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Centers for Medicare & Medicaid Services

Joel Harvey, CLU, LUTCF

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Medigap and Other Supplemental Insurance

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Session Objectives• Define Medigap insurance• Describe how Medigap policies can help• Describe Medigap protections• Explain procedures and rights when M+C

plan withdraws• Explain other types of supplemental

insurance• Review information sources

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What Is A Medigap Policy?

• Policy sold by private insurance company

• Fills the “gaps” in Original Medicare Plan

• 10 standard plans called A to J– Set of standard benefits for each standard plan

• Costs may vary

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What Is A Medigap Policy?

• Helps pay costs with Original Medicare

• Don't need a Medigap policy if in– Medicare managed care plan– Private Fee-for-Service plan

• Can go to any doctor, hospital, or provider– Unless you have Medicare SELECT

M+C plans

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Medicare SELECT• Type of Medigap policy• One of 10 Medigap plans A to J• Use specific hospitals and doctors to get full

benefits– Except in an emergency

• Generally cost less• Might not be offered in your state• If you have SELECT, can switch to Medigap of

same or lower value

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Medigap Is Not

• Coverage you get from employer or union

• A Medicare managed care plan– Like an HMO

• A Private Fee-for-Service plan

• Medicare Part B

• Medicaid

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Why Do You Need Medigap?

• Original Medicare does not pay all health care costs

• Medigap policy may help you– Lower your out-of-pocket costs– Get more health insurance coverage

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Your Out-of-Pocket Costs

• Your out-of-pocket costs depend on– Whether your doctor accepts “assignment”– How often you need health care– What type of health care you need– Whether you buy a Medigap policy– Which Medigap policy you buy– Whether you have other health insurance

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Gaps in the Original Medicare Plan

What you pay for in 2002

• Hospital Stays

• Skilled Nursing

• Blood

$812 deductible for days 1-60$203 per day for days 61-90$406 per day for days 91-150

Up to $101.50 for days 21-100

First 3 pints if not replaced

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Gaps in the Original Medicare Plan

• Part B deductible

• Part B services

$100 per year

20% for most covered services50% for outpatient mental healthOutpatient copayments

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What do Medigap Policies Cover?

• Basic Core Benefits (included in all plans)– Part A coinsurance for inpatient hospital care– Cost of 365 extra days of hospital care– Part B coinsurance or copayment amount– First 3 pints of blood each year

• Most plans have additional benefits

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Other Medigap Benefits

• Some Medigap policies cover– Routine yearly check-ups– At-home recovery– Medicare Part B excess charges – And more

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Items Not Covered

• Long-term care services

• Vision or dental care

• Hearing aids

• Private-duty nursing

• Unlimited prescription drugs

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Prescription Drug Coverage

• Plans H and I– “Basic” prescription drug benefit– $250 deductible– 50% up to $1,250 per year

• Plan J– “Extended” prescription drug benefit– $250 deductible– 50% up to $3,000 per year

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What to Consider With H, I, or J

• Prescription Drug Coverage– Plans H and I

• Should have at least $2,750 per year in drug costs for maximum benefits

• Cover half your costs after deductible

– Plan J• Should have at least $6,250 per year in drug costs

for maximum benefits

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High Deductible Option

• “High deductible option” on Plans F and J • $1,620 deductible for the year 2002

– Amount can go up each year

• Often cost less– Out-of-pocket costs will be higher– May not be able to change plans

• Additional deductibles– Prescription drugs– Foreign travel

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How Much Does Medigap Cost?

• Depends on– Your age (in some states)– Where you live– Company from which you buy the policy

• Can be big differences in premiums for exactly the same coverage

• Compare the same Medigap policies

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Who Can Buy Medigap?

• Must have Medicare Parts A and B

• May not be able to buy Medigap if under 65

• Medigap policies only work with the Original Medicare Plan– Except under certain circumstances

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Medigap Policy Premiums

• Three ways of pricing policies based on age1. No-age-rated (community-rated)

• Everyone pays same rate

2. Issue-age-rated• Based on age when purchased• Price does not go up automatically as you get older

3. Attained-age-rated• Costs go up automatically as you get older

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What is Underwriting?

