Tuesday, December 4, 2007

GUIDE TO HEALTH INSURANCE FOR PEOPLE WITH MEDICARE

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 andthe 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 part time 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-administrable prescription drugs or

immunizations, except for neumococcal, 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

providersoutside 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


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