Skip to main content Skip to office menu Skip to footer
Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

                            CHAPTER 90-H.F.No. 1968 
                  An act relating to insurance; making changes in 
                  Medicare supplemental insurance required by federal 
                  law; amending Minnesota Statutes 1998, sections 
                  62A.31, subdivisions 1, 3, and by adding a 
                  subdivision; and 62A.43, subdivision 4. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1998, section 62A.31, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [POLICY REQUIREMENTS.] No individual or 
        group policy, certificate, subscriber contract issued by a 
        health service plan corporation regulated under chapter 62C, or 
        other evidence of accident and health insurance the effect or 
        purpose of which is to supplement Medicare coverage issued or 
        delivered in this state or offered to a resident of this state 
        shall be sold or issued to an individual covered by Medicare 
        unless the requirements in subdivisions 1a to 1s 1u are met.  
           Sec. 2.  Minnesota Statutes 1998, section 62A.31, is 
        amended by adding a subdivision to read: 
           Subd. 1u.  [GUARANTEED ISSUE FOR ELIGIBLE PERSONS.] (a)(1) 
        Eligible persons are those individuals described in paragraph 
        (b) who apply to enroll under the Medicare supplement policy not 
        later than 63 days after the date of the termination of 
        enrollment described in paragraph (b), and who submit evidence 
        of the date of termination or disenrollment with the application 
        for a Medicare supplement policy. 
           (2) With respect to eligible persons, an issuer shall not:  
        deny or condition the issuance or effectiveness of a Medicare 
        supplement policy described in paragraph (c) that is offered and 
        is available for issuance to new enrollees by the issuer; 
        discriminate in the pricing of such a Medicare supplement policy 
        because of health status, claims experience, receipt of health 
        care, medical condition, or age; or impose an exclusion of 
        benefits based upon a preexisting condition under such a 
        Medicare supplement policy. 
           (b) An eligible person is an individual described in any of 
        the following: 
           (1) the individual is enrolled under an employee welfare 
        benefit plan that provides health benefits that supplement the 
        benefits under Medicare; and the plan terminates, or the plan 
        ceases to provide all such supplemental health benefits to the 
        individual; 
           (2) the individual is enrolled with a Medicare+Choice 
        organization under a Medicare+Choice plan under Medicare part C, 
        and any of the following circumstances apply: 
           (i) the organization's or plan's certification under 
        Medicare part C has been terminated or the organization has 
        terminated or otherwise discontinued providing the plan in the 
        area in which the individual resides; 
           (ii) the individual is no longer eligible to elect the plan 
        because of a change in the individual's place of residence or 
        other change in circumstances specified by the secretary, but 
        not including termination of the individual's enrollment on the 
        basis described in section 1851(g)(3)(B) of the federal Social 
        Security Act, United States Code, title 42, section 
        1395w-21(g)(3)(b) (where the individual has not paid premiums on 
        a timely basis or has engaged in disruptive behavior as 
        specified in standards under section 1856 of the federal Social 
        Security Act, United States Code, title 42, section 1395w-26), 
        or the plan is terminated for all individuals within a residence 
        area; 
           (iii) the individual demonstrates, in accordance with 
        guidelines established by the Secretary, that: 
           (A) the organization offering the plan substantially 
        violated a material provision of the organization's contract in 
        relation to the individual, including the failure to provide an 
        enrollee on a timely basis medically necessary care for which 
        benefits are available under the plan or the failure to provide 
        such covered care in accordance with applicable quality 
        standards; or 
           (B) the organization, or agent or other entity acting on 
        the organization's behalf, materially misrepresented the plan's 
        provisions in marketing the plan to the individual; or 
           (iv) the individual meets such other exceptional conditions 
        as the secretary may provide; 
           (3)(i) the individual is enrolled with: 
           (A) an eligible organization under a contract under section 
        1876 of the federal Social Security Act, United States Code, 
        title 42, section 1395mm (Medicare risk or cost); 
           (B) a similar organization operating under demonstration 
        project authority, effective for periods before April 1, 1999; 
