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GUIDE TO HEALTH INSURANCE FOR PEOPLE WITH MEDICARE
* WHAT MEDICARE PAYS AND DOESN'T PAY
* 10 STANDARD MEDIGAP INSURANCE PLANS
* YOUR RIGHT TO MEDIGAP INSURANCE
* TIPS ON SHOPPING FOR PRIVATE HEALTH INSURANCE
Developed jointly by the National Association of Insurance
Commissioners and the Health Care Financing
Administration of the U.S. Department
of Health and Human Services.
Publication No. HCFA-02110
-NOTICE -
Listed in the back of this booklet are the addresses and
telephone numbers of each of the state agencies on aging and
the state insurance departments. They are available to assist
you with any questions you may have about private insurance to
supplement Medicare.
Suspected violations of the laws governing the marketing
of insurance policies should generally be reported to your
state insurance department since states are responsible for the
regulation of insurance within their boundaries.
There are, however, federal penalties for certain
violations concerning Medicare supplement insurance ("Medigap")
policies. It is, for example, a federal offense for an
insurance agent to indicate that he or she represents the
Medicare program or any other federal agency in order to sell a
policy. It is also illegal for an insurance company or agent to
sell you a policy that duplicates coverage you already have.
The federal toll-free telephone number for filing
complaints is:
1-800-638-6833
TABLE OF CONTENTS
DEFINITIONS OF SOME MEDICARE TERMS
SOME BASIC THINGS YOU SHOULD KNOW
WHAT IS MEDICARE?
MEDICARE HOSPITAL INSURANCE (PART A)
MEDICARE MEDICAL INSURANCE (PART B)
MEDICARE BENEFIT CHARTS
TYPES OF PRIVATE HEALTH INSURANCE
Medigap
Your Right to Medigap Coverage
Medicare SELECT
Managed Care Plans
Employer Group Insurance
Association Group Insurance
Long-Term Care Insurance
Hospital Indemnity Insurance
Specified Disease Insurance
DO YOU NEED MORE INSURANCE?
Medicaid Recipients
Assistance for Low-Income Elderly
Federally Qualified Health Center Services
TIPS ON SHOPPING FOR HEALTH INSURANCE
LIST OF STANDARD MEDIGAP BENEFIT PLANS
CHART COMPARING STANDARD MEDIGAP BENEFIT PLANS
INSURANCE POLICY CHECK-LIST
INSURANCE COUNSELING TELEPHONE NUMBERS
STATE INSURANCE DEPARTMENTS AND AGENCIES ON AGING
DEFINITIONS OF SOME MEDICARE TERMS
Actual Charge: The amount a physician or supplier actually
bills for a particular medical service or supply.
Approved Amount: The amount Medicare determines to be
reasonable for a service that is covered under Part B of
Medicare. It may be less than the actual charge. For physician
services the approved amount is taken from a national fee
schedule that assigns a dollar value to all physician services
covered by Medicare.
Assignment: An arrangement whereby a physician or medical
supplier agrees to accept the Medicare-approved amount as the
total charge for services and supplies covered under Part B.
Medicare usually pays 80% of the approved amount directly to
the provider after the beneficiary meets the annual Part B
deductible of $100. The beneficiary pays the other 20%.
Benefit Period: A benefit period is a way of measuring a
beneficiary's use of hospital and skilled nursing facility
services covered by Medicare. A benefit period begins the day
the beneficiary is hospitalized and ends after the beneficiary
has been out of the hospital or skilled nursing facility for 60
days in a row. If the beneficiary is hospitalized after 60
days, a new benefit period begins and most Medicare Part A
benefits are renewed. There is no limit as to the number of
benefit periods a beneficiary can have.
Coinsurance: The portion or percentage of Medicare's
approved amounts for covered services that a beneficiary is
responsible for paying.
Deductible: The amount of expense a beneficiary must first
incur before Medicare begins payment for covered service's.
Excess Charge: The difference between the
Medicare-approved amount for a service or supply and the actual
charge, if the actual charge is more than the approved amount.
Limiting Charge: The maximum amount a physician may charge
a Medicare beneficiary for a covered physician service if the
physician does not accept assignment of the Medicare claim. The
limit is 15% more than the fee schedule amount for
nonparticipating physicians. Limiting charge information
appears on Medicare's Explanation of Medicare Benefits (EOMB)
form.
Medicare Carrier: An insurance organization under contract
to the federal government to process Medicare Part B claims
from physicians and other health care providers. The names and
addresses of the carriers and areas they serve are listed in
the back of The Medicare Handbook, available from any Social
Security Administration office.
Medicare Hospital Insurance: This is Part A of Medicare.
It helps pay for medically necessary inpatient care in a
hospital, skilled nursing facility or psychiatric hospital, and
for hospice and home health care.
Medicare Medical Insurance: This is Pan B of Medicare.
This pan helps pay for medically necessary physician services
and many other medical services and supplies not covered by
Part A.
Participating Physician and Supplier: A physician or
supplier who agrees to accept assignment on all Medicare
claims.
SOME BASIC THINGS YOU SHOULD KNOW
If you are like most older Americans covered by Medicare,
there are aspects of the federal health insurance program that
you find complex and confusing. You may be uncertain about what
Medicare covers and doesn't cover and how much it pays toward
your medical expenses. And, like many other beneficiaries, you
want to know what, if any, additional health insurance you
should buy.
This booklet will give you a better understanding of your
Medicare benefits, identify the gaps in your Medicare coverage,
and provide tips on shopping for private health insurance to
fill those gaps. As a Medicare beneficiary, you probably are
already aware that Medicare does not cover all of your
potential health care costs. For example, you are responsible
for Medicare's deductibles and coinsurance and for charges for
services not covered by Medicare.
Few people can afford to pay all of those expenses out of
their own funds, so many rely on supplemental insurance to
cover some of the costs. As you seek to limit your
out-of-pocket costs for health care services, you will find
that there are three basic ways of doing so:
1. Through the purchase of Medicare supplement insurance,
which is also called "Medigap" or "MedSup" insurance;
2. By enrolling in a managed care plan, such as a health
maintenance organization (HMO) that has a contract to
serve Medicare beneficiaries; and,
3. By continuing coverage under an employer-provided health
insurance policy, if you are eligible for such protection.
In addition, for beneficiaries who qualify, some costs may
be covered by state Medicaid programs (see page 17).
Each of these ways will be discussed in subsequent
sections. Special attention will be devoted to employer plans
and Medigap insurance, which most Medicare beneficiaries
purchase.
Insurance Counseling
Although the information in this booklet will help you to
be a better informed and more careful purchaser, you may wish
to obtain additional information before buying health
insurance. Information about insurance to supplement Medicare
is available from various senior citizen advocacy organizations
and governmental agencies.
You first may want to turn to your state government for
help, as all states now offer insurance counseling in
one-on-one confidential sessions with trained counselors. In
these sessions, you will be able to clarify insurance issues
that you find confusing and receive assistance in evaluating
your insurance needs. These services are provided at no charge
to you.
The telephone number for your state insurance counseling
office is listed in the directory of state insurance
departments and agencies on aging beginning on page 27.
WHAT IS MEDICARE
Before discussing Medigap and the other types of private
insurance available to supplement Medicare, it will be helpful
to review your Medicare benefits and identify the payment gaps.
Medicare is a federal health insurance program for people
65 or older, people of any age with permanent kidney failure,
and certain disabled people under 65. It is administered by the
Health Care Financing Administration (HCFA) of the U.S.
Department of Health and Human Services (HHS). The Social
Security Administration, also a part of HHS, provides
information about the program and handles enrollment.
Two Parts of Medicare
Medicare has two parts--Hospital Insurance (Part A) and
Medical Insurance (Part B). Part A is financed through part of
the Social Security (FICA) tax paid by workers and their
employers. You do not have to pay a monthly premium for
Medicare Pan A if you or your spouse is entitled to benefits
under either the Social Security or Railroad Retirement systems
or worked a sufficient period of time in federal, state, or
local government employment to be insured.
If you do not qualify for premium-free Part A benefits,
you may purchase the coverage if you are at least age 65 and
meet certain requirements. You also may buy Part A if you are
under age 65, were previously entitled to Medicare under the
disability provisions and you still have the same disabling
impairment but your disability benefits were terminated because
of your work and earnings. If you do not qualify for
premium-free Part A but had at least 30 quarters of covered
employment, the Pan A monthly premium in 1994 is $184. If you
had fewer than 30 quarters or no quarters of covered employment
the premium is $245 per month in 1994.
