mines that it would be difficult to prevail in a case before a court of law as a result of the legal issues involved or inability of the parties to agree to the facts of the case. The amount that HCFA accepts in compromise under this provision will reflect (i) The likelihood that HCFA would have prevailed on the legal question(s) involved; (ii) Whether and to what extent HCFA would have obtained a full or partial recovery of a judgment, depending on the availability of witnesses, or other evidentiary support for HCFA's claim; and (iii) The amount of court costs that would be assessed to HCFA. (3) Cost of collecting the claim. HCFA may compromise a claim if it determines that the cost of collecting the claim does not justify the enforced collection of the full amount. In this case, HCFA may adjust the amount it accepts as a compromise to allow an appropriate discount for the costs of collection it would have incurred but for the compromise. (d) Enforcement policy. HCFA may compromise statutory penalties, forfeitures, or debts established as an aid to enforcement or to compel compliance, if it determines that its enforcement policy, in terms of deterrence and securing compliance both present and future, is adequately served by acceptance of the compromise amount. of compromise § 401.615 Payment amount. (a) Time and manner of compromise. Payment by the debtor of the amount that HCFA has agreed to accept as a compromise in full settlement of a claim must be made within the time and in the manner prescribed by HCFA. Accordingly, HCFA will not settle a claim until the full payment of the compromise amount has been made. (b) Effect of failure to pay compromise amount. Failure of the debtor to make payment, as provided by the compromise agreement, reinstates the full amount of the claim, less any amounts paid prior to the default. (c) Prohibition against grace periods. HCFA will not agree to inclusion of a provision in an installment agree ment that would permit grace periods for payments that are late under the terms of the agreement. § 401.617 Suspension of collection action. (a) General conditions. HCFA may temporarily suspend collection action on a claim if the following general conditions are met (1) Amount of future recovery. HCFA determines that future collection action may result in a recovery of an amount sufficient to justify periodic review and action on the claim by HCFA during the period of suspension. (2) Statute of limitations. HCFA determines that (i) The applicable statute of limitations has been tolled, waived or has started running anew; or (ii) Future collections may be made by HCFA through offset despite an applicable statute of limitations. (b) Basis for suspension. Bases on which HCFA may suspend collection action on a particular claim include the following (1) A debtor cannot be located; or (2) A debtor (i) Owns no substantial equity in property; (ii) Is unable to make payment on HCFA's claim or is unable to effect a compromise; and (iii) Has future prospects that justify retention of the claim. (c) Locating debtors. HCFA will make every reasonable effort to locate missing debtors sufficiently in advance of the bar of an applicable statute of limitations to permit timely filing of a lawsuit to recover the amount of the claim. (d) Effect of suspension on liquidation of security. HCFA will liquidate security, obtained in partial recovery of a claim, despite a decision under this section to suspend collection action against the debtor for the remainder of the claim. (1) The age and health of the debtor if the debtor is an individual; (2) Present and potential income of the debtor; and (3) Whether assets have been concealed or improperly transferred by the debtor. (b) Basis for termination of collection action. Bases on which HCFA may terminate collection action on a claim include the following (1) Inability to collect a substantial amount of the claim. HCFA may terminate collection action if it determines that it is unable to collect, or to enforce collection, of a significant amount of the claim. In making this determination, HCFA will consider factors such as (i) Judicial remedies available; (ii) The debtor's future financial prospects; and (iii) Exemptions available to the debtor under State or Federal law. (2) Inability to locate debtor. In cases involving missing debtors, HCFA may terminate collection action if— (i) There is no security remaining to be liquidated; (ii) The applicable statute of limitations has run; or (iii) The prospects of collecting by offset, whether or not an applicable statute of limitations has run, are considered by HCFA to be too remote to justify retention of the claim. (3) Cost of collection exceeds recovery. HCFA may terminate collection action if it determines that the cost of further collection action will exceed the amount recoverable. (4) Legal insufficiency. HCFA may terminate collection action if it determines that the claim is legally without merit. (5) Evidence unavailable. HCFA may terminate collection action if— (i) Efforts to obtain voluntary payment are unsuccessful; and (ii) Evidence or witnesses necesary to prove the claim are unavailable. § 401.623 Joint and several liability. (a) Collection action. HCFA will liquidate claims as quickly as possible. In cases of joint and several liability among two or more debtors, HCFA will not allocate the burden of claims payment among the debtors. HCFA Sec. 403.248 Administrative review of HCFA de terminations. VOLUNTARY CERTIFICATION PROGRAM: Loss RATIO PROVISIONS 403.250 Loss ratio calculations: General provisions. 403.251 Loss ratio date and time frame pro visions. 403.253 Calculation of benefits. 403.254 Calculation of premiums. 403.256 Loss ratio supporting data. 403.258 Statement of actuarial opinion. Subpart A-[Reserved] Subpart B-Medicare Supplemental Policies AUTHORITY: Sections 1102, 1871, 1874(a), and 1882 of the Social Security Act (42 U.S.C. 1302, 1395hh, 1395kk(a), and 1395ss). SOURCE: 47 FR 32400, July 26, 1982, unless otherwise noted. § 403.200 Basis and scope. (a) Provisions of the legislation. This subpart implements, in part, section 1882 of the Social Security Act. The intent of that section is to enable Medicare beneficiaries to identify Medicare supplemental policies that do not duplicate Medicare, and that provide adequate, fairly priced protection against expenses not covered by Medicare. The legislation establishes certain standards for Medicare supplemental policies and provides two methods for informing Medicare beneficiaries which policies meet those standards: (1) Through a State approved program, that is, a program that a Supplemental Health Insurance Panel determines to meet certain minimum requirements for the regulation of Medicare supplemental policies; and (2) In a State without an approved program, through certification by the Secretary of policies voluntarily submitted by insuring organizations for review against the standards. (b) Scope of subpart. This subpart sets forth the standards and procedures HCFA will use to implement the voluntary certification program. GENERAL PROVISIONS § 403.201 State regulation of insurance policies. (a) The provisions of this subpart do not affect the right of a State to regulate policies marketed in that State. (b) Approval of a policy under the voluntary certification program, as provided for in § 403.235(b), does not authorize the insuring organization to market a policy that does not conform to applicable State laws and regulations. § 403.205 Medicare supplemental policy. (a) Except as specified in paragraph (d) of this section, "Medicare supplemental policy" (policy) means a health insurance policy or other health benefit plan (1) That a private entity offers to a Medicare beneficiary; and (2) That is primarily designed, or is advertised, marketed, or otherwise purported to provide payment for expenses incurred for services and items that are not reimbursed under the Medicare program because of deductibles, coinsurance, or other limitations under Medicare. (b) Unless otherwise specified in this subpart, the term "policy" includes both policy form and policy. (1) "Policy form" means the form of health insurance contract that is approved by and on file with the State agency for the regulation of insurance. (2) "Policy" means the contract(i) Issued under the policy form; and (ii) Held by the policyholder. (c) Medicare supplemental policy includes the following (1) An individual policy. (d) Medicare supplemental policy does not include any of the following health insurance policies or health benefit plans (1) A policy or plan of one or more employers for employees, former employees, or any combination thereof. (2) A policy or plan of one or more labor organizations for members, former members, or any combination thereof. (3) A policy or plan of the trustees of a fund established by one or more labor organizations, one or more employers, or any combination, for any one or combination of the following(i) Employees. (ii) Former employees. (iv) Former members. (4) A policy or plan of a profession, trade, or occupational association, if the association (i) Is composed of individuals all of whom are actively engaged in the same profession, trade, or occupation; (ii) Has been maintained in good faith for a purpose other than obtaining insurance; and (iii) Has been in existence for at least two years before the date of its initial offering of a Medicare supplemental health insurance policy to its members. (5) For