November 18, 2015

Missouri insurance regulators reach settlement with Medicare supplement insurer

Old Surety Life Insurance Company to pay $150,000 fine

Jefferson City, Mo. - The Missouri Department of Insurance recently reached a settlement agreement with the Old Surety Life Insurance Company after regulators alleged the insurer discouraged producers from accepting Medicare Supplement applications from unhealthy consumers during open enrollment and guarantee issue periods. During the open enrollment/guarantee issue periods, applicants for Medicare Supplement coverage are required to be accepted regardless of health condition and without any underwriting.

"Medicare recipients are entitled by law to guarantee issue regardless of their health conditions during open enrollment and guarantee issue periods," said Missouri Department of Insurance Director John M. Huff. "Missourians can be assured they will receive benefits in accordance with the law. Insurers we find are not complying will face swift regulatory consequences."

In the Old Surety settlement, the department alleged that representatives of the company tried to discourage producers from submitting applications for Medicare supplement insurance coverage during open enrollment or guarantee issue periods. The department alleged representatives of the company instructed producers not to submit applications from unhealthy applicants even if they were in their open enrollment or guarantee issue periods, subjecting guarantee issue applicants to health underwriting. The department also alleged representatives of the company told producers they would be terminated if they submitted guarantee issue applications.

As part of the settlement, Old Surety is paying a $150,000 fine and has agreed that it will not terminate or threaten to terminate producers for submitting guarantee issue applications. The insurer also agreed that it will not maintain any processes or practices to discourage or impede the submission of open enrollment and guarantee issue applications. Additionally, Old Surety agreed to ensure that its underwriting guidelines require the acceptance of open enrollment and guarantee issue Medicare Supplement applications and to have procedures ensuring that guarantee issue/open enrollment applicants are not required to answer underwriting questions.