Part B is optional and is offered to all beneficiaries
when they become entitled to Part A. It also may be purchased
by most persons age 65 or over who do not qualify for
premium-free Part A coverage. The Part B premium, which most
Medicare beneficiaries have deducted from their monthly Social
Security check, is $41.10 per month in 1994.
You are automatically enrolled in Part B when you become
entitled to Part A unless you state that you don't want it.
Although you do not have to purchase Part B, it is a good buy
because the federal government pays about 75 percent of the
program costs.
Your Medicare card shows the coverage you have [Hospital
Insurance (Part A), Medical Insurance (Part B), or both] and
the date your coverage started. If you only have one part of
Medicare, you can get information about getting the other part
from any Social Security office.
MEDICARE HOSPITAL INSURANCE BENEFITS (PART A)
When all program requirements are met, Medicare Part A
helps pay for medically necessary inpatient care in a hospital,
skilled nursing facility or psychiatric hospital, and for
hospice care. In addition, Part A pays the full cost of
medically necessary home health care and 80 percent of the
approved cost for wheelchairs, hospital beds, and other durable
medical equipment (DME) supplied under the home health care
benefit.
Benefit Periods
Medicare Part A hospital and skilled nursing facility
benefits are paid on the basis of benefit periods. A benefit
period begins the first day you receive a Medicare-covered
service in a qualified hospital. It ends when you have been out
of a hospital or skilled nursing or rehabilitation facility for
60 days in a row. It also ends if you remain in a skilled
nursing facility but do not receive any skilled care there for
60 days in a row.
If you enter a hospital again after 60 days, a new benefit
period begins. With each new benefit period, all Part A
hospital and skilled nursing facility benefits are renewed
except for any lifetime reserve days or psychiatric hospital
benefits that were used. There is no limit to the number of
benefit periods you can have for hospital or skilled nursing
facility care.
Inpatient Hospital Care
If you are hospitalized, Medicare will pay all charges for
covered hospital services during the first 60 days of a benefit
period except for the deductible. The Pan A deductible in 1994
is $696 per benefit period. You are responsible for the
deductible. In addition to the deductible, you are responsible
for a share of the daily costs if your hospital stay lasts more
than 60 days. For the 61st through the 90th day, Part A pays
for all covered services except for coinsurance of $174 a day
in 1994. You are responsible for the coinsurance.
Under Part A, you also have a lifetime reserve of 60 days
for inpatient hospital care. These lifetime reserve days may be
used whenever you are in the hospital for more than 90
consecutive days. When a reserve day is used, Part A pays for
all covered services except for coinsurance of $348 a day in
1994. Again, the coinsurance is your responsibility. Once used,
reserve days are not renewed.
Gaps in Medicare Inpatient Hospital Coverage:
* You pay $696 deductible on first admission to hospital in
each benefit period.
* You pay $174 daily coinsurance for days 61 through 90.
* No coverage beyond 90 days in any benefit period unless
you have "lifetime reserve" days available and use them.
* You pay $348 daily coinsurance for each lifetime reserve
day used.
* No coverage for the first 3 pints of whole blood or units
of packed cells used in each year in connection with
covered services. To the extent the 3-pint blood
deductible is met under Part B, it does not have to be met
under Part A.
* No coverage for a private hospital room, unless medically
necessary, or for a private duty nurse.
* No coverage for personal convenience items, such as a
telephone or television in a hospital room.
* No coverage for care that is not medically necessary or
for non-emergency care in a hospital not certified by
Medicare.
* No coverage for care received outside the U. S. and its
territories, except under limited circumstances in Canada
and Mexico.
Skilled Nursing Facility Care
A skilled nursing facility (SNF) is a special kind of
facility that primarily furnishes skilled nursing and
rehabilitation services. It may be a separate facility or a
distinct part of another facility, such as a hospital. Medicare
benefits are payable only if you require daily skilled care
which, as a practical matter, can only be provided in a skilled
nursing facility on an inpatient basis, and the care is
provided in a facility certified by Medicare. Medicare will not
pay for your stay if the services you receive are primarily
personal care or custodial services, such as assistance in
walking, getting in and out of bed, eating, dressing, bathing
and taking medicine.
To qualify for Medicare coverage for skilled nursing
facility care, you must have been in a hospital at least three
consecutive days (not counting the day of discharge) before
entering a skilled nursing facility. You must be admitted to
the facility for the same condition for which you were treated
in the hospital and the admission generally must be within 30
days of your discharge from the hospital. Your physician must
certify that you need, and receive, skilled nursing or skilled
rehabilitation services on a daily basis.
Medicare can help pay for up to 100 days of skilled care
in a skilled nursing facility during a benefit period. All
covered services for the first 20 days of care are fully paid
by Medicare. All covered services for the next 80 days are paid
by Medicare except for a daily coinsurance amount. The daily
coinsurance in 1994 is $87. You are responsible for the
coinsurance. If you require more than 100 days of care in a
benefit period, you are responsible for all charges beginning
with the 101st day.
Gaps in Medicare Skilled Nursing Facility, Coverage:
* You pay $87 daily coinsurance for days 21 through 100 in
each benefit period.
* No coverage beyond 100 days in a benefit period.
* No coverage for care in a nursing home, or in a SNF not
certified by Medicare, or for just custodial care in a
Medicare-certified SNF.
* No coverage for 3-pint blood deductible (see list of gaps
under inpatient hospital care).
Home Health Care
Medicare fully covers medically necessary home health
visits if you are homebound, including parttime or intermittent
skilled nursing services. A Medicare-certified home health
agency can also furnish the services of physical and speech
therapists. Should you require speech-language pathology,
physical therapy, continuing occupational therapy or
intermittent skilled nursing services, are confined to your
home, and are under the care of a physician, Medicare can also
pay for medical supplies, necessary part-time or intermittent
home health aide services, occupational therapy, and medical
social services. Coverage is also provided for a portion of the
cost of wheelchairs, hospital beds and other durable medical
equipment (DME) provided under a plan-of-care set up and
periodically reviewed by a physician.
Gaps in Medicare Home Health Coverage
* No coverage for full-time nursing care.
* No coverage for drugs or for meals delivered to your home
* You pay 20% of the Medicare-approved amount for durable
medical equipment, plus charges in excess of the approved
amount on unassigned claims.
* No coverage for homemaker services that are primarily to
assist you in meeting personal care or housekeeping needs.
Hospice Care
Medicare beneficiaries certified as terminally ill may
choose to receive hospice care rather than regular Medicare
benefits for their terminal illness. Part A can pay for two
90-day hospice benefit periods, a subsequent period of 30 days,
and a subsequent extension of unlimited duration. If you enroll
in a Medicare-certified hospice program, you will receive
medical and support services necessary for symptom management
and pain relief. When these services which are most often
provided in your home-are furnished by a Medicare-certified
hospice program, the coverage includes: physician services,
nursing care, medical appliances and supplies (including drugs
for symptom management and pain relief), short-term inpatient
care, counseling, therapies, home health aide and homemaker
services.
You do not have to pay Medicare's deductibles and
coinsurance for services and supplies furnished under the
hospice benefit. You must pay only limited charges for
outpatient drugs and inpatient respite care. In the event you
require medical services for a condition unrelated to the
terminal illness, regular Medicare benefits are available. When
regular benefits are used, you are responsible for the
applicable Medicare deductible and coinsurance amounts.
Gaps in Medicare Hospice Coverage:
* You pay limited charges for inpatient respite care and
outpatient drugs.
* You pay deductibles and coinsurance amounts when regular
Medicare benefits are used for treatment of a condition
other than the terminal illness.
Psychiatric Hospital Care
Part A helps pay for up to 190 days of inpatient care in a
Medicare-participating psychiatric hospital in your lifetime.
Once you have used 190 days (or have used fewer than 190 days
but have exhausted your inpatient hospital coverage), Part A
doesn't pay for any more inpatient care in a psychiatric
hospital. However, psychiatric care in general hospitals,
rather than in free-standing psychiatric hospitals, is not
subject to this 190-day limit. Inpatient psychiatric care in a
general hospital is treated the same as other Medicare
inpatient hospital care. If you are a patient in a psychiatric
hospital on the first day of your entitlement to Medicare,
there are additional limitations on the number of hospital days
that Medicare will pay for.
Gaps in Medicare Inpatient Psychiatric Hospital Care:
* No coverage for care after you have received 190 days of
such specialized treatment in your lifetime (even if you
have not yet exhausted your inpatient hospital coverage).