           (C) an organization under an agreement under section 
        1833(a)(1)(A) of the federal Social Security Act, United States 
        Code, title 42, section 1395l(a)(1)(A) (health care prepayment 
        plan); or 
           (D) an organization under a Medicare Select policy under 
        section 62A.318 or the similar law of another state; and 
           (ii) the enrollment ceases under the same circumstances 
        that would permit discontinuance of an individual's election of 
        coverage under clause (2); 
           (4) the individual is enrolled under a Medicare supplement 
        policy, and the enrollment ceases because: 
           (i)(A) of the insolvency of the issuer or bankruptcy of the 
        nonissuer organization; or 
           (B) of other involuntary termination of coverage or 
        enrollment under the policy; 
           (ii) the issuer of the policy substantially violated a 
        material provision of the policy; or 
           (iii) the issuer, or an agent or other entity acting on the 
        issuer's behalf, materially misrepresented the policy's 
        provisions in marketing the policy to the individual; 
           (5)(i) the individual was enrolled under a Medicare 
        supplement policy and terminates that enrollment and 
        subsequently enrolls, for the first time, with any 
        Medicare+Choice organization under a Medicare+Choice plan under 
        Medicare part C; any eligible organization under a contract 
        under section 1876 of the federal Social Security Act, United 
        States Code, title 42, section 1395mm (Medicare risk or cost); 
        any similar organization operating under demonstration project 
        authority; an organization under an agreement under section 
        1833(a)(1)(A) of the federal Social Security Act, United States 
        Code, title 42, section 1395l(a)(1)(A) (health care prepayment 
        plan); or a Medicare Select policy under section 62A.318 or the 
        similar law of another state; and 
           (ii) the subsequent enrollment under paragraph (a) is 
        terminated by the enrollee during any period within the first 12 
        months of such subsequent enrollment; or 
           (6) the individual, upon first enrolling for benefits under 
        Medicare part B, enrolls in a Medicare+Choice plan under 
        Medicare part C, and disenrolls from the plan by not later than 
        12 months after the effective date of enrollment. 
           (c) The Medicare supplement policy to which eligible 
        persons are entitled under: 
           (1) paragraph (b), clauses (1) to (4), is any Medicare 
        supplement policy that has a benefit package consisting of the 
        basic Medicare supplement plan described in section 62A.316, 
        paragraph (a), plus any combination of the three optional riders 
        described in section 62A.316, paragraph (b), clauses (1) to (3), 
        offered by any issuer; 
           (2) paragraph (b), clause (5), is the same Medicare 
        supplement policy in which the individual was most recently 
        previously enrolled, if available from the same issuer, or, if 
        not so available, any policy described in clause (1) offered by 
        any issuer; 
           (3) paragraph (b), clause (6), shall include any Medicare 
        supplement policy offered by any issuer. 
           (d)(1) At the time of an event described in paragraph (b), 
        because of which an individual loses coverage or benefits due to 
        the termination of a contract or agreement, policy, or plan, the 
        organization that terminates the contract or agreement, the 
        issuer terminating the policy, or the administrator of the plan 
        being terminated, respectively, shall notify the individual of 
        the individual's rights under this subdivision, and of the 
        obligations of issuers of Medicare supplement policies under 
        paragraph (a).  The notice must be communicated 
        contemporaneously with the notification of termination. 
           (2) At the time of an event described in paragraph (b), 
        because of which an individual ceases enrollment under a 
        contract or agreement, policy, or plan, the organization that 
        offers the contract or agreement, regardless of the basis for 
        the cessation of enrollment, the issuer offering the policy, or 
        the administrator of the plan, respectively, shall notify the 
        individual of the individual's rights under this subdivision, 
        and of the obligations of issuers of Medicare supplement 
        policies under paragraph (a).  The notice must be communicated 
        within ten working days of the issuer receiving notification of 
        disenrollment.  
           (e) Reference in this subdivision to a situation in which, 
        or to a basis upon which, an individual's coverage has been 
        terminated does not provide authority under the laws of this 
        state for the termination in that situation or upon that basis. 
           (f) An individual's rights under this subdivision are in 
        addition to, and do not modify or limit, the individual's rights 
        under subdivision 1h. 
