ORDER OF THE COMMISSIONER OF INSURANCE
REPEALING, RENUMBERING AND AMENDING, CONSOLIDATING RENUMBERING AND AMENDING, AMENDING, REPEALING AND RECREATING AND CREATING A PERMANENT RULE.
Rule No.: Agency 145 – INS 3.39 and 3.55, Wis. Adm. Code
The Commissioner of Insurance proposes an order to repeal INS 3.39 (1) (c), (2) (a) 4., (c) 1. and (d) 4., (3) (r) 1. to 3., (4) (a) 18r. (intro.), (4s) (a) 21. (intro.), (15) (Note), (30) (b), (30m) (b), (31) (bm), Appendices 8 and 9; to renumber and amend INS 3.39 (3) (r) (intro.), (4) (a) 18r. a. to c., (4m), (4s) (intro.), (a) (intro.) and 1. to 20., 21. a. to c., 22., and (b) to (f), (5m) (a) 1., (b) and (c), (14m) (d) (intro.) and 1. to 3., (16) (d) 3., (34) (ez), Appendix 2 to Appendix 5, INS 3.55 (d) and (e); to consolidate, renumber and amend INS 3.39 (2) (c) (intro.) and 2.; to amend INS 3.13 (2) (j) (intro.), 3. and (Note), INS 3.29 (3) (a) and (7) (b), INS 3.39 (1) (a), (b), and (d), (2) (a) (intro.) 1. to 3., 5., and (b), (d) (intro.), (e) (intro.) and 1., (3) (c) (intro.) and 1., (ce), (e) to (g), (i) 1. c., d. and 5. a., (v), (w), (y), (za) and (zb), (4) (title), (intro.), (a) (intro.) 1. to 7., 9. to 12., and 16., 18. and 18p., (b) (intro.) and 1. to 7., (c), (e), and (g), (5) (title), (intro.), (c) (intro.), (n) 12., (o) 12., (5m) (title), (a) 2. (intro.), (e), (g) 12., (h) 12., and (k) 4., (6) (intro.), (7) (title), (a) (intro.), (b) (intro.), 1. (intro.), c. and 2., (c), (cm) and (dm), (8) (title), (a) (intro.), (c), and (e), (10) (title), (a) and (d) 1., (13), (14) (a), (c) (intro.) 1. to 6., (d), (i) and (L), (14m) (title), (a), (c) 1. to 6., and (i) (intro.), (15), (16) (a), (c), (d) (intro.), 1., and (e), (17), (21) (a), (22) (d), (f) (intro.), and 1., (23) (a) (intro.), (c) and (e), (24) (a) (intro.) and 3., (25) (a) to (c); (26) (a) (intro.),1., and (b), (27), (28) (title), (a) (intro.), (b) 2. and (c), (29) (a) and (b) 1., (30) (a), (k) (intro.), (n) (intro.), (q) 12. and (r) 12., (30m) (a) 1., (i) 1. (intro.) and 8., (k) (intro.), (n) (intro.), (q) (intro.), (r) 12, (s) 12., (34) (a) 1., 2., (b) (intro.), 1s. and 2., (e) 4. and 5., (f) 1. and 2., (35) (intro.) and (a), Appendix 1, Appendix 6 and 7, INS 3.55 (title) (1), (2), (4) (a) and (5) (intro.), INS 9.01 (3m); to repeal and recreate INS 3.39 (31) (a) and (b); to create INS 3.39 (3) (fm), (gm), (jm), (pm), (um), (ve), (vm), (vs), (we), (wm), (ws), (zag), (zar), (zbm), and (zcm), (3g), (4t), (5m) (a) (intro.), (a) 1. b., (5t), (7) (ct) and (dt), (14t), (16) (d) 3. a. to g., (21) (f), (24) (a) 4., (26) (a) 3. to 6., (30t), (34) (et), Appendices 2t, 3t, 4t, 5t, 6m, and 6t, Wis. Adm. Code, relating to Medicare supplement insurance and affecting small business.
The statement of scope for this rule SS: 084-18, was approved by the Governor on July 19, 2018, published in Register No. 751B, on July 30, 2018, and was approved by the Commissioner on August 28, 2018. The proposed rule was approved by the Governor on August 9, 2019, to submit to the legislature and was submitted to the legislature on August 12, 2019. The rule passed through committees and JCRAR on November 6, 2019 with no action taken.