• Process to review your health status and medical history

• Company may use information to decide how much to charge for Medigap policy

• Cannot deny coverage or charge more– If you are in Medigap open enrollment period– When you have a special right to buy Medigap policy

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Best Time to Buy Medigap

• Medigap open enrollment period– Lasts for 6 months– Starts on the first day of the month in which

you are both1. Age 65 or older, and2. Enrolled in Medicare Part B

• Once 6 month Medigap open enrollment period starts, it can't be changed

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Waiting to Enroll in Part B

• Medigap Open Enrollment Period starts– Age 65 and enrolled in Part B

• Consider waiting to enroll in Part B– If you or your spouse are working and – You have group health coverage

• Once 6 month Medigap open enrollment period starts, it can't be changed

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Buying a Medigap Policy• Important decision• Shop carefully and follow 6 steps

1. Look at your health care costs for the past

2. Review plans to see what you want/need

3. Find out which companies sell policies in your state

4. Compare costs

5. Choose the policy that is best for you

6. Buy the Medigap policy

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Minnesota, Massachusetts, and Wisconsin

• Standardized plans

• NOT labeled “Plans A to J”

• Offer comparable benefits

• For information– Call your State Insurance Department

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Getting Information

• Call your State Insurance Department

• See if your state has a rate guide or shopper’s guide

• Call your SHIP

• Look on the Internet – www.medicare.gov

• Medigap Compare

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Medigap Compare www.medicare.gov

• Click on “Medigap Compare”– Policies sold in your state– How to shop for a policy– What policies must cover– How premiums are determined– Medigap rights and protections

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If You Want to Know More...

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Pre-existing Condition

• A health problem you had before the date a new insurance policy starts

• Medigap insurance company can refuse to cover health problems for up to 6 months in some cases

• Called a "pre-existing condition waiting period" • Only if your health problem was diagnosed or

treated during the 6 months before the policy started

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Creditable Coverage

“Any previous health coverage you had that can reduce the time you have to wait before your pre-existing health conditions will be covered by a policy you buy during your Medigap open enrollment period”

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Creditable Coverage

• Group health plan• Health insurance policy• Medicare Part A or Part B• Medicaid• IHS or tribal organization• A state health benefits risk

pool

• TRICARE• FEHBP• Public health plan• Health plan under the

Peace Corps Act

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Medigap for Those Under 65

• Medicare due to a disability or ESRD– May not be able to buy a Medigap policy– Right to choose and buy any Medigap policy at

age 65• Companies cannot refuse to sell Medigap because of

disability or other health problem

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Medigap for Those Under 65

• Some states require Medigap be offered to people under 65 with Medicare Part B– Another Medigap open enrollment period at 65

• Some companies sell Medigap policies to people under 65– Policies may cost more

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New Right to Suspend Medigap

• Under 65 and entitled due to a disability– New right to suspend your Medigap policy

• Without penalty, while enrolled in your or your spouse's employer group health plan

– Get your Medigap policy back at any time– You must notify within 90 days of losing your

employer group health plan coverage

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Medigap & Medicare+Choice Plans

• M+C plan enrollees– May not need Medigap– Sometimes not legal for anyone to sell you a

Medigap policy – May keep Medigap policy you already have

• Will not pay coinsurance and deductibles

• May cover services not covered by M+C plan

– Learn about options before making a decision

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Medicare Savings Programs

• Help people with Medicare save money• You can apply for these programs if:

– You have Medicare Part A

– You have limited resources

– You have a limited income• Less than$1,313 per month for an individual or

• Less than $1,762 per month for a couple

• Individual states may have more generous income and/or resource requirements.

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Medigap and Medicaid

• Most health care costs are covered if you have both Medicare and Medicaid

• For information, call your state medical assistance office

• If you have Medicaid, an insurance company can sell you a Medigap policy only in certain situations

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Suspending Medigap

• Right to suspend Medigap while on Medicaid– You do not pay premiums– Policy will not pay benefits– Can suspend a Medigap policy for up to two years– Can start it up again

• Without new medical underwriting or pre-existing condition waiting periods

• Call your State Medical Assistance Office to help you with this decision

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Special Medigap Protections(Guaranteed Issue Rights)

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Medigap Protections

• Also called ‘guaranteed issue’

• Special rights to buy a Medigap policy

– Only in certain situations

• These protections are from federal law

• Many states provide more Medigap protections

• Keep letters, claim denials, postmarked envelopes

• Call your SHIP or State Insurance Department

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Important Message

• Without this protection– Insurance company can refuse to sell you a

policy or charge more for the policy– If you drop Medigap, you may not be able to

get your policy back

• Apply for a Medigap policy early– Choose to start Medigap coverage after your

health plan coverage ends– This will prevent gaps in your health coverage

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Summary of Medigap Protections

• In some situations you have a guaranteed issue– Right to buy a Medigap policy

• In these situations, an insurance company– Can't deny you Medigap coverage

– Can’t place conditions on a policy

– