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Bulletin No. 95-05

Disclosure statements used in connection with policies that duplicates medicare

Issued and entered July 31, 1995 by D. Joseph Olson, Commissioner of Insurance

Until recently, the federal certification program which applies to Medicare supplement policies prohibited the sale of policies that duplicate Medicare benefits to Medicare beneficiaries. Under the Social Security Act amendments of 1994 (H.R. 5252), the sale of these types of policies to Medicare beneficiaries is allowed with proper disclosure. Language for disclosure statements to be used in connection with such policies was developed by the National Association of Insurance Commissioners (NAIC) and approved by the Health Care Financing Administration (HCFA). Therefore, on or after August 11, 1995, policies which duplicate Medicare benefits can be sold to Medicare beneficiaries if these disclosure statements are included on or with the application for such policies.

The NAIC has identified 10 separate types of health insurance policies that each need an individualized statement of the extent to which the policy duplicates Medicare. Each of these types shall include a disclosure statement, according to the particular policy type involved, on the application or together with the application. The disclosure statement may not vary in terms of language or format from that developed by the NAIC for that type of policy.

Because these disclosure statements are required for all policies that duplicate Medicare, and because the language and format of these statements may not vary from that developed by the NAIC, insurers amending applications for the sole purpose of including a disclosure statement may do so without filing the language or the application with the Insurance Bureau for prior approval.

Disclosure statement language, together with more details about the federal requirements, are available in the June 12, 1995 issue of the Federal Register (Vol. 60, No. 112). Insurers are reminded that failure to provide the appropriate disclosure statement, or failure to pay benefits under the duplicating policy without regard to other coverage, could result in the imposition of federal criminal or civil penalties.

Questions regarding this bulletin may be addressed to:
Life and Health Section
Commercial Market Standards
Michigan Insurance Bureau
P.O. Box 30220
Lansing, MI 48909
(517) 373-0224