ANALYSIS PREPARED BY THE OFFICE OF THE COMMISSIONER OF INSURANCE (OCI)
1. Statutes interpreted:
ss. 185.983 (1m), 600.03, 601.01 (2), 609.01 (1g) (b), 625.16, 628.34 (12), 628.38, 631.20 (2), 632.73 (2m), 632.76 (2) (b) and 632.81, 632.84, 632.895 (2), (3), (4), and (6), Wis. Stats. 2. Statutory authority:
3. Explanation of OCI’s authority to promulgate the proposed rule under these statutes:
The statutes all relate to the commissioner’s authority to promulgate rules regulating the business of insurance as it relates to Medicare supplement and Medicare replacement insurance products. Specifically, ss. 601.41 (3), 625.16, 628.38, 632.73 (2m) and (3) (b), 632.76 (2) (b), and 632.81, Wis. Stats., permit the commissioner to promulgate rules regulating various aspects of Medicare supplement and Medicare replacement products while ss. 628.34, and 628.38, Wis. Stats., authorize the commissioner to promulgate rules governing disclosure requirements and unfair marketing practices for disability policies that includes Medicare supplement and Medicare replacement products. 4. Related statutes or rules:
The Centers for Medicare & Medicaid Services (CMS) required the National Association of Insurance Commissioners, (NAIC) to make conforming changes to the Medicare supplement model regulation by incorporating changes to implement the federal Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), P.L. 114-10. States are required to adopt the NAIC model revision in order to continue regulating the Medicare supplement marketplace. CMS delegates enforcement of MACRA to the states that have incorporated the NAIC model into states insurance laws or regulations. To date Wisconsin has passed NAIC model regulations through statutes and regulations governing Medicare supplement and Medicare replacement products. In Wisconsin Medicare supplement and Medicare replacement products are currently regulated under s. Ins 3.39, Wis. Adm. Code, inclusive of the appendices that this proposed rule modifies to implement MACRA requirements. 5. The plain language analysis and summary of the proposed rule:
The proposed rule amends the current rules to incorporate the NAIC model regulation that implements the Medicare Supplement Insurance Minimum Standards Model Act to comply with MACRA. Medicare supplement policies are policies purchased by Medicare beneficiaries to cover Medicare deductibles, co-insurance and selected services that Medicare does not cover. Medicare establishes eligibility rules, benefits and coverage limits.
The proposed rule implements changes to the Medicare supplement benefits that are permitted to be offered to persons newly eligible for Medicare on or after January 1, 2020. Wisconsin is a waived state, meaning Wisconsin is waived from implementing the standardized Medicare supplement Plans A to N, and instead requires minimum standardized supplemental benefits with seven standardized benefit riders. This is advantageous to both the insurer and the consumers as this system permits consumers to compare products on an equal basis to determine the best product to meet their insurance needs. However, beginning with January 1, 2020, consumers who are first eligible for Medicare on or after January 1, 2020, may not be offered the Medicare Part B deductible in accordance with MACRA. This change does not affect those who became eligible for Medicare prior to January 1, 2020, through age or disability, including end-stage renal disease. This change also does not limit the ability for insurers to continue to market and offer the Medicare Part B deductible to consumers first eligible for Medicare prior to January 1, 2020.
The remainder of the proposed rule; updates terminology, creates consistency in numbering and references, and updates and simplifies the appendices to the rule. However, since Medicare supplement and Medicare select plans are guaranteed renewable for life, OCI cannot repeal original or previous federal law changes reflected in the current regulation as individuals may still have existing policies regulated under those sections. Instead OCI, in this draft, adopts a parallel citation approach for ease of navigation. Subsections that apply to all plans or a plan issued to groups or individuals who were first eligible for Medicare prior to June 1, 2010, appear with just a number for the subsection, i.e. s. Ins 3.39 (4), Wis. Adm. Code. All appendices and subsections that apply to policies issued to groups or individuals who were first eligible for Medicare on or after June 1, 2010, and prior to January 1, 2020, appear as a number with the letter “m” following the subsection number, i.e. s. Ins 3.39 (4m), Wis. Adm. Code. For the new plans that will be issued to groups or individuals who are newly eligible for Medicare on or after January 1, 2020, all appendices and subsections appear as a number with the letter “t” following the subsection number, i.e. s. Ins 3.39 (4t), Wis. Adm. Code. Finally, there are citation corrections within cross references to existing or newly created s. Ins 3.39, Wis. Adm. Code, provisions within the insurance administrative code. 6. Summary of and preliminary comparison with any existing or proposed federal regulation that is intended to address the activities to be regulated by the proposed rule:
This proposed rule will permit Wisconsin to continue to have jurisdiction and control over Medicare supplement, select and cost products offered in this state. Wisconsin is a waived state so Wisconsin consumers are not subjected to the federal plan listings typically associated with Medicare supplemental plans that are enumerated by letters that frequently change. Further, Wisconsin developed a standardized set of basic coverage inclusive of applicable mandates and a finite number of riders prior to 1990. This approach allows consumers to easily compare “apple to apple” coverage and options available for their supplemental needs.
7. Summary of any public comments and feedback on the statement of scope of the proposed rule that the agency received at any preliminary public hearing and comment period held under s. 227.136, Stat., and a description of how and to what extent the agency took those comments and that feedback into account in drafting the proposed rule. The office gave notice of a preliminary public hearing on a statement of scope for s. Ins 3.39 and 3.55, Wis. Adm. Code, relating to amending Medicare supplemental insurance and reporting requirements. The notice was published in the Wisconsin Administrative Register on July 30, 2018, in Register No. 751B. A public hearing was held on August 9, 2018 at 11:00 am. Notice as also published on the office’s website. The public could provide oral or written testimony and a public comment period was open until 4:00 pm on August 20, 2018. Testimony was received by OCI that addressed areas of potential confusion between the NAIC model and the federal MACRA law. Specifically, testimony highlighted that the key decision point for what coverage a person who is Medicare eligible may receive through a Medicare supplemental product is tied to the date the individual first became eligible for Medicare. The testimony provided highlighted that although MACRA required insurers to not offer the Medicare Part B medical deductible rider to persons first eligible for Medicare on or after January 1, 2020, insurers could continue offering the rider to persons eligible for Medicare prior to January 1, 2020. Additionally, it was noted that given Medicare supplemental products are guaranteed renewable for life thus necessitating insurers to continue to renew the Medicare Part B medical deductible rider coverage. The office, in drafting the permanent rule, incorporated the suggestions raised in oral testimony into the drafted rule.