MEDICARE MEDICAL INSURANCE (PART B) BENEFITS
Part B helps pay for medically necessary physician
services no matter where you receive them--at home, in the
doctor's office, in a clinic, in a nursing home, or in a
hospital. It also covers related medical services and supplies,
medically necessary outpatient hospital services, X-rays and
laboratory tests. Coverage is also provided for certain
ambulance services and the use at home of durable medical
equipment, such as wheelchairs and hospital beds.
Additionally, Part B covers medically necessary physical
therapy, occupational therapy, and speech-language pathology
services in a doctor's office, as an outpatient, or in your
home. Mental health services are covered as are mammograms and
Pap smears. And if you qualify for home health care but do not
have Part A, then Part B pays for all covered home health
visits.
Outpatient prescription drugs generally are not covered by
Part B. The exceptions include certain drugs furnished to
hospice enrollees, non-self administrable drugs provided as
part of a physician's services, and special drugs, such as
drugs furnished during the first year after an organ
transplantation, erythropoetin for home dialysis patients, and
certain oral cancer drugs.
When you use your Part B benefits, you will be required to
pay the first $100 (the annual deductible) each calendar year.
The deductible must represent charges for services and supplies
covered by Medicare. It also must be based on the Medicare
approved amounts, not the actual charges billed by your
physician or medical supplier.
After you meet the deductible, Part B generally pays 80
percent of the Medicare-approved amount for covered services
you receive the rest of the year. You are responsible for the
other 20 percent. If you require home health services, you do
not have to pay a deductible or coinsurance. You do, however,
have to pay 20 percent of the Medicare-approved amount for any
durable medical equipment! supplied under the Medicare home
health benefit.
You may also have other out-of-pocket costs under Part B
if your physician or medical supplier does not accept
assignment of your Medicare claim and charges more than
Medicare's approved amount. The difference to be paid is called
the "excess charge" or "balance billing." You should be aware,
however, that there are certain charge limitations mandated by
federal law (discussed below) and that some states also limit
physician charges.
Medicare-Approved Amount
The Medicare-approved amount for physician services
covered by Part B is based on a national fee schedule. The
schedule assigns a dollar value to each physician service based
on work, practice costs and malpractice insurance costs. Under
this payment system, each time you go to a physician for a
service covered by Medicare, the amount Medicare will recognize
for that service will be taken from the national fee schedule.
Medicare generally pays 80 percent of that amount.
Because you cannot tell in advance whether the approved
amount and the actual charge for covered services and supplies
will be the same, always ask your physicians and medical
suppliers whether they accept assignment of Medicare claims.
Accepting Assignment
Those who take assignment on a Medicare claim agree to
accept the Medicare-approved amount as payment in full. They
are paid directly by Medicare, except for the deductible and
coinsurance amounts that you must pay.
For example, for your first annual visit, if you go to a
participating physician, or if you go to a nonparticipating
physician who accepts assignment, and the Medicare-approved
amount for the service you receive is $200, you will be billed
$120: $100 for the annual deductible plus 20 percent of the
remaining $100, or $20. Medicare would pay the other $80.
Having met the deductible for the year, the next time you used
Part B services furnished by a physician or medical supplier
who accepts assignment, you would be responsible for only 20
percent of the Medicare-approved amount.
Physicians and suppliers who sign Medicare participation
agreements accept assignment on all Medicare claims. Their
names and addresses are listed in The Medicare Participating
Physician/Supplier Directory, which is distributed to senior
citizen organizations, all Social Security and Railroad
Retirement Board offices, hospitals, and all state and area
offices of the Administration on Aging.
It also is available free by writing or calling the
insurance company that processes Medicare Pan B claims for your
area. Called a Medicare "carrier," the company's name, address
and telephone number are listed in the back of The Medicare
Handbook, available from any Social Security office.
Even if your physician or supplier does not participate in
Medicare, ask before receiving any services or supplies whether
he or she will accept assignment of your Medicare claim. Many
physicians and suppliers accept assignment on a case-by-case
basis. If your physician or supplier will not accept
assignment, you are responsible for paying all permissible
charges.
Medicare will then reimburse you its share of the approved
amount for the services or supplies you received. Regardless of
whether your physician or supplier accepts assignment, they are
required to file your Medicare claim for you.
In certain situations nonparticipating providers of
services are required by law to accept assignment. For
instance, all physicians and qualified laboratories must accept
assignment for Medicare-covered clinical diagnostic laboratory
tests. Physicians also must accept assignment for covered
services provided to beneficiaries with incomes low enough to
qualify for Medicaid payment of their Medicare cost-sharing
requirements (see page 18).
Physician Charge Limits
While physicians who do not accept assignment of a
Medicare claim can charge more than physicians who do, there is
a limit as to the amount they can charge you for services
covered by Medicare. Under the law, they are not permitted to
charge more than 115 percent of the Medicare-approved amount
for the service. Physicians who knowingly, willfully, and
repeatedly charge more than the legal limit are subject to
sanctions. If you think you have been overcharged, or you want
to know what the limiting charge is for a particular service,
contact the Medicare carrier for your area. Limiting charge
information also appears on the Explanation of Medicare
Benefits (EOMB) form that you generally receive from the
Medicare carrier when you go to a physician for a
Medicare-covered service. You do not have to pay charges that
exceed the legal limit.
If you think your physician has exceeded the charge limit,
you should contact the physician and ask for a reduction in the
charge, or a refund, if you have paid more than the charge
limit. If you cannot resolve the issue with the physician, you
can call your Medicare carrier and ask for assistance.
More Charge Limits
Another federal law requires physicians who do not accept
assignment for elective surgery to give you a written estimate
of your costs before the surgery if the total charge will be
$500 or more. If the physician did not give you a written
estimate, you are entitled to a refund of any amount you paid
in excess of the Medicare-approved amount. Any nonparticipating
physician who provides you with services that he or she knows
or has reason to believe Medicare will determine to be
medically unnecessary and thus will not pay for, is required to
so notify you in writing before performing the service. If
written notice is not given, and you did not know that Medicare
would not pay, you cannot be held liable to pay for that
service. However, if you did receive written notice and signed
an agreement to pay for the service, you will be held liable to
pay.
Gaps in Medicare Coverage for Doctors and Medical Suppliers
* You pay $100 annual deductible.
* Generally, you pay 20% coinsurance.
* You pay legally permissible charges in excess of the
Medicare-approved amount for unassigned claims (see page
6).
* You pay 50% of approved charges for most outpatient mental
health treatment.
* You pay all charges in excess of Medicare's maximum yearly
limit of $900 for independent physical or occupational
therapists.
* No coverage for most services that are not reasonable and
necessary for the diagnosis or treatment of an illness or
injury.
* No coverage for most self-administerable prescription
drugs or immunizations, except for pneumococcal, influenza
and hepatitis B vaccinations.
* No coverage for routine physicals and other screening
services, except for mammograms and Pap smears.
* Generally, no coverage for dental care or dentures.
* No coverage for acupuncture treatment.
* No coverage for hearing aids or routine hearing loss
examinations.
* No coverage for care received outside the United States
and its territories, except under limited circumstances in
Canada and Mexico.
* No coverage for routine foot care except when a medical
condition affecting the lower limbs (such as diabetes)
requires care by a medical professional.
* No coverage for services of naturopaths, Christian Science
practitioners, immediate relatives, or charges imposed by
members of your household.
* No coverage for the first 3 pints of whole blood or units
of packed cells used in each year in connection with
covered services. To the extent the 3-pint blood
deductible is met under Part A, it does not have to be met
under Part B.
* No coverage for routine eye examinations or eyeglasses,
except prosthetic lenses, if needed, after cataract
surgery.
Medicare Benefit Charts
The charts on pages 8 and 9 describe Medicare benefits
only. The "You Pay" column itemizes expenses you are
responsible for and must pay out of your own pocket or through
the purchase of some type of private insurance as described in
this booklet.
[Graphic Omitted]
[Graphic Omitted]
TYPES OF PRIVATE HEALTH INSURANCE
Whether you need health insurance in addition to Medicare
is a decision that only you can make. As you saw from the
review of your Medicare benefits, Medicare does not offer
complete health insurance protection. Private health insurance
can help fill many of the gaps. But before buying insurance to
supplement your Medicare benefits, make sure you need it. Not
everyone does (see page 17). In general it is advisable to buy
the additional protection that private health insurance can
provide. If you decide to buy supplemental insurance, shop
carefully and buy a policy that offers the kind of additional
help you think you need most.