           Sec. 3.  Minnesota Statutes 1998, section 62A.31, 
        subdivision 3, is amended to read: 
           Subd. 3.  [DEFINITIONS.] (a) The definitions provided in 
        this subdivision apply to sections 62A.31 to 62A.44. 
           (b) "Accident," "accidental injury," or "accidental means" 
        means to employ "result" language and does not include words 
        that establish an accidental means test or use words such as 
        "external," "violent," "visible wounds," or similar words of 
        description or characterization. 
           (1) The definition shall not be more restrictive than the 
        following:  "Injury or injuries for which benefits are provided 
        means accidental bodily injury sustained by the insured person 
        which is the direct result of an accident, independent of 
        disease or bodily infirmity or any other cause, and occurs while 
        insurance coverage is in force." 
           (2) The definition may provide that injuries shall not 
        include injuries for which benefits are provided or available 
        under a workers' compensation, employer's liability or similar 
        law, or motor vehicle no-fault plan, unless prohibited by law. 
           (b) (c) "Applicant" means: 
           (1) in the case of an individual Medicare supplement policy 
        or certificate, the person who seeks to contract for insurance 
        benefits; and 
           (2) in the case of a group Medicare supplement policy or 
        certificate, the proposed certificate holder. 
           (c) (d) "Bankruptcy" means a situation in which a 
        Medicare+Choice organization that is not an issuer has filed, or 
        has had filed against it, a petition for declaration of 
        bankruptcy and has ceased doing business in the state. 
           (e) "Benefit period" or "Medicare benefit period" shall not 
        be defined more restrictively than as defined in the Medicare 
        program. 
           (d) (f) "Certificate" means a certificate delivered or 
        issued for delivery in this state or offered to a resident of 
        this state under a group Medicare supplement policy or 
        certificate. 
           (e) (g) "Certificate form" means the form on which the 
        certificate is delivered or issued for delivery by the issuer. 
           (f) (h) "Convalescent nursing home," "extended care 
        facility," or "skilled nursing facility" shall not be defined 
        more restrictively than as defined in the Medicare program. 
           (g) (i) "Employee welfare benefit plan" means a plan, fund, 
        or program of employee benefits as defined in United States 
        Code, title 29, section 1002 (Employee Retirement Income 
        Security Act). 
           (j) "Health care expenses" means expenses of health 
        maintenance organizations associated with the delivery of health 
        care services which are analogous to incurred losses of 
        insurers.  The expenses shall not include: 
           (1) home office and overhead costs; 
           (2) advertising costs; 
           (3) commissions and other acquisition costs; 
           (4) taxes; 
           (5) capital costs; 
           (6) administrative costs; and 
           (7) claims processing costs. 
           (h) (k) "Hospital" may be defined in relation to its 
        status, facilities, and available services or to reflect its 
        accreditation by the joint commission on accreditation of 
        hospitals, but not more restrictively than as defined in the 
        Medicare program. 
           (i) (l) "Insolvency" means a situation in which an issuer, 
        licensed to transact the business of insurance in this state, 
        including the right to transact business as any type of issuer, 
        has had a final order of liquidation entered against it with a 
        finding of insolvency by a court of competent jurisdiction in 
        the issuer's state of domicile. 
           (m) "Issuer" includes insurance companies, fraternal 
        benefit societies, health care service plans plan corporations, 
        health maintenance organizations, and any other entity 
        delivering or issuing for delivery Medicare supplement policies 
        or certificates in this state or offering these policies or 
        certificates to residents of this state. 
           (j) (n) "Medicare" shall be defined in the policy and 
        certificate.  Medicare may be defined as the Health Insurance 
        for the Aged Act, title XVIII of the Social Security Amendments 
        of 1965, as amended, or title I, part I, of Public Law Number 
        89-97, as enacted by the 89th Congress of the United States of 
        America and popularly known as the Health Insurance for the Aged 
        Act, as amended. 
           (k) (o) "Medicare eligible expenses" means health care 
        expenses covered by Medicare, to the extent recognized as 
        reasonable and medically necessary by Medicare. 
