CHAPTER 1652. MEDICARE SUPPLEMENT BENEFIT PLANS

State Codes and Statutes

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INSURANCE CODE

TITLE 8. HEALTH INSURANCE AND OTHER HEALTH COVERAGES

SUBTITLE I. SPECIALIZED COVERAGES

CHAPTER 1652. MEDICARE SUPPLEMENT BENEFIT PLANS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 1652.001. DEFINITIONS. In this chapter:

(1) "Applicant" means:

(A) an individual who seeks to contract for insurance or other

health benefits under an individual Medicare supplement benefit

plan; or

(B) the proposed certificate holder of a group Medicare

supplement benefit plan.

(2) "Approved regulatory program" means a state regulatory

program that complies with the requirements of Section 1882,

Social Security Act (42 U.S.C. Section 1395ss).

(3) "Medicare" means the Health Insurance for the Aged Act (42

U.S.C. Section 1395 et seq.), as amended.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

Sec. 1652.002. MEDICARE SUPPLEMENT BENEFIT PLAN. (a) "Medicare

supplement benefit plan" means a group or individual policy of

accident and health insurance, a subscriber contract of a group

hospital service corporation operating under Chapter 842, or, to

the extent required by federal law, an evidence of coverage

issued by a health maintenance organization operating under

Chapter 843 that is advertised, marketed, or designed primarily

as a supplement to reimbursements under Medicare for the

hospital, medical, or surgical expenses of an individual eligible

for Medicare.

(b) A policy, contract, subscriber contract, or evidence of

coverage is not considered to be a Medicare supplement benefit

plan if it is:

(1) a policy, contract, subscriber contract, or evidence of

coverage of one or more employers or labor organizations, or of

the trustees of a fund established by one or more employers or

labor organizations, or a combination, for employees or former

employees, or a combination, or for members or former members, or

a combination, of the labor organizations;

(2) a policy or health care benefit plan, including a policy or

contract of group insurance, a group contract of a group hospital

service corporation operating under Chapter 842, or a group

evidence of coverage issued by a health maintenance organization

operating under Chapter 843 that is not marketed or held to be a

Medicare supplement benefit plan; or

(3) an individual or group evidence of coverage issued in

accordance with a contract under Section 1833 or 1876, Social

Security Act (42 U.S.C. Section 1395l or 1395mm), by a health

maintenance organization operating under Chapter 843.

"Medicare supplement benefit plan" provided by Subsection (a) to

the extent necessary for this state to qualify as a state with an

approved regulatory program.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

Sec. 1652.003. APPLICABILITY OF CHAPTER. This chapter applies

to an individual or group Medicare supplement benefit plan

delivered or issued for delivery in this state and, regardless of

the place where the plan was delivered or issued for delivery, a

certificate that was issued under a group Medicare supplement

benefit plan and delivered or issued for delivery in this state,

if the plan or certificate is issued by:

(1) a capital stock insurance company, including a life, health

and accident, and general casualty insurance company;

(2) a mutual life insurance company;

(3) a mutual assessment life insurance company, including a

statewide mutual assessment company, local mutual aid

association, and burial association;

(4) a mutual or mutual assessment association of any kind,

including an association subject to Section 887.102;

(5) a mutual insurance company other than a life insurance

company;

(6) a mutual or natural premium life or casualty insurance

company;

(7) a fraternal benefit society;

(8) a Lloyd's plan;

(9) a reciprocal or interinsurance exchange;

(10) a nonprofit hospital, medical, or dental service

corporation, including a corporation operating under Chapter 842;

(11) a stipulated premium company;

(12) another insurer that by law is required to be authorized by

the department; or

(13) a health maintenance organization operating under Chapter

843, to the extent required by federal law.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

Sec. 1652.004. CONSTRUCTION OF CHAPTER. (a) This chapter may

not be construed to enlarge the powers of an entity described by

Section 1652.003.

(b) This chapter controls to the extent of any conflict with

another provision of this code.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

Sec. 1652.005. RULES NECESSARY FOR CERTIFICATION. In addition

to other rules required or authorized by this chapter, the

commissioner shall adopt reasonable rules necessary and proper to

carry out this chapter, including rules adopted in accordance

with federal law relating to the regulation of Medicare

supplement benefit plan coverage that are necessary for this

state to obtain or retain certification as a state with an

approved regulatory program.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

SUBCHAPTER B. BENEFITS

Sec. 1652.051. MINIMUM STANDARDS. (a) The commissioner shall

adopt reasonable rules to establish specific standards for

provisions in Medicare supplement benefit plans and standards for

facilitating comparisons of different Medicare supplement benefit

plans. The standards are in addition to and must be in accordance

with:

(1) applicable laws of this state, including Chapters 842 and

1201;

(2) applicable federal law, rules, regulations, and standards;

and

(3) any model rules and regulations required by federal law,

including Section 1882, Social Security Act (42 U.S.C. Section

1395ss).

(b) The standards may include provisions relating to:

(1) terms of renewability;

(2) initial and subsequent conditions of eligibility;

(3) nonduplication of coverage;

(4) probationary periods;

(5) benefit limitations, exceptions, and reductions;

(6) elimination periods;

(7) requirements for replacement;

(8) recurrent conditions;

(9) definitions of terms; and

(10) exclusions required by state or federal law.

specifically prohibit benefit plan provisions that:

(1) are not otherwise specifically authorized by statute; and

(2) the commissioner determines are unjust, unfair, or unfairly

discriminatory to a person who is covered or proposed for

coverage.

(d) Rules adopted under this section must include requirements

that are at least equal to those required by federal law, rules,

regulations, and standards, including Section 1882, Social

Security Act (42 U.S.C. Section 1395ss).

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

Sec. 1652.052. MINIMUM STANDARDS FOR BENEFITS AND CLAIM

PAYMENTS. (a) The commissioner shall adopt reasonable rules to

establish minimum standards for benefits and claim payments under

Medicare supplement benefit plans.

(b) The standards for benefits and claim payments must include

the requirements for certification of Medicare supplement benefit

plans prescribed by Section 1882, Social Security Act (42 U.S.C.

Section 1395ss).

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

Sec. 1652.053. DUPLICATE BENEFITS PROHIBITED. A Medicare

supplement benefit plan or certificate in force in this state may

not contain benefits that duplicate benefits provided by

Medicare.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

Sec. 1652.054. BASIC PLAN. An entity described by Section

1652.003 that offers for sale in this state a Medicare supplement

benefit plan must offer a basic Medicare supplement benefit plan

that:

(1) provides only those benefits common to all Medicare

supplement benefit plans; and

(2) meets but does not exceed the minimum standards of benefits

for Medicare supplement benefit plans adopted by the commissioner

and authorized by Section 1882, Social Security Act (42 U.S.C.

Section 1395ss).

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

Sec. 1652.055. ADDITIONAL BENEFITS. (a) In addition to the

basic Medicare supplement benefit plan described by Section

1652.054, an entity may offer additional Medicare supplement

benefit plans for sale in this state.

(b) The combination of benefits provided by an additional plan

must conform to one of the benefit packages adopted by the

commissioner and authorized by Section 1882, Social Security Act

(42 U.S.C. Section 1395ss).

new or innovative benefits that may be provided in a plan other

than the basic plan and that otherwise comply with this

subchapter. The benefits must:

(1) be offered in a manner consistent with the goal of Medicare

supplement benefit plan simplification; and

(2) meet the requirements prescribed by Section 1882, Social

Security Act (42 U.S.C. Section 1395ss).

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

Sec. 1652.056. COVERAGE FOR MAMMOGRAPHY. (a) In this section,

"low-dose mammography" means the x-ray examination of the breast

using equipment dedicated specifically for mammography, including

the x-ray tube, filter, compression device, screens, films, and

cassettes, with an average radiation exposure delivery of less

than one rad mid-breast, with two views for each breast.

(b) Each Medicare supplement benefit plan must include coverage

for an annual screening by low-dose mammography for the presence

of occult breast cancer.

favorable than coverage for other radiological examinations and

must be subject to the same dollar limits, deductibles, and

coinsurance factors.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

Sec. 1652.057. WAIVER OF WAITING PERIOD. (a) An entity that

delivers or issues for delivery in this state a Medicare

supplement benefit plan or certificate that replaces a Medicare

supplement benefit plan or certificate shall give credit for the

satisfaction or partial satisfaction of any waiting period,

elimination period, or probationary period for a preexisting

condition that has been satisfied under the plan being replaced.

(b) A replacement plan that clearly provides a new or additional

benefit may include appropriate and clearly stated periods as a

condition for payment of the new or additional benefit.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

Sec. 1652.058. COVERAGE FOR PREEXISTING CONDITION. (a) A

Medicare supplement benefit plan may not contain a provision that

excludes coverage for a claim for losses incurred more than six

months after the effective date of coverage for a preexisting

condition.

(b) A Medicare supplement benefit plan may not define a

preexisting condition more restrictively than a condition for

which medical advice was given or treatment was recommended by or

received from a physician within six months before the effective

date of coverage.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

SUBCHAPTER C. LOSS RATIO STANDARDS

Sec. 1652.101. LOSS RATIO STANDARDS. (a) A Medicare supplement

benefit plan must return to a plan holder benefits that are

reasonable in relation to the premium charged.

(b) The commissioner shall adopt reasonable rules to establish

minimum loss ratio standards for Medicare supplement benefit

plans. The standards must be established:

(1) on the basis of incurred claims experience and earned

premiums for the entire period for which rates are computed to

provide coverage;

(2) in accordance with accepted actuarial principles and

practices; and

(3) to the extent necessary for the state to obtain or retain

certification as a state with an approved regulatory program.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

Sec. 1652.102. FILING REQUIREMENTS. (a) Annually, each entity

providing Medicare supplement benefit plans in this state shall

file with the department the entity's rates, rating schedule, and

supporting documentation demonstrating that:

(1) the entity is complying with the applicable loss ratio

standards of this state; and

(2) the actual and expected losses in relation to premiums

comply with the requirements of this subchapter and the rules

adopted by the commissioner.

(b) The documentation required by Subsection (a) must include a

report of the ratio of incurred losses to covered premiums for

the preceding calendar year, illustrated by calendar year of

issue.

requirements for rates, rating schedules, and loss ratios.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

Sec. 1652.103. REVIEW OF PREMIUM INCREASES. (a) The

commissioner by rule shall provide a process for reviewing and

approving or disapproving a proposed premium increase relating to

a Medicare supplement benefit plan.

(b) The rules must comply with federal law, including Section

1882, Social Security Act (42 U.S.C. Section 1395ss).

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

Sec. 1652.104. BENEFIT CHANGES. (a) Before the date on which a

Medicare benefit change required by federal law takes effect,

each entity providing in this state a Medicare supplement benefit

plan existing on the effective date of the change shall file with

the commissioner, in accordance with Chapter 1701:

(1) each appropriate premium adjustment necessary to produce the

loss ratios originally anticipated for the applicable plan,

accompanied by any supporting documents necessary to justify the

adjustment; and

(2) each appropriate rider, endorsement, or plan form necessary

to modify the coverage so as to eliminate benefit duplications

with Medicare.

(b) A rider, endorsement, or plan form required by Subsection

(a) must provide a clear description of the Medicare supplement

benefits provided by the plan.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

Sec. 1652.105. REPORTING LOSS RATIO INFORMATION TO SECRETARY OF

HEALTH AND HUMAN SERVICES. To the extent necessary for this

state to obtain or retain certification as a state with an

approved regulatory program, the department shall comply with

federal requirements relating to periodic reporting of loss ratio

information to the secretary of health and human services, based

on a uniform methodology, as authorized by federal law.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

SUBCHAPTER D. CONSUMER INFORMATION AND NOTICE

Sec. 1652.151. RULES RELATING TO DISCLOSURE. The rules adopted

under Sections 1652.152, 1652.153, and 1652.154 must include

provisions and requirements that are at least equal to those

required by federal law, including the rules, regulations, and

standards adopted under Section 1882, Social Security Act (42

U.S.C. Section 1395ss).

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

Sec. 1652.152. OUTLINE OF COVERAGE. (a) To provide for full

and fair disclosure in the sale of Medicare supplement benefit

plans, a Medicare supplement benefit plan or certificate may not

be delivered or issued for delivery in this state unless an

outline of coverage that complies with this section is delivered

to the applicant when the applicant applies for the coverage.

(b) The commissioner by rule shall prescribe the format and

content of the outline of coverage required by Subsection (a).

The rules must address the style, arrangement, and overall

appearance of the outline of coverage, including the size, color,

and prominence of type and the arrangement of text and captions.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

Sec. 1652.153. INFORMATIONAL BROCHURE. (a) The commissioner by

rule may prescribe a standard form and the contents of an

informational brochure intended to improve the ability of an

individual eligible for Medicare to understand Medicare and to

select the most appropriate Medicare supplement coverage.

(b) Except as provided by Subsection (c), the commissioner by

rule may require that the informational brochure be provided to

an individual eligible for Medicare concurrently with delivery of

the outline of coverage.

plan, the commissioner by rule may require that the informational

brochure be provided on request to an individual eligible for

Medicare at any time not later than the time the plan is

delivered.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

Sec. 1652.154. NOTICE RELATING TO OTHER TYPES OF COVERAGE. (a)

The commissioner may adopt reasonable rules for captions or

notice requirements for each accident and health insurance

policy, subscriber contract, or evidence of coverage sold to an

individual eligible for Medicare that are determined to be in the

public interest and designed to inform the individual that a

particular coverage is not a Medicare supplement benefit plan.

This subsection does not apply to:

(1) a Medicare supplement benefit plan;

(2) a disability income policy;

(3) a basic, catastrophic, or major medical expense policy;

(4) a single premium nonrenewable policy; or

(5) another policy, contract, or subscriber contract described

by Section 1652.002(b)(1) or (2).

(b) The commissioner may adopt reasonable rules to govern the

full and fair disclosure of information relating to replacing an

accident and health insurance policy, a subscriber contract, or a

certificate by an individual eligible for Medicare.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

Sec. 1652.155. RIGHT TO RETURN FOR REFUND; NOTICE. (a) If an

applicant is not satisfied for any reason after examining a

Medicare supplement benefit plan document or certificate, the

applicant is entitled to receive a refund of the premium if the

applicant returns the document or certificate not later than the

30th day after the date it is delivered.

(b) The entity issuing the plan or certificate shall refund the

premium directly to the applicant in a timely manner.

a notice stating the substance prescribed by Subsection (a)

prominently printed on the first page of or attached to the plan

or certificate.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

Sec. 1652.156. ADVERTISING FILING REQUIREMENTS. (a) The

commissioner shall adopt reasonable rules to require each entity

described by Section 1652.003 to file with the department a copy

of any advertisement relating to Medicare supplement benefit

plans that the entity intends to use in this state. The rules

must require that the entity file the copy not later than the

60th day before the date of intended use.

(b) At the expiration of the 60-day period provided by

Subsection (a), an advertisement filed in accordance with that

subsection is considered acceptable, unless before the end of

that 60-day period the department notifies the entity of the

advertisement's nonacceptance.

supplement benefit plans that does not comply with state law,

including department rules and Section 541.084.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

475, Sec. 3, eff. September 1, 2007.

SUBCHAPTER E. AGENTS

Sec. 1652.201. INFORMATION PROVIDED TO AGENTS. (a) An entity

that offers a Medicare supplement benefit plan for sale in this

state shall provide to each agent authorized to sell that plan

information relating to:

(1) Medicare;

(2) the Medicare supplement benefit plans offered by that

entity; and

(3) the agent's ethical obligations to clients.

(b) The commissioner by rule may prescribe the information that

must be provided under this section.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

Sec. 1652.202. PERMITTED COMPENSATION ARRANGEMENTS. (a) The

commissioner by rule shall limit the commission or other

compensation that may be paid to an agent for the sale of a

Medicare supplement benefit plan or certificate, including a

replacement plan or certificate.

(b) The rules must conform to, but may not be more restrictive

than, the requirements of federal law necessary for this state to

obtain or retain certification as a state with an approved

regulatory program.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 4, eff. April 1,

2005.

SUBCHAPTER F. OUTPATIENT PRESCRIPTION DRUGS

Sec. 1652.251. OUTPATIENT PRESCRIPTION DRUG BENEFIT PLANS. (a)

An entity described by Section 1652.003 that issues a Medicare

supplement benefit plan in this state may offer a group or

individual policyholder:

(1) an outpatient prescription drug benefit plan authorized

under 42 U.S.C. Section 1395ss; or

(2) a new or innovative outpatient prescription drug benefit

plan filed with and approved by the commissioner under Section

1652.055.

(b) The commissioner shall approve or disapprove an outpatient

drug benefit plan described by Subsection (a) that is filed for

approval under Section 1652.055 not later than the 60th day after

the date the entity files the plan with the department. A drug

benefit plan that has not been approved or disapproved by the

commissioner before the 61st day after the date the plan is filed

with the department is considered approved on that day.

Added by Acts 2005, 79th Leg., Ch.

728, Sec. 11.075(a), eff. September 1, 2005.

Sec. 1652.252. PRESCRIPTION DRUG DISCOUNT PROGRAMS. (a) In

this section, "prescription drug discount program" means any

program that entitles a participant to purchase prescription

drugs or other medical supplies and services from vendors at a

discount under an agreement made with a participating pharmacy.

(b) An entity described by Section 1652.003 may offer

participation in a prescription drug discount program in

connection with the solicitation of an application for issuance

of a Medicare supplement benefit plan.

program described by this section is not a violation of Chapter

541 or any other law prohibiting the offer of rebates in the

solicitation of insurance policies.

Added by Acts 2005, 79th Leg., Ch.

728, Sec. 11.075(a), eff. September 1, 2005.

State Codes and Statutes

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State Codes and Statutes

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