A variety of private insurance policies is available to
help pay for medical expenses, services and supplies that
Medicare covers only partly or not at all. The basic types of
policies include:
1. Medigap, which pays some of the amounts that Medicare does
not pay for covered services and may pay for certain
services not covered by Medicare.
2. Managed care plans [these include health maintenance
organizations (HMOs) and competitive medical plans
(CMPs)], from which you purchase health care services
directly for a fixed monthly premium;
3. Continuation or conversion of an employer-provided or
other policy you have when you reach 65;
4. Nursing home or long-term care policies, which pay cash
amounts for each day of covered nursing home or at-home
care;
5. Hospital indemnity policies, which pay only when you need
treatment for the insured disease.
6. Specified disease policies, which pay only when you need
treatment for the insured disease.
Medigap
Medigap insurance is regulated by federal and state law
and must be clearly identified as Medicare supplement
insurance. Unlike other types of health insurance, it is
designed specifically to supplement Medicare's benefits by
filling in some of the gaps in Medicare coverage.
To make it easier for consumers to comparison shop for
Medigap insurance, nearly all states, U.S. territories, and the
District of Columbia have adopted regulations that limit the
number of different Medigap policies that can be sold in any of
those jurisdictions to no more than 10 standard benefit plans.
The plans, which have letter designations ranging from "A"
through "J", were developed by the National Association of
Insurance Commissioners and incorporated into state and federal
laws. See pages 22-24 for descriptions and comparisons of the
10 plans.
Plan A of the 10 standard Medigap plans is the "basic"
benefit package. Each of the other nine plans includes the
basic package plus a different combination of benefits. The
plans cover specific expenses either not covered or not fully
covered by Medicare, with "A" being the most basic policy and
"J" the most comprehensive. Insurers are not permitted to
change the combination of benefits in any of the plans or to
change the letter designations.
Each state must allow the sale of Plan A, and all Medigap
insurers must make Plan A available. Insurers are not required
to offer any of the other nine plans, but most offer several
plans, and some offer all 10. Insurers can independently decide
which of the nine optional plans they will sell as long as the
plans they select have been approved for sale in the state in
which they are to be offered.
Some states have limited the number of plans available in
the state. Delaware does not permit Plans C, F, G and H to be
sold in the state. Pennsylvania and Vermont do not permit the
sale of Plans F, G and I. (As this guide was being prepared for
printing, however, Pennsylvania was considering a proposal that
would permit the sale of all 10 plans.)
Residents of Minnesota, Massachusetts and Wisconsin will
find that their Medigap plans are different than those sold in
other states. This is because those states had alternative
Medigap standardization programs in effect before the federal
legislation standardizing Medigap was enacted. Therefore, they
were not required to change their benefit plans. If you live in
Minnesota, Massachusetts or Wisconsin, you should contact the
state insurance department to find out what Medigap coverage is
available to you.
The only areas where standardization is not in effect are
Guam, American Samoa, and the Commonwealth of the Northern
Mariana Islands.
Comparing Medigap Plans: To make it easier for consumers
to compare plans and premiums, the same format, language, and
definitions must be used in describing the benefits of each of
the plans. A uniform chart and outline of coverage also must be
used by the insurer to summarize those benefits for you.
As you shop for a Medigap policy, keep in mind that each
company's products are alike, so they are competing on service,
reliability and price. Compare benefits and premiums and be
satisfied that the insurer is reputable before buying. And in
selecting the benefits that meet your needs, remember that
Medicare pays only for services it determines to be medically
necessary and only the amount it determines to be reasonable.
Medigap policies pay most, if not all, Medicare
coinsurance amounts and may provide coverage for Medicare's
deductibles. Some of the 10 standard plans pay for services not
covered by Medicare and some pay for charges in excess of
Medicare's approved amount. Look for the plan that best meets
your needs.
All standard Medigap plans must have a loss ratio of at
least 65 percent for individual policies and 75 percent for
group policies. This means that on average either 65 cents or
75 cents of each premium dollar goes for benefits.
Unlike some types of health coverage that restrict where
and from whom you can receive care, Medigap policies generally
pay the same supplemental benefits regardless of your choice of
health care provider. If Medicare pays for a service, wherever
provided, the standard Medigap policy must pay its regular
share of benefits. The only exception is Medicare SELECT
insurance, discussed on page 13.
Besides the standardized benefit plans, federal law
permits states to allow an insurer to add "new and innovative
benefits" to a standardized plan that otherwise complies with
applicable standards. Any such new or innovative benefits must
be cost-effective, not otherwise available in the marketplace,
and offered in a manner that is consistent with the goal of
simplification. Check with your state insurance department to
find out whether such benefits are available in your state.
Your Right To Medigap Coverage: If you are 65 or older,
state and federal laws guarantee that for a period of 6 months
from the date you first enroll in Medicare Part B, you have a
right to buy the Medigap policy of your choice regardless of
your health conditions.
During this 6-month open enrollment period, you have the
choice of any of the different Medigap policies sold by any
insurer doing Medigap business in your state. The company
cannot deny or condition the issuance or effectiveness, or
discriminate in the pricing of a policy, because of your
medical history, health status, or claims experience. The
company can, however, impose the same preexisting condition
restrictions (see page 19) that it applies to Medigap policies
sold outside the open enrollment period.
Many individuals are enrolled automatically in Pan
B as soon as they rum 65, or they sign up during an initial
7-month enrollment period that begins 3 months before they turn
65. If you are in this group, your Part B coverage generally
starts in the month you turn 65 or shortly thereafter,
depending on when you applied for Part B. Your Medigap open
enrollment period starts as soon as your Part B coverage
starts.
Others may delay their enrollment in Part B. For example,
if after turning 65, you continue to work and choose to be
continuously covered by an employer insurance plan, or if you
are continuously covered under a spouse's employment related
insurance instead of Medicare Part B, you will have a special
7-month enrollment period for Part B. It begins with the month
your or your spouse's work ends or when you are no longer
covered under the employer plan, whichever comes first. Your
6-month Medigap open enrollment period starts when your Part B
coverage begins.
If you are covered under an employer group health plan
when you become eligible for Part B at age 65, carefully
consider your options. Once you enroll in Part B the 6-month
Medigap open enrollment period starts and cannot be extended or
repeated.
If you cannot defer Part B enrollment as described above,
but are 65 or older and are eligible for Part B but never
signed up for it, you may buy Part B during Medicare's annual
general enrollment period. It runs from January 1 through March
31. If you sign-up during an open enrollment period, both your
Part B coverage and Medigap open enrollment period begin the
following July 1.
Your Medicare card shows the effective dates for your Part
A and/or Part B coverage. To figure whether you are in your
Medigap open enrollment period, add 6 months to the effective
date of your Part B coverage. If the date is in the future and
you are at least 65, you are eligible for open enrollment. If
the date is in the past, you are not eligible.
If you are under age 65, disabled, and enrolled in
Medicare Part B, you are not eligible for Medigap open
enrollment unless your state requires open enrollment for
persons under 65 who qualify for Medicare because of a
disability. Moreover, unless your state requires otherwise, you
will not be eligible for the Medigap open enrollment period
when you turn 65 because you will not be enrolling in Part B
for the first time.
Older Medigap Policies: Current federal requirements
generally do not apply to Medigap policies in force in a state
before the requirements which took effect in that state in
1992. Depending on which state you live in, you will not have
to switch to one of the 10 standard plans if you have an older
policy that is guaranteed renewable.
Some states, however, have specific requirements that
affect existing non-standard policies. For example, some states
require or permit insurers to convert older policies to the
standardized plans. Check with your state insurance department
to find out what state-specific requirements are in force. Even
if you are not required to convert an older policy, you may
want to consider switching to one of the standardized Medigap
plans if it is to your advantage and an insurer is willing to
sell you one.
If you do switch, you will not be allowed to go back to
the old policy. Before switching, compare benefits and
premiums, and determine if there are waiting periods for any of
the benefits in the new policy. Some of the older policies may
provide superior coverage, especially for prescription drugs
and extended skilled nursing care.
If you had the old Medigap policy at least 6 months and
you decide to switch, the new policy is not permitted to impose
a waiting period for a preexisting condition if you satisfied a
waiting period for a similar benefit under your old policy. If,
however, a benefit is included in the new policy that was not
in the old policy, a waiting period of up to 6 months unless
prohibited by your state may be applied to that particular
benefit.
Because it is unlawful for anyone to sell you insurance
that duplicates coverage you already have, and because you do
not need more than one Medigap policy, you must sign a
statement that you intend to replace your current policy and
will not keep both policies. Do not cancel the old policy until
the new one is in force and you have decided to keep it (see
"Free Look," page 20).
Medigap Insurance Defined: Under state and federal laws,
Medigap policies are policies designed to supplement your
Medicare benefits. They must provide specific benefits that
pay, within limits, some or all of the costs of services either
not covered or not fully covered by Medicare. The definition
does not include all insurance products that may help you cover
out-of-pocket costs. For example, neither a health plan offered
by a company for current or former employees, nor by a labor
organization for current or former members, is Medigap
insurance. Nor are limited benefit plans such as hospital
indemnity insurance. They do not qualify because they are not
required. to provide the same benefits that the 10 standard
Medigap plans must provide.
Similarly, coverage provided to individuals enrolled in
managed care plans, such as health maintenance organizations
(HMOs) under contracts or agreements with the federal
government, does not meet the definition of Medigap insurance
even though some of the coverage may be similar. On the other
hand, an HMO's supplemental insurance product sold to an
individual Medicare beneficiary who is not enrolled under
either an employer plan or a federal contract or agreement,
does qualify as Medigap insurance.
Medicare SELECT. A Medicare supplement health insurance
product called "Medicare SELECT" is permitted to be sold in
Alabama, Arizona, California, Florida, Illinois, Indiana,
Kentucky, Massachusetts, Minnesota, Missouri, Noah Dakota,
Ohio, Texas, Washington and Wisconsin. Medicare SELECT, which
may be offered in the designated states by insurance companies
and HMOs, is the same as standard Medigap insurance in nearly
all respects. If you buy a Medicare SELECT policy, you are
buying one of the 10 standard Medigap plans (see page 22).
The only difference between Medicare SELECT and standard
Medigap insurance is that Medicare SELECT policies will only
pay or provide full supplemental benefits if covered services
are obtained through specified health care professionals and
facilities. Medicare SELECT policies are expected to have lower
premiums because of this limitation. The specified health care
professionals and facilities, called "preferred providers," are
selected by the insurance company or HMO. Each issuer of a
Medicare SELECT policy makes arrangements with its own network
of preferred providers.
If you have a Medicare SELECT policy, each time you
receive covered services from a preferred provider, Medicare
will pay its share of the approved charges and the insurer will
pay or provide the full supplemental benefits provided for in
the policy. Medicare SELECT insurers must also pay supplemental
benefits for emergency health care furnished by providers
outside the preferred provider network. In general, Medicare
SELECT policies deny payment or pay less than the full benefit
if you go outside the network for non-emergency services.
Medicare, however, will still pay its share of approved charges
if the services you receive outside the network are services
covered by Medicare.
Medicare SELECT will be evaluated through 1994 to
determine if it should be continued and made available
throughout the nation. Companies selling Medicare SELECT
policies are required to provide for the continuation of
coverage if the policies are discontinued. If the program is
not extended, Medicare SELECT policyholders will have the
option to purchase any standard Medigap policy that the
insurance company or HMO offers, if in fact it issues Medigap
insurance other than Medicare SELECT. To the extent possible,
the replacement policy would have to provide similar benefits.
Carrier Filing of Medigap Claims. Under certain
circumstances, when you receive medical services covered by
both Medicare and your Medigap insurance, you may not have to
file a separate claim with your Medigap insurer in order to
have payment made directly to your physician or medical
supplier. By law, the Medicare carrier that processes Medicare
claims for your area must send your claim to the Medigap
insurer for payment when the following three conditions are met
for a Medicare Part B claim:
1. Your physician or supplier must have signed a
participation agreement with Medicare to accept assignment
of Medicare claims for all patients who are Medicare
beneficiaries:
2. Your policy must be a Medigap policy: and
3. You must instruct your physician to indicate on the
Medicare claim form that you wish payment of Medigap
benefits to be made to the participating physician or
supplier. Your physician will put your Medigap policy
number on the Medicare claim form.
When these conditions are met, the Medicare carrier will
process the Medicare claim, send the claim to the Medigap
insurer and generally send you an Explanation of Medicare
Benefits (EOMB). Your Medigap insurer will pay benefits
directly to your physician or medical supplier and send you a
notice that they have done so. If the insurer refuses to pay
the physician directly when these three conditions are met, you
should report this to your state insurance department. For more
information on Medigap claim filing by the carrier, contact the
Medicare carrier. Look in The Medicare Handbook for the name
and telephone number of the carrier for your area.
Managed Care Plans That Contract With Medicare
Managed care plans, also called coordinated care and
prepaid plans, include health maintenance organizations (HMOs)
and competitive medical plans (CMPs). They might be thought of
as a combination insurance company and doctor/hospital. Like an
insurance company, they cover health care costs in return for a
monthly premium, and like a doctor or hospital, they arrange
for health care.
As a Medicare beneficiary, you can choose how you will
receive hospital, doctor, and other health care services
covered by Medicare. You can receive them either through the
traditional fee-for-service delivery system or through a
managed care plan that has a contract with Medicare. If you
choose fee-for-service care, you should consider purchasing
Medigap insurance.
If you enroll in a Medicare-contracting HMO or CMP, you
will not need a Medigap policy. In fact, insurers are
prohibited from issuing you one because it would duplicate your
HMO or CMP benefits. If you have a Medigap policy and decide to
enroll in a plan, you will be asked to provide an assurance
that you will give up the Medigap policy.
Should you enroll in a managed care plan and later
disenroll and return to fee-for-service care, you likely will
be able to buy a Medigap policy, but you may not get the
policy; of your choice, especially if you have a health
problem. On the other hand, both disabled and aged Medicare
beneficiaries generally may enroll in a Medicare-contracting
HMO or CMP without regard to any health problems they may have.
For this and other reasons, managed care can be an attractive
option for many beneficiaries.
A managed care plan generally arranges with a network of
health care providers (doctors, hospitals, skilled nursing
facilities, etc.) to offer comprehensive, coordinated medical
services to plan members on a prepaid basis. If you enroll in
an HMO or CMP with a Medicare contract; services usually must
be obtained from the professionals and facilities that are part
of the plan, except in a medical emergency.
The plan must provide or arrange for all Part A and B
services (if you are covered under both parts of Medicare).
Some plans also provide benefits beyond what Medicare covers,
such as preventive care, prescription drugs, dental care,
hearing aids and eyeglasses.
Medicare makes a monthly payment to the plan to cover
Medicare's share of the cost of the services you receive.
Additionally, most plans charge enrollees a monthly premium and
nominal copayments as services are used. Usually there are no
other charges--no matter how many times you visit the doctor,
are hospitalized, or use other covered services. Medicare's
deductibles and coinsurance do not apply to beneficiaries
enrolled in plans with Medicare contracts.
If you enroll in an HMO or a CMP that has a "risk"
contract with Medicare, Medicare will not pay for non-emergency
services you receive from providers outside of the HMO or CMP.
That is, you must receive all your health care benefits (except
in an emergency) from the HMO or CMP in order to be covered.
If you enroll in a plan that has a "cost" contract with
Medicare, you can receive covered services either through the
plan or outside the plan. If you go outside the plan for
non-emergency services, Medicare will still pay but the plan
will not. You would be responsible for the same charges that
you would be liable for if you were only covered by Medicare,
but you would no longer have a Medigap policy to cover those
charges.
You are eligible to enroll in a managed care plan with a
Medicare contract if you live in the plan's service area, are
enrolled in Medicare Part B, do not have permanent kidney
failure, and have not elected the Medicare hospice benefit. The
plan must enroll Medicare beneficiaries in the order of
application, without health screening, during at least one open
enrollment period each year.
Before joining a plan, be sure to read the plan's
membership materials carefully to learn your rights and the
nature and extent of your coverage. If you live in an area that
is served by more than one managed care plan, compare benefits,
costs and other features to determine which plan meets your
needs. Also, determine which type of contract the plan has with
Medicare.
Group Insurance
There are two principal sources of group insurance:
employers and voluntary associations.
Employer Group Insurance for Retirees. Many people have
private insurance when they reach age 65 that often is
purchased through their or their spouse's current employer or
union membership. If you have such coverage, find out if it can
be continued when you or your spouse retires. Check the price
and the benefits, including benefits for your spouse.
Group health insurance that is continued after retirement
usually has the advantage of having no waiting periods or
exclusions for preexisting conditions, and the coverage is
usually based on group premium rates, which may be lower than
the premium rates for individually purchased policies. One note
of caution, however. If you have a spouse under 65 who was
covered under the prior policy, make sure you know what effect
your continued coverage will have on his or her insurance
protection.
Furthermore, since employer group insurance policies do
not have to comply with the federal minimum benefit standards
for Medigap policies, it is important to determine what
coverage your specific retirement policy provides. While the
policy may not provide the same benefits as a Medigap policy,
it may offer other benefits such as prescription drug coverage
and routine dental care.
Special Rules for Working People Age 65 or Over. If you
are 65 or over and you or your spouse works, Medicare may be
secondary payer to any employer group health plan (EGHP)
coverage you have. This means that the employer plan pays first
on your hospital and medical bills. If the employer plan does
not pay all of your expenses, Medicare may pay secondary
benefits for Medicare-covered services to supplement the amount
paid by the employer plan.
Employers who have 20 or more employees are required to
offer the same health benefits, under the same conditions, to
employees age 65 or over and to employees' spouses who are 65
or over, that they offer to younger employees and spouses. EGHP
coverage of employers of 20 or more employees is primary to
Medicare.
You may accept or reject coverage under the EGHP. If you
accept the employer plan, it will be your primary payer. If you
reject the plan, Medicare will be the primary payer for
Medicare-covered health services that you receive. If you
reject the employer plan, you can buy supplemental insurance
but an employer cannot provide you with a plan that pays
supplemental benefits for Medicare-covered services or
subsidize such coverage. An employer may, however, offer a plan
that pays for health care services not covered by Medicare,
such as hearing aids, routine dental care, and physical
checkups.
Special Rules for Certain Disabled Medicare Beneficiaries.
Medicare is also secondary for certain people under age 65 who
are entitled to Medicare based on disability (other than those
with permanent kidney failure) and who have large group health
plan (LGHP) coverage. An LGHP is a plan of, or contributed to
by, an employer or employee organization that covers the
employees of at least one employer with 100 or more employees.
This requirement applies to those who have LGHP coverage
as an employee, employer, self-employed person, business
associate of an employer, or a family member of any of these
people. An LGHP must not treat any of these people differently
because they are disabled and have Medicare.
The term "employee" here includes both those who are
actively working despite their disability (such as disabled
Medicare beneficiaries engaged in a trial work period) and
those who are not actively working, but whom the employer
treats as employees. Medicare determines whether an individual
is considered to be an employee.
Disabled persons also have the option of accepting or
rejecting LGHP coverage. If they reject the plan, Medicare
becomes their primary payer and the employer may not provide or
subsidize supplemental coverage, except for items and services
not covered by Medicare.
Special Rules for Medicare Beneficiaries with Permanent
Kidney Failure. Medicare is secondary payer to EGHPs for 18
months for beneficiaries who have Medicare solely because of
permanent kidney failure. This requirement applies only to
those with permanent kidney failure, whether they have their
own coverage under an EGHP or are covered under an EGHP as
dependents. EGHPs are primary payers during this period without
regard to the size of the EGHP or the number of employees. The
18-month period begins with the earlier of:
* The first month in which the person becomes entitled to
Medicare Part A or
* The first month in which an individual would have been
entitled to Part A if he had filed an application for
Medicare benefits.
However, EGHPs may be primary for an additional 3 months,
or a total of up to 21 months: the first three months of
dialysis (a period during which an individual generally is not
eligible for Medicare benefits) plus the first 18 months of
Medicare eligibility or entitlement. After the period of up to
21 months expires, Medicare is primary payer for entitled
individuals and the EGHP is secondary.
The Health Care Financing Administration pamphlet entitled
Medicare Coverage of Kidney Dialysis and Kidney Transplant
Services contains more information about Medicare and kidney
disease. You can get a free copy from the Social Security
Administration or the Consumer Information Center, Department
59, Pueblo, CO 81009.
Association Group Insurance. Many organizations, other
than employers, offer group health insurance coverage to their
members. Just because you are buying through a group does not
mean that you are getting a low rate. Group insurance can be as
expensive as or more costly than comparable coverage under
individual policies. Be sure you understand the benefits
included and then compare prices. Association group Medigap
insurance must comply with the same rules that apply to other
Medigap policies.
The following types of coverage are generally limited in
scope and are not substitutes for Medigap insurance or managed
care plans.
Long-Term Care Insurance
Nursing home and long-term care insurance are available to
cover custodial care in a nursing home. Some of these policies
also cover care in the home, and others are available to pay
for care in a skilled nursing facility (SNF) after your
Medicare benefits run out (see page 3 for an explanation of the
Medicare benefit for skilled nursing facility care).
If you are in the market for nursing home or longterm care
insurance, be sure you know which types of nursing homes and
services are covered by the different policies available. And
if you buy a policy, make sure it does not duplicate skilled
nursing facility (SNF) coverage provided by any Medigap policy,
managed care plan, or other coverage you have.
It is important to remember that custodial care (the type
of care most persons in nursing homes require) is not covered
by Medicare or most Medigap policies. The only care of this
nature that Medicare covers is skilled nursing care or skilled
rehabilitation care that is provided in a Medicare-certified
skilled nursing facility.
For more information about long-term care insurance,
request a copy of A Shopper's Guide to Long-Term Care Insurance
from either your state insurance department or the National
Association of Insurance Commissioners, 120 W. 12th Street,
Suite 1100, Kansas City, MO 64 105-1925. You may also obtain a
copy of the Guide to Choosing a Nursing Home by writing to
Medicare Publications, Health Care Financing Administration,
6325 Security Boulevard, Baltimore, MD 21207.
Hospital Indemnity Insurance
Hospital indemnity coverage is insurance that pays a fixed
cash amount for each day you are hospitalized up to a
designated number of days. Some coverage may have added
benefits such as surgical benefits or skilled nursing home
confinement benefits. Some policies have a maximum number of
days or a maximum payment amount. Generally, a hospital
indemnity policy will pay the specified daily amount regardless
of any other health insurance coverage you have, but other
group health insurance may coordinate benefits with hospital
confinement indemnity insurance sold on a group basis.
Specified Disease Insurance
Specified disease insurance, which is not available in
some states, provides benefits for only a single disease, such
as cancer, or a group of specified diseases. The value of such
coverage depends on the chance you will get the specific
disease or diseases covered. Benefits are usually limited to
payment of a fixed amount for each type of treatment. Benefits
are not designed to fill gaps in Medicare coverage.
DO YOU NEED MORE INSURANCE?
Before buying insurance to supplement Medicare, ask
yourself whether you need private health insurance in addition
to Medicare. Not everyone does.
Medicaid Recipients
Low-income people who are eligible for Medicaid usually do
not need additional insurance. They also qualify for certain
health care benefits beyond those covered by Medicare, such as
long-term nursing home care. If you become eligible for
Medicaid, and you have Medigap insurance purchased on or after
November 5, 1991, you can request that the Medigap benefits and
premiums be suspended for up to two years while you are covered
by Medicaid. Should you become ineligible for Medicaid benefits
during the two years, your Medigap policy will be reinstated if
you give proper notice and begin paying premiums again. You do
not, however, have to suspend your Medigap policy, and
suspension is not always to a Medicaid recipient's advantage.
You may want to discuss your options with your state Medicaid
representatives.
Qualified Medicare Beneficiary Program: Assistance for
Low-Income Elderly
Limited financial assistance is available through Medicaid
for paying Medicare premiums, deductibles, and coinsurance
amounts for certain low-income elderly and disabled
beneficiaries. If your annual income is at or below the
national poverty level and your cash and savings are very
limited, you may qualify for state assistance in paying
Medicare's monthly premiums, deductibles and coinsurance. This
is called the "Qualified Medicare Beneficiary" (QMB) program.
To have qualified in 1993, your income could not have been
more than $601 per month for one person or $806 per month for a
couple, except in Alaska and Hawaii. In Alaska the income
limits were $745 per month for one person and $1,002 per month
for a couple. In Hawaii they were $690 per month for one person
and $925 per month for a couple. The limits for 1994 will be
announced in February 1994. Financial resources such as bank
accounts, stocks, and bonds cannot exceed $4,000 for one person
or $6,000 for a couple.
Financial assistance also is available for Medicare
beneficiaries under the "Specified Low-Income Medicare
Beneficiary" (SLMB) program. This program is for beneficiaries
whose incomes exceed the poverty level by not more than 10
percent and who meet certain resource limitations. To have
qualified for this program in 1993, your income could not have
been more than $659 a month for one person or $884 a month for
a couple, except in Alaska and Hawaii. In Alaska the income
limits were $818 per month for one person and $1,100 per month
for a couple. In Hawaii they were $758 per month for one person
and $1,016 per month for a couple. Individuals in this category
are eligible only for Medicaid payment of their Medicare Pan B
premium, which is $41.10 per month in 1994. If you think you
qualify for state assistance in paying your Medicare expenses
under either of these two programs, contact your state or local
social service agency. If you cannot find a telephone number
for the state agency, call 1-800638-6833 for assistance.
Federally Qualified Health Center
Medicare pays for some health services, including
preventive care, when provided by a federally qualified health
center (FQHC). These facilities are typically community health
centers, migrant health centers and health centers for the
homeless. They are generally located in inner-city and rural
areas. The services covered by Medicare at FQHCs include
routine physical examinations, screenings, and diagnostic tests
for the detection of vision and hearing problems and other
medical conditions, and the administration of certain vaccines
for immunization against influenza and other diseases.
When those services are furnished at a FQHC, the $100
annual Part B deductible does not apply (see page 5). However,
if other services are provided, such as X-rays or screening
mammograms, the FQHC may bill the Medicare carrier. In that
case, you would be responsible for any unmet portion of the Pan
B annual deductible of $.100. As for the 20 percent Part B
coinsurance, it is applicable for all FQHC services but Public
Health Service guidelines allow the FQHC to waive it in some
instances. Any Medicare beneficiary may seek services at an
FQHC.
To find out whether one of these centers serves your area,
call 1-800-638-6833.
TIPS ON SHOPPING FOR HEALTH INSURANCE
Shop Carefully Before You Buy. Policies differ as to
coverage and cost, and companies differ as to service. Contact
different companies and compare the premiums before you buy.
Don't Buy More Policies Than You Need. Duplicate coverage
is expensive and unnecessary. A single comprehensive policy is
better than several policies with overlapping or duplicate
coverage. Federal law prohibits issuing duplicative coverage to
Medicare beneficiaries even if both policies would pay full
benefits. The law generally prohibits the sale of a Medicare
supplement policy to a person who has Medicaid or another
health insurance policy that provides coverage for any of the
same benefits.
Similarly, the sale of any other kind of health insurance
policy is generally prohibited if it duplicates coverage you
already have. When you buy a replacement Medigap policy, the
insurer is required to obtain your written statement that you
intend to cancel the first policy after the new policy becomes
effective. If you are on Medicaid, insurers may not sell you a
Medigap policy unless the state pays the premium. Anyone who
sells you a policy in violation of these anti-duplication
provisions is subject to criminal and/or civil penalties under
federal law. Call 1-800-638-6833 to report suspected
violations.
Consider Your Alternatives. Depending on your health care
needs and finances, you may want to consider continuing the
group coverage you have at work; joining an HMO, CMP or other
managed care plan; buying a Medigap policy; or buying a
longterm care insurance policy.
Check For Preexisting Condition Exclusions. In evaluating
a policy, you should determine whether it limits or excludes
coverage for existing health conditions. Many policies do not
cover health problems that you have at the time of purchase.
Preexisting conditions are generally health problems you went
to see a physician about within the 6 months before the date
the policy went into effect.
Don't be misled by the phrase "no medical examination
required." If you have had a health problem, the insurer might
not cover you immediately for expenses connected with that
problem. Medigap policies, however, are required to cover
preexisting conditions after the policy has been in effect for
6 months.
Beware of Replacing Existing Coverage. Be careful when
buying a replacement Medigap policy. Make sure you have a good
reason for switching from one policy to another--you should
only switch for different benefits, better service, or a more
affordable price. On the other hand, don't keep inadequate
policies simply because you have had them a long time. If you
decide to replace your Medigap policy, you must be given credit
for the time spent under the old policy in determining when any
preexisting conditions restrictions apply under the new policy.
You must also sign a statement that you intend to terminate the
policy to be replaced. Do not cancel the first policy until you
are sure that you want to keep the new policy.
Prohibited Marketing Practices. It is unlawful for a
company or agent to use high pressure tactics to force or
frighten you into buying a Medigap policy, or to make
fraudulent or misleading comparisons to get you to switch from
one company or policy to another. Deceptive "cold lead"
advertising also is prohibited. This lactic involves mailings
to identify individuals who might be interested in buying
insurance. If you fill in and return the card enclosed in the
mailing, the card may be sold to an insurance
agent who will try to sell you a policy.
Be Aware of Maximum Benefits. Most policies have some type
of limit on benefits. They may restrict either the dollar
amount that will be paid for treatment of a condition or the
number of days of care for which payment will be made. Some
insurance policies (but not Medigap policies) pay less than the
Medicare-approved amounts for hospital outpatient medical
services and for services provided in a doctor's office. Others
do not pay anything toward the cost of those services.
Check Your Right to Renew. States now require that Medigap
policies be guaranteed renewable. This means that the company
can refuse to renew your policy only if you do not pay the
premiums or you made material misrepresentations on the
application. Beware of older policies that let the company
refuse to renew on an individual basis. These policies provide
the least permanent coverage.
Even though your policy may be guaranteed renewable. the
company may adjust the premiums from time to time. Some
policies have premiums which increase as you grow older.
Be A ware That Policies to Supplement Medicare Are Neither
Sold Nor Serviced by the State or Federal Governments. State
insurance departments approve policies sold by insurance
companies but approval only means the company and policy meet
requirements of state law. Do not believe statements that
insurance to supplement Medicare is a government-sponsored
program.
If anyone tells you that they are from the government and
later tries to sell you an insurance policy, report that person
to your state insurance department or federal authorities. This
type of misrepresentation is a violation of federal and state
law. It is also unlawful for a company or agent to claim that a
policy has been approved for sale in any state in which it has
not received state approval, or to use fraudulent means to gain
approval.
Know With Whom You're Dealing. A company must meet certain
qualifications to do business in your state. You should check
with your state insurance department to make sure that any
company you are considering is licensed in your state. This is
for your protection. Agents also must be licensed by your state
and may be required by the state to carry proof of licensure
showing their name and the company they represent. If the agent
cannot verify that he or she is licensed, do not buy from that
person. A business card is not a license.
Keep Agents' and/or Companies' Names, Addresses and
Telephone Numbers. Write down the agents' and/or companies'
names, addresses and telephone numbers or ask for a business
card that provides all that information.
Take Your Time. Do not be pressured into buying a policy.
Principled salespeople will not rush you. If you are not
certain whether a program is worthy, ask the salesperson to
explain it to a friend. Keep in mind, however, that there is a
limited time period in which new Medicare Part B enrollees can
buy the Medigap policy of their choice without conditions being
imposed (see page 11). Once this open enrollment period
elapses, you may be limited as to the Medigap policies
available to you, especially if you have a preexisting health
condition.
If You Decide To Buy, Complete the Application Carefully.
Do not believe an insurance agent who tells you that your
medical history on an application is not important. Some
companies ask for detailed medical information. If you leave
out any of the medical information requested, coverage could be
refused for a period of time for any medical condition you
neglected to mention. The company also could deny a claim for
treatment of an undisclosed condition and/or cancel your
policy.
Look For an Outline of Coverage. You must be given a
clearly worded summary of the policy... READ IT CAREFULLY.
Do Not Pay Cash. Pay by check, money order or bank draft
made payable to the insurance company, not to the agent or
anyone else. Get a receipt with the insurance company's name,
address and telephone number for your records.
Policy Delivery or Refunds Should be Prompt. The insurance
company should deliver a policy within 30 days. If it does not,
contact the company and obtain in writing the reason for the
delay. If 60 days go by without a response, contact your state
insurance department.
Use the "Free-Look" Provision. Insurance companies must
give you at least 30 days to review a Medigap policy. If you
decide you don't want the policy, send it back to the agent or
company within 30 days of receiving it and ask for a refund of
all premiums you paid. Contact your state insurance department
if you have a problem getting a refund.
For Your Protection
As noted above, federal criminal and civil penalties can
be imposed against anyone who sells you a policy that
duplicates coverage you already have unless you sign a
statement declaring that the first policy will be cancelled, or
unless you have Medicaid and the state Medicaid agency pays the
premium for your Medigap policy. Penalties may also be imposed
for claiming that a policy meets legal standards for federal
certification when it does not, and for using the mail for the
delivery of advertisements offering for sale a Medigap policy
in a state in which it has not received state approval.
Additionally, it is illegal under federal law for an
individual or company to misuse the names, letters, symbols or
emblems of the U.S. Department of Health and Human Services,
the Social Security Administration, or the Health Care
Financing Administration. It also is illegal to use the names.
letters, symbols or emblems of their various programs.
This law is aimed primarily at mass marketers who use this
information on mail solicitations to either imply or claim that
the product they are selling whether it be insurance or
something else--has either been endorsed or is being sold by
the U.S. government. The advertising literature used by these
organizations is often designed to look like it came from a
government agency.
If you believe you have been the victim of any unlawful
sales practices, contact your state insurance department
immediately. If you believe that federal law has been violated,
you may call 1-800-638-6833. In most cases, however, your state
insurance department can offer the most assistance in resolving
insurance related problems.
Standard Medigap Plans
Following is a list of the 10 standard plans and the
benefits provided by each:
PLAN A (the basic policy) consists of these basic benefits:
* Coverage for the Part A coinsurance amount ($174 per day
in 1994) for the 61st through the 90th day of
hospitalization in each Medicare benefit period.
* Coverage for the Part A coinsurance amount ($348 per day
in 1994) for each of Medicare's 60 non-renewable lifetime
hospital inpatient reserve days used.
* After all Medicare hospital benefits are exhausted,
coverage for 100% of the Medicare Part A eligible hospital
expenses. Coverage is limited to a maximum of 365 days of
additional inpatient hospital care during the
policyholder's lifetime. This benefit is paid either at
the rate Medicare pays hospitals under its Prospective
Payment System or another appropriate standard of payment.
* Coverage under Medicare Parts A and B for the reasonable
cost of the first three pints of blood or equivalent
quantities of packed red blood cells per calendar year
unless replaced in accordance with federal regulations.
* Coverage for the coinsurance amount for Part B services
(generally 20% of approved amount; 50% of approved charges
for mental health services) after $100 annual deductible
is met.
PLAN B includes the basic benefits plus:
* Coverage for the Medicare Part A inpatient hospital
deductible ($696 per benefit period in 1994).
PLAN C includes the basic benefits plus:
* Coverage for the Medicare Part A deductible.
* Coverage for the skilled nursing facility care coinsurance
amount ($87 per day for days 21 through 100 per benefit
period in 1994).
* Coverage for the Medicare Part B deductible ($100 per
calendar year in 1994).
* 80% coverage for medically necessary emergency care in a
foreign country, after a $250 deductible.
PLAN D includes the basic benefits plus:
* Coverage for the Medicare Part A deductible.
* Coverage for the skilled nursing facility care daily
coinsurance amount.
* 80% coverage for medically necessary emergency care in a
foreign country, after a $250 deductible.
* Coverage for at-home recovery. The at-home recovery
benefit pays up to $1600 per year for short-term, at-home
assistance with activities of daily living (bathing,
dressing, personal hygiene, etc.) for those recovering
from an illness, injury or surgery. There are various
benefit requirements and limitations.
PLAN E includes the basic benefits plus:
* Coverage for the Medicare Part A deductible.
* Coverage for the skilled nursing facility care daily
coinsurance amount.
* 80% coverage for medically necessary emergency care in a
foreign country, after a $250 deductible.
* Coverage for preventive medical care. The preventive
medical care benefit pays up to $120 per year for such
things as a physical examination, flu shot, serum
cholesterol screening, hearing test, diabetes screenings,
and thyroid function test.
PLAN F includes the basic benefits plus:
* Coverage for the Medicare Part A deductible.
* Coverage for the skilled nursing facility care daily
coinsurance amount.
* Coverage for the Medicare Part B deductible.
* 80% coverage for medically necessary emergency care in a
foreign country, after a $250 deductible.
* Coverage for 100% of Medicare Part B excess charges. *
PLAN G includes the basic benefits plus:
* Coverage for the Medicare Part A deductible.
* Coverage for the skilled nursing facility care daily
coinsurance amount.
* Coverage for 80% of Medicare Plan B excess charges.*
* 80% coverage for medically necessary emergency care in a
foreign country, after a $250 deductible.
* Coverage for at-home recovery (see Plan D).
PLAN H includes the basic benefits plus:
* Coverage for the Medicare Part A deductible.
* Coverage for the skilled nursing facility care daily
coinsurance amount.
* 80% coverage for medically necessary emergency care in a
foreign country, after a $250 deductible.
* Coverage for 50% of the cost of prescription drugs up to a
maximum annual benefit of $1,250 after the policyholder
meets a $250 per year deductible (this is called the
"basic" prescription drug benefit).
PLAN I includes the basic benefits plus:
* Coverage for the Medicare Part A deductible.
* Coverage for the skilled nursing facility care daily
coinsurance amount.
* Coverage for 100% of Medicare Part B excess charges. *
* Basic prescription drug coverage (see Plan H for
description).
* 80% coverage for medically necessary emergency care in a
foreign country, after a $250 deductible.
* Coverage for at-home recovery (see Plan D).
PLAN J includes the basic benefits plus:
* Coverage for the Medicare Part A deductible.
* Coverage for the skilled nursing facility care daily
coinsurance amount.
* Coverage for the Medicare Part B deductible.
* Coverage for 100% of Medicare Part B excess charges. *
* 80% coverage for medically necessary emergency care in a
foreign country, after a $250 deductible.
* Coverage for 50% of the cost of prescription drugs up to a
maximum annual benefit of $3,000 after the policyholder
meets a $250 per year deductible (this is called the
"extended" drug benefit).
* Plan pays a specified percentage of the difference between
Medicare's approved amount for Part B services and the
actual charges (up to the amount of charge limitations set
by either Medicare or state law).
[Graphic Omitted]
Basic Benefits pay the patient's share of Medicare's
approved amount for physician services (generally 20%) after
$100 annual deductible, the patient's cost of a long hospital
stay ($174/day for days 60-90, $348/day for days 91-150,
approved costs not paid by Medicare after day 150 to a total of
365 days lifetime), and charges for the first 3 pints of blood
not covered by Medicare.
Two prescription drug benefits are offered:
1. a "basic" benefit with $250 annual deductible, 50%
coinsurance and a $1,250 maximum annual benefit (Plans H
and I above), and
2. an "extended" benefit (Plan J above) containing a $250
annual deductible, 50% coinsurance and a $3,000 maximum
annual benefit.
Each of the 10 plans has a letter designation ranging from
"A" through "J". Insurance companies are not permitted to
change these designations or to substitute other names or
titles. They may, however, add names or titles to these letter
designations. While companies are not required to offer all of
the plans, they all must make Plan A available if they sell any
of the other 9 in a state.
INSURANCE POLICY CHECK-LIST
After reading this guide, you may find this check-list
useful in assessing the benefits provided by a Medigap policy
or in comparing policies.
POLICY I POLICY 2 POLICY 3
Does the policy cover: YES NO YES NO YES NO
Medicare Part A hospital deductible?
*Medicare Part A hospital daily coinsurance?
*Hospital care beyond Medicare's 150-day limit?
Skilled nursing facility (SNF) daily coinsurance?
SNF care beyond Medicare's limits?
Medicare Part B annual deductible?
*Medicare Part B coinsurance?
Physician and supplier charges in excess
of Medicare's approved amounts?
*Medicare blood deductibles?
Prescription drugs?
Other Policy Considerations
Can the company cancel or non-renew the policy?
What are the policy limits for covered services?
How much is the annual premium?
How often can the company raise the premium?
How long before existing health problems are covered?
Does the policy have a waiting period before any
benefits will be paid? How long?
* Most states now require that these benefits be included in
all newly issued Medigap policies.
NOTES
DIRECTORY OF STATE INSURANCE DEPARTMENTS AND AGENCIES ON AGING
Each state has its own laws and regulations governing all
types of insurance. The insurance offices listed in the left
column of this directory are responsible for enforcing these
laws, as well as providing the public with information about
insurance. The agencies on aging, listed in the right column,
are responsible for coordinating services for older Americans.
The middle column of the directory lists the telephone number
to call for insurance counseling services. Calls to an 800
number listed in this directory are free when made within the
respective state.
[Table Omitted]
U.S. Department of Health and Human Services
Health Care Financing Administration
6325 Security Boulevard
Baltimore, Maryland 21207
HCFA ICN 003622
SSA ICN 002795
.