There
are two parts of Medicare: Part A (Hospital Insurance)
and Part B (Medical Insurance). Under Medicare Part
A, the Federal government will pay a portion of your
expenses for inpatient hospitalization, skilled nursing
facility care, hospice care services, home health care
services, and for medically necessary blood transfusions.
Medicare Part B covers your doctors' services, outpatient
hospital care, and other medical services. To better
understand your Medicare benefits and how to use them,
read the Medicare & You handbook, which is available
from your local Social Security office or by calling
Medicare at 800-633-4227. You may also refer to the
Medicare Web site at www.medicare.gov.
For each
medical service Medicare covers, there is a portion
that Medicare does not pay. Medicare Part A and Part
B both have a deductible (the amount you must pay or
must incur before Medicare will begin to pay). You must
also pay the portion of the hospital or medical expenses
for which you are responsible, commonly referred to
as "coinsurance" or a "co-payment".
The monthly premiums, deductibles and coinsurance for
Medicare change each year. You can find out the current
amount of these Medicare charges by contacting your
local Social Security office.
Often people
need medical services that Medicare does not cover.
Such services as medical expenses incurred during foreign
travel or outpatient prescription drugs are not covered
by Medicare. The
Medicare handbook is reprinted each year to reflect
any changes in deductibles, coinsurances, or benefits.
Consult a current Medicare handbook for any changes
to the Medicare plan.
Medicare
Supplement Insurance Is Standardized
Congress
passed legislation creating Federal standards for Medicare
Supplement insurance policies that the states are required
to adopt, with the exception of Massachusetts, Minnesota,
and Wisconsin. Federally mandated standardization means
that all Medicare Supplement insurance policies sold
must contain a package of benefits conforming to one
of the ten standard plans that are designated as Plan
A through Plan J. (Click on Plan A through Plan J for
an explanation of the benefits in each of the ten standard
plans).
As a result
of standardization, comparison-shopping among different
insurance carriers for Medicare Supplement insurance
is relatively simple. For example, Plan C will contain
the same benefits no matter which insurer sells it.
Consumers can select policies based on premium cost
and the special features or services offered by the
Medicare Supplement insurance company.
Who
Pays First If You Have Other Health Insurance?
If you have
a question about who should pay, or who should pay first,
check your insurance policy or coverage. It may include
a coordination of benefits clause. You may call your
insurance company or the Medicare Coordination of Benefits
Contractor at 800-999-1118.
Open
Enrollment for Purchasing a Medicare Plan
If you
are 65 years old or older, you may buy any Medicare
Supplement insurance policy, regardless of the condition
of your health, during the "open enrollment"
period. The open enrollment period lasts for six months
after you first become eligible for Medicare Part B.
Effective September 27, 2000, Medicare eligible disabled
individuals under the age of 65 who do not have End-Stage
Renal Disease now have the right to a six month open
enrollment period beginning with their entitlement to
Medicare Part B to purchase selected standardized Plans
A, B, C, F or a prescription drug Plan H, I, or J at
the discretion of the insurer. When the under the age
of 65 disabled Medicare beneficiary turns 65, they will
have a second six month open enrollment period to purchase
any of the standardized supplement plans.
Important
Notice: New legislation requires Medicare supplement
carriers to offer a special 90-day open enrollment to
all qualified Medicare beneficiaries who became eligible
for Medicare due to disability, do not have End-Stage
Renal Disease, and did not use the prior one-time open
enrollment period that started on January 1, 2001. The
special open enrollment period begins on January 1,
2004.
Once you
have purchased a Medicare Supplement plan, you will
have an annual open enrollment commencing with your
birthday and ending 30 days later. The policy must be
of equal or lesser value in coverage to your existing
plan.
"Open
Enrollment" means that no insurer may deny you
the right to purchase any of the ten standard plans
because of any preexisting medical condition, claims
experience, or receipt of medical care. If you have
a preexisting medical condition (a condition for which
you received medical advice or treatment during the
six months before your insurance begins), open enrollment
is an important advantage to you.
NOTE:
Although you are guaranteed the right to purchase any
Medicare Supplement insurance product during open enrollment,
insurers are permitted to impose a waiting period of
up to six months before paying you benefits related
to any preexisting condition. Some policies have shorter
waiting periods or no waiting period. If you have a
preexisting medical condition, ask your agent to check
the outline of coverage on the policy you are considering
buying for the length of the waiting period.
