Guide to Health Insurance (Medicare)

TIPS ON SHOPPING FOR HEALTH INSURANCE

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

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

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.

• 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.

• 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.

• 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.

• 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.

• 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).

• 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).

• 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).

• 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).

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.