           (l) (p) "Medicare+Choice plan" means a plan of coverage for 
        health benefits under Medicare part C as defined in section 1859 
        of the federal Social Security Act, United States Code, title 
        42, section 1395w-28, and includes: 
           (1) coordinated care plans which provide health care 
        services, including, but not limited to, health maintenance 
        organization plans, with or without a point-of-service option, 
        plans offered by provider-sponsored organizations, and preferred 
        provider organization plans; 
           (2) medical savings account plans coupled with a 
        contribution into a Medicare+Choice medical savings account; and 
           (3) Medicare+Choice private fee-for-service plans. 
           (q) "Medicare-related coverage" means a policy, contract, 
        or certificate issued as a supplement to Medicare, regulated 
        under sections 62A.31 to 62A.44, including Medicare select 
        coverage; policies, contracts, or certificates that supplement 
        Medicare issued by health maintenance organizations; or 
        policies, contracts, or certificates governed by section 1833 
        (known as "cost" or "HCPP" contracts) or 1876 (known as "TEFRA" 
        or "risk" contracts) of the federal Social Security Act, United 
        States Code, title 42, section 1395, et seq., as amended. 
           (m) (r) "Medicare supplement policy or certificate" means a 
        group or individual policy of accident and sickness insurance or 
        a subscriber contract of hospital and medical service 
        associations or health maintenance organizations, or those 
        policies or certificates covered by section 1833 of the federal 
        Social Security Act, United States Code, title 42, section 1395, 
        et seq., or an issued policy under a demonstration project 
        specified under amendments to the federal Social Security Act, 
        which is advertised, marketed, or designed primarily as a 
        supplement to reimbursements under Medicare for the hospital, 
        medical, or surgical expenses of persons eligible for Medicare. 
           (n) (s) "Physician" shall not be defined more restrictively 
        than as defined in the Medicare program or section 62A.04, 
        subdivision 1, or 62A.15, subdivision 3a. 
           (o) (t) "Policy form" means the form on which the policy is 
        delivered or issued for delivery by the issuer. 
           (p) (u) "Secretary" means the Secretary of the United 
        States Department of Health and Human Services. 
           (v) "Sickness" shall not be defined more restrictively than 
        the following: 
           "Sickness means illness or disease of an insured person 
           which first manifests itself after the effective date of 
           insurance and while the insurance is in force." 
           The definition may be further modified to exclude 
        sicknesses or diseases for which benefits are provided under a 
        workers' compensation, occupational disease, employer's 
        liability, or similar law. 
           Sec. 4.  Minnesota Statutes 1998, section 62A.43, 
        subdivision 4, is amended to read: 
           Subd. 4.  [OTHER POLICIES NOT PROHIBITED.] The prohibition 
        in this section or the requirements of section 62A.31, 
        subdivision 1, against the sale of duplicate Medicare supplement 
        coverage do not preclude the sale of insurance coverage, such as 
        travel, accident and sickness coverage, the effect or purpose of 
        which is not to supplement Medicare coverage a health insurance 
        policy or certificate if it will pay benefits without regard to 
        other health coverage and if prospective purchasers are 
        provided, on or together with the application for the policy or 
        certificate, the appropriate disclosure statement for health 
        insurance policies sold to Medicare beneficiaries that duplicate 
        Medicare as prescribed by the National Association of Insurance 
        Commissioners.  Notwithstanding this provision, if the 
        commissioner determines that the coverage being sold is in fact 
        Medicare supplement insurance, the commissioner shall notify the 
        insurer in writing of the determination.  If the insurer does 
        not thereafter comply with sections 62A.31 to 62A.44, the 
        commissioner may, pursuant to chapter 14, revoke or suspend the 
        insurer's authority to sell accident and health insurance in 
        this state or impose a civil penalty not to exceed $10,000, or 
        both. 
           Sec. 5.  [EFFECTIVE DATE.] 
           Sections 1 to 4 are effective the day following final 
        enactment. 
           Presented to the governor April 20, 1999 
           Signed by the governor April 23, 1999, 11:16 a.m.