What
Is Medicare Select?
Medicare
Select is a PPO variation of Medicare standardized plans
A through J initiated by Congress in 1990 that set standards
for Preferred Provider Organizations (PPOs). PPOs attempt
to cut costs by offering you a discount if you use a
doctor or other medical provider who is a member of
the PPO network. The "network" is made up
of various health care provider groups which contract
to provide specific services to consumers. You are not
required to use the providers in the network when it
is an emergency or not reasonable to obtain services
through a network provider, but you receive an advantage
if you do (the advantage generally is that the insurance
company will pay a larger percentage of the cost). Medicare
Select PPOs offer standardized Medicare Supplement coverage
through a PPO system. If you try a Medicare Select PPO
system and you do not like it, you may switch to an
individual Medicare
Supplement policy if your insurance company offers one.
Individual Insurance
vs. Group Insurance
An individual
Medicare Supplement policy is a contract between you
and the insurance company. Its provisions have the maximum
number of consumer protections required under California
law, but it is sometimes more expensive than group insurance.
The law requires that every individual policy must be
either "guaranteed renewable" or "noncancelable".
Guaranteed
Renewable means that you have the right to continue
the same
coverage with no change in the terms of your policy,
so long as you continue to pay the premiums on time.
However, the insurance company has the right to change
the premium. Of course, there is no guarantee that the
insurer will not go bankrupt. Individuals covered by
a company withdrawing / exiting the Medicare Supplement
market shall have the opportunity to renew under another
company and retain the same benefits. Noncancelable
means that you have the right to continue the same coverage,
with no change in policy terms and no change in premium
rates, so long as you continue to pay premiums on time.
Currently, none of the insurance companies have chosen
to offer noncancelable policies although they are authorized
to do so. Group Medicare Supplement insurance is a contract
between the insurance company and a group master-policyholder
such as an employer acting on behalf of its employees.
The group
master-policyholder can also be a sponsoring organization
such as a trade or professional association like AARP,
Retired Officers Association, or a labor union specialized
plan. If you are covered under a group plan, you receive
a certificate rather than a policy of insurance, and
the group master-policyholder negotiates the terms of
the insurance and has the option to terminate the policy
or insurance carriers. Often, but not always, group
insurance is less expensive than
individual insurance.
If your
Medicare Supplement insurance group terminates or cancels
the policy, or if you lose your membership in the group,
you will be entitled to either (1) continuation of the
benefits in the group policy, or (2) conversion (the
right to buy one of the standardized individual policies).
It is likely that your premium will increase under either
continuation or conversion.
If your
Medicare Supplement insurance group replaces the policy
or the insurer with a new one, the new group insurer
will offer everyone in your group the new coverage without
exclusions for any preexisting condition that would
have been covered under the prior group policy. The
premiums may be higher.
Consumer
Protections Required in All Medicare Supplement Coverage
30-Day
Free Look: Every applicant for Medicare Supplement
insurance, both individual and group, has the right
to return any policy or certificate for any reason within
30 days of receiving that policy. The insurance company
is required to refund all premiums and any other fees
that have been paid. Your 30-day free look begins when
you receive the policy or certificate. If you buy a
"field-issued" policy (a policy that the agent
delivers to you on the same day you complete the application),
your 30-day free look begins when you receive a notice
in the mail from the insurer. Always document the date
you received the policy and the date you return the
policy to the insurance company or the agent. Many applicants
use that 30 days to discuss the purchase with family,
friends, or with a HICAP counselor.
Waiting
Periods for Preexisting Medical Conditions:
No Medicare Supplement insurance may require a waiting
period longer than six months for coverage of a preexisting
condition. If you replace one policy or certificate
with another, and have satisfied the waiting period
under the first one, the replacing insurance company
may not impose a new waiting period for the same preexisting
condition. You must be given credit for your prior coverage.
Suspension of Coverage During Medical Eligibility: If
you become eligible to receive Medi-Cal benefits, you
can ask to have your Medicare Supplement insurance suspended
for up to two years. If you become ineligible for Medi-Cal
during the two years,
you can ask to have your insurance benefits reinstated
and begin paying
premiums again.
