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Medicare Supplement Insurance ...
Medicare is a national health insurance program for people 65 years of age and older, certain younger disabled people, and people with permanent kidney failure. Medicare is run by the Health Care Financing Administration. The Social Security Administration helps HCFA by enrolling people in Medicare and by collecting Medicare premiums.
Medicare is divided into two parts: Hospital Insurance (Part A) and Medical Insurance (Part B). Part A helps pay for care in a hospital and a skilled nursing facility, and for home health and hospice care. Part B helps pay doctor bills, and for outpatient hospital care and other medical services not covered by Part A.
If you decide that you need more insurance, there is a variety of private insurance policies available to help pay health care expenses that Medicare covers only partially or not at all. The basic types of coverage include:
Medigap insurance is specifically designed to supplement Medicare's benefits and is regulated by federal and state law. It must be clearly identified as Medicare Supplement insurance and it must provide specific benefits that help fill the gaps in Medicare coverage (Refer to: Gaps In Medicare Coverage). Other kinds of insurance may help you with out-of-pocket health care costs, but they do not qualify as Medigap plans.
Standard Medigap Plans: To make it easier for consumers to comparison shop for Medigap insurance, all states (except Minnesota, Massachusetts and Wisconsin), U.S. territories and the District of Columbia limit the number of different Medigap policies that can be sold in any of those jurisdictions to no more than 12 standard Medigap plans. These plans have letter designations ranging from "A" through "L," (Plans "K" and "L" are new for 2006) with Plan A being the "basic" benefit package. Each of the other 9 plans includes the basic package plus a different combination of additional benefits. Plan L provides the most coverage of all the plans. The plans cover specific expenses either not covered or not fully covered by Medicare. Insurance companies are not permitted to change the combination of benefits or the letter designations of any of the plans.
Medicare Advantage (MA): This is the name for the different private plans available to provide Medicare. In addition to the original Medicare "fee-for-service" program, Medicare offers beneficiaries the option to receive care through private insurance plans. These private insurance options are part of Medicare Part C, which has also been known as Medicare+Choice plans, and is now called Medicare Advantage. The most common type of Medicare Advantage plans are Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). To date, most Medicare beneficiaries who participate in Medicare Advantage are enrolled in HMOs. Medicare Advantage plans must provide coverage for the services currently available under Medicare Parts A and B.
Part D: Beginning January 1, 2006, Medicare can now help pay for certain prescription drugs. Most people with Medicare will have to sign up for a drug plan if they want prescription drug coverage and will have to pay premiums and co-payments. Not all drugs will be covered and there will be many different plans to choose from. People who have Medicare Part A or Part B are eligible for Medicare drug coverage. They may enroll in any of the Part D plans that serve the area where they live. Medicare Part D is optional. People do not have to elect Part D coverage and they will still be able to participate in Medicare Parts A and B if they don't. However, people who do not choose to enroll in Part D when they are first eligible will have to pay a higher premium if they decide to join later. This penalty will be about 1% of the premium. People who sign up late will have to pay this penalty unless Medicare decides they had drug coverage that was as good as Medicare's during the time they were not enrolled in Part D. This is known as "creditable" coverage. (Refer to: More About Medicare Plan D).
Medigap Premiums: Although the benefits are identical for all Medigap plans of the same type, the premiums may vary greatly from one company to another and from area to area. Insurance companies use three different methods to calculate premiums: issue age, attained age and no age rating.
If your company uses the issue age method, and you were 65 when you bought the policy, you will always pay the same premium the company charges people who are 65, regard- less of your age. If it uses the attained age method, the premium is based on your current age and will increase as you grow older. Under the no age rating method, everyone pays the same premium regardless of age. Your state insurance department must approve the rates charged for all Medigap policies. The insurance company can raise your premiums only when it has approval to raise the premiums for everyone else with the same policy.
Open Enrollment Guarantees Your Right To Medigap Coverage: State and federal laws guarantee that for a period of 6 months from the date you are both enrolled in Medicare Part B and the age 65 or older, you have a right to buy the Medigap policy of your choice, regardless of any health problems you may have. If, however, your birthday falls on the first day of the month, your Part B coverage (if you buy it) begins on the first day of the previous month, while you are still 64. Your Medigap open enrollment period would also begin at that time.
During this 6-month open enrollment period, you can buy any Medigap policy 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 pre-existing condition restrictions that apply to Medigap polices sold outside the open enrollment period.
Guaranteed Renewable: All standard Medigap policies are guaranteed renewable. This means that the insurance company cannot refuse to renew your policy unless you do not pay the premiums or you made material misrepresentations on the application. Older policies may allow the company to refuse to renew on an individual basis. These older policies provide the least permanent coverage.
Older Medigap Policies: Many federal requirements do not apply to Medigap policies sold before 1992, when Medigap was standardized. There is generally no requirement that you switch to one of the standard plans if you have an older policy. However, you may be required to switch if your older plan was not guaranteed renewable and the company discontinues the type of policy you have. Check with your state insurance department to find out what state-specific requirements are in force.
Switching Medigap Policies: 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 better coverage, especially for prescription drugs and extended skilled nursing care. On the other hand, older Medigap policies, which cannot be sold to new applicants, may experience greater premium increases than newer standardized policies which can enroll new applicants (younger, healthier policyholders whose better claims experience will help moderate premiums).
If you have had a Medigap policy for at least 6 months and you decide to switch, the replacement policy generally cannot impose a waiting period for a pre-existing condition. 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.
You do not need more than one Medigap policy. If you already have a Medigap policy, you must sign a statement when you buy another indicating that you intend to replace your current policy and will not keep both policies. However, do not cancel the old policy until the new one is in force and you have decided to keep it.
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.
Non-Standard Plans: It is illegal for anyone to sell a Medigap plan that does not conform to Medigap standardization requirements. This may include a "retainer agreement" that your doctor may offer you under which he or she will provide certain non-Medicare- covered services and waive the Medicare coinsurance and deductible amounts. This arrangement may violate federal laws governing Medigap policies. If a doctor refuses to see you as a Medicare patient unless you pay him or her an annual fee and sign one of these retainer agreements, you should register a complaint with federal authorities by calling 1-800-638-6833.
Whether you need health insurance in addition to Medicare is a decision that only you can make. Medicare does not offer complete health insurance protection. Private health insurance can fill many of the gaps. But before buying insurance to supplement your Medicare benefits, make sure you need it. Not everyone does.
NOTE: This is only a brief overview of Medicare & Medigap insurance. For additional information contact your state insurance department, your state agency on aging or your local Social Security office.
[Source: Guide To Health Insurance for People with Medicare]
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Last modified: March 01, 2015