8. Comparison of similar rules in adjacent states as found by OCI:
Illinois: 50 Ill. Adm. Code 2008, Minimum Standards for Individual and Group Medicare Supplement Insurance. Effective November 26, 2018. Please note that as Wisconsin is a waived state for Medicare supplemental insurance there are no similar rules in adjacent states.
Iowa: IA ADC 191-37 (514D). Effective May 15, 2019 implementing MACRA. Please note that as Wisconsin is a waived state for Medicare supplemental insurance there are no similar rules in adjacent states.
Michigan: M.C.L.A 500.3801-3861. Effective March 20, 2019. Please note that as Wisconsin is a waived state for Medicare supplemental insurance there are no similar rules in adjacent states.
Minnesota: Minnesota Statutes s. 62A.3099 to 62A.44 are being revised by 2019 Legislative Bill HF2051 and SF2313. The proposed bills will implement the MACRA changes. Please note that as Wisconsin is a waived state for Medicare supplemental insurance there are no similar rules in adjacent states.
9. A summary of the factual data and analytical methodologies that OCI used in support of the proposed rule and how any related findings support the regulatory approach chosen for the proposed rule:
OCI’s review of complaints, NAIC models, insurer’s financial information, and CMS data indicates that Medicare currently covers 60 million Americans, 1,143,459 of whom are Wisconsin residents as of 2018. An estimated 25 percent of Wisconsin Medicare beneficiaries are covered by Medicare supplement policies. Nationally, the per person personal health care spending for the 65 and older population was $18,988 in 2012.
Information collected by the OCI indicates that 48 insurance companies offer Medicare supplement, Medicare cost or Medicare select policies to Wisconsin consumers eligible for Medicare due to age or disability. In addition, there are 34 insurance companies that have Medicare supplement policyholders although the companies no longer actively market Medicare supplement coverage in Wisconsin. At year-end 2017, there were 289,662 Wisconsin Medicare beneficiaries with Medicare supplement policies.
10. Any analysis and supporting documentation that OCI used in support of OCI’s determination of the rule’s effect on small businesses under s. 227.114: OCI reviewed financial statements and other reports filed by life, accident and health insurers and determined that none qualify as a small business. Wisconsin currently has 48 insurance companies actively marketing offering Medicare supplement, Medicare cost and Medicare select insurance policies and an additional 34 companies supporting guaranteed renewable policies although no longer actively marketing Medicare supplement policies.
11. See the attached Private Sector Fiscal Analysis.
The proposed rule will not significantly impact the private sector. Insurers offering Medicare supplement policies (Medicare supplement, Medicare cost, and Medicare select policies) may incur costs associated with developing new Medicare supplement policies and marketing materials, mailing riders and explanatory materials to existing policyholders. However, these costs are offset by the insurers’ ability to continue offering Medicare supplement policies to Wisconsin consumers. Further, removing the Medicare Part B medical deductible rider as an optional purchase to persons first eligible for Medicare on or after January 1, 2020, will not adversely impact consumers, agents or insurers as the typical premium for rider closely approximates the actual deductible amount that for 2019 will be $185.00.
12. A description of the Effect on Small Business:
The proposed rule will not significantly impact the private sector. Insurers offering Medicare supplement policies (Medicare supplement, Medicare cost, and Medicare select policies) may incur costs associated with developing new Medicare supplement policies and marketing materials, mailing riders and explanatory materials to existing policyholders. However, these costs are offset by the insurers’ ability to continue offering Medicare supplement policies to Wisconsin consumers. Further, removing the Medicare Part B medical deductible rider as an optional purchase for newly eligible persons on or after January 1, 2020, will not adversely impact consumers, agents, or insurers as the typical premium for Medicare Part B medical deductible riders closely approximated the actual deductible amount that for 2019 will be $185.00.
13. Agency contact person:
or by contacting Karyn Culver, Paralegal, at:
Phone: (608) 267-9586
Address: 125 South Webster St – 2nd Floor, Madison WI 53703-3474
Mail: PO Box 7873, Madison, WI 53707-7873
14. Place where comments are to be submitted and deadline for submission:
The deadline for submitting comments is 4:00 p.m. on May 21, 2019.
Mailing address:
Julie E. Walsh
Legal Unit - OCI Rule Comment for Rule Ins 3.39 and 3.55, Wis. Adm. Code.
Office of the Commissioner of Insurance
PO Box 7873
Madison WI 53707-7873
Street address:
Julie E. Walsh