purposes of the voluntary certification program, a policy issued to an employee or to a member of a labor organization as an addition to a franchise plan (a plan that enables members of the same entity to purchase an individual policy marketed to them under group underwriting procedures), if the plan is in existence on July 1, 1982. § 403.206 General standards for Medicare supplemental policies. (a) For purposes of the voluntary certification program described in this subpart, a policy must meet (1) The National Association of Insurance Commissioners (NAIC) model standards as defined in § 405.210; and (2) The loss ratio standards specified in § 403.215. (b) Except as specified in paragraph (c) of this section, the standards specified in paragraph (a) of this section must be met in a single policy. (c) In the case of a nonprofit hospital or a medical association where State law prohibits the inclusion of all benefits in a single policy, the standards specified in paragraph (a) of the section must be met in two or more policies issued in conjunction with one another. § 403.210 NAIC model standards. (a) "NAIC model standards" means the National Association of Insurance Commissioners (NAIC) "Model Regu lation to Implement the Individual Accident and Insurance Minimum Standards Act" (as amended and adopted by the NAIC on June 6, 1979, as it applies to Medicare supplemental policies). Copies of the NAIC model standards can be purchased from the National Association of Insurance Commissioners at 350 Bishops Way, Brookfield, Wisconsin 53004, and from the NIARS Corporation, 318 Franklin Avenue, Minneapolis, Minnesota 55404. (b) The policy must comply with the provisions of the NAIC model standards, except as follows (1) "Policy", for purposes of this paragraph, means individual and group policy, as specified in § 403.205. The NAIC model standards limit "policy" to individual policy. (2) The policy must meet the loss ratio standards specified in § 403.215. [47 FR 32400, July 26, 1982; 49 FR 44472, Nov. 7, 1984] (a) The policy must be expected to return to the policyholders, in the form of aggregate benefits provided under the policy (1) At least 75 percent of the aggregate amount of premiums in the case of group policies; and (2) At least 60 percent of the aggregate amount of premiums in the case of individual policies. (b) For purposes of loss ratio requirements, policies issued as a result of solicitation of individuals through the mail or by mass media advertising are considered individual policies. STATE REGULATORY PROGRAMS § 403.220 Supplemental Health Insurance Panel. (a) Membership. The Supplemental Health Insurance Panel (Panel) consists of (1) The Secretary or a designee, who serves as chairperson, and (2) Four State Commissioners or Superintendents of Insurance appointed by the President. (The terms Commissioner or Superintendent of Insurance include persons of similar rank.) (b) Functions. (1) The Panel determines whether or not a State regula fied. The insuring organization must comply with these conditions and restrictions. (d) If a certified policy is issued in a State that later has an approved regulatory program, as provided for in § 403.222, the insuring organization may display the emblem on the policy until the earliest of the following (1) When prohibited by State law or regulation. (2) When the policy no longer meets the requirements for Medicare supplemental policies specified in § 403.206. (3) The date the insuring organization would be required to submit material to HCFA for annual review in order to retain certification, if the State did not have an approved program (see § 403.239). § 403.232 Requirements and procedures for obtaining certification. (a) To be certified by HCFA, a policy must meet (1) The NAIC model standards specified in § 403.210; (2) The loss ratio standards specified in § 403.215; and (3) Any State requirements applicable to a policy- (i) Issued in that State; or (ii) Marketed in that State. (b) An insuring organization requesting certification of a policy must submit the following to HCFA for review (1) A copy of the policy form (including all the documents that would constitute the contract of insurance that is proposed to be marketed as a certified policy). (2) A copy of the application form including all attachments. (3) A copy of the uniform certificate issued under a group policy. (4) A copy of the outline of coverage, in the form prescribed by the NAIC model standards. (5) A copy of the Medicare supplement buyers' guide to be provided to all applicants if the buyers' guide is not the HCFA/NAIC buyers' guide. (6) A statement of when and how the outline of coverage and the buyers' guide will be delivered and copies of applicable receipt forms. t |