Outline
of Coverage: Every Medicare Supplement insurer
and agent is required to give you an outline of coverage
at the time you are offered insurance to buy. The outline
of coverage contains a chart of all ten standardized
plans and a chart for each plan offered by the insurance
company. It will probably summarize the terms and features
unique to that insurance company. You do not have to
fill out an application in order to get the outline
of coverage. Compare different outlines of coverage
in private with family members, friends, or a HICAP
counselor.
Premium
Refund: Insurers are required to refund any
unearned monthly premium you paid in advance and terminate
coverage when requested by the
insured.
What
Should I Look for When Comparison Shopping?
Premium
Rates: Since standardization, the most important difference
between Medicare Supplement insurance products is the
premium cost. Be
careful! Lower premiums are not necessarily the best
choice.
Rating
Methodology:
Attained
Age Rating policies use a pricing method which automatically
increase the premium as you age. These policies are
usually less expensive during the first year, but the
premium will increase automatically as you enter new
age brackets. These automatic increases may be combined
with premium increases based on inflation and higher
medical costs, resulting in exceptionally steep increases
as you get older. You may be "priced out"
and find it costly to go elsewhere at an advanced age.
California law requires a notice on each policy or
certificate disclosing any automatic premium increases
based on age.
Issue Age
Pricing is a pricing method based on your age when the
policy is first issued. The premium may increase with
inflation, but not because you enter an older age bracket.
Policies using this method appear slightly more expensive
initially, but premiums do not automatically increase
and are more reasonable in an older age bracket.
Community-Rate
policies, also called No-Age Rated policies, charge
everyone the same rate, regardless of their age. Insurance
Policy / Health Maintenance Plan:
While your
local HICAP office can provide in depth comparison between
indemnity based (traditional fee-for-service insurance)
and managed care Medicare Supplement plans, a few initial
distinctions between insurance and managed care policies
may assist you in researching the Medicare Supplement
policy that best suits your needs and budget.
The hallmark
of traditional fee-for-service insurance is choice.
Most indemnity based policies give you the freedom to
choose your doctor, specialist, or hospital with few
if any limitations. Also, the options you have with
an insurance company are seldom limited by geographic
restrictions.
The intent
of managed care products is to create less costly delivery
of health care services while maintaining quality health
care by specifying provider choice. With managed care
products you must obtain health care services from designated
providers in most cases. Also, you are often limited
by geographic restrictions of the managed care network.
Should
I Replace My Non-Standardized Policy with a Newer Standardized
Policy?
Not necessarily.
If you bought a Medicare Supplement policy before July
1992, it may contain better benefits or suit you better
than one of the new standardized policies. It may be
less expensive than the same coverage in a standardized
policy. Consult your HICAP counselor if you are considering
replacing your coverage.
One disadvantage
of replacing an older policy is that many insurers will
charge higher premiums or deny coverage to applicants
who have preexisting conditions. If you are considering
replacement, first ask your current insurance company
if you may update your coverage without submitting a
new application. If your company agrees, only the medical
conditions listed as preexisting in your original policy
will be considered as preexisting conditions. Also,
request that your premium be calculated based on your
age when you purchased the original policy. If your
company agrees, the premium may be higher than the one
for your original policy, but it will be lower than
the cost to a first-time buyer. Remember that you have
the right to switch to another company with similar
benefits each year for 30 days following your birthday.
Never cancel
existing coverage until a replacement policy is in force,
and you are certain you want to keep it.
What
Are Limited Benefit Health Plans?
Limited
Benefit Health Plans also called Supplemental Plans
are not Medicare Supplement Plans. Limited Benefit Health
Plans may include the following:
Dread Disease
Policies that cover medical expenses or pay for a specific
disease, usually cancer or stroke. Since medical treatment
for all diseases are covered by Medicare, this coverage
is duplicative.
Hospital
Indemnity Policies that pay a certain number of dollars
for each day you are hospitalized. As hospital stays
become shorter, these benefits are used less and less.
More importantly, since Medicare Part A covers inpatient
hospitalization, these policies may duplicate Medicare.
Accident
Policies that often pay a benefit for the loss of a
limb or other body parts as a result of an accident.
Since Medicare covers any medical treatment, regardless
of the cause, this coverage may be unnecessary. If you
already own one of these policies when you buy a Medicare
Supplement policy, discuss with your HICAP counselor
the need and usefulness of these policies.
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