medicare program and a description of each modification made to the coverage provided under the Medicare supplement insurance policy, contract, or certificate; and

(B) inform each covered person as to when any premium adjustment is to be made due to changes in Medicare.

(2) The notice of benefit modifications and any premium adjustments must be in outline form and in clear and simple terms so as to facilitate comprehension.

(3) The notice may not contain or be accompanied by any solicitation.

(4) Issuers must comply with any notice requirements of the MMA.

Source Note: The provisions of this §3.3308 adopted to be effective June 1, 1982, 7 TexReg 1303; amended to be effective July 11, 1988, 13 TexReg 3295; amended to be effective July 28, 1989, 14 TexReg 3401; amended to be effective February 14, 1990, 15 TexReg 540; amended to be effective July 3, 1990, 15 TexReg 3581; amended to be effective December 1, 1990, 15 TexReg 6594; amended to be effective April 15, 1992, 17 TexReg 2238; amended to be effective January 1, 1997, 21 TexReg 10753; amended to be effective April 14, 1999, 24 TexReg 3353; amended to be effective February 19, 2001 26 TexReg 1544; amended to beeffective April 4, 2002, 27 TexReg 2498; amended to be effective May 10, 2005, 30 TexReg 2669; amended to be effective July 6, 2009, 34 TexReg 4532; amended to be effective June 13, 2018, 43 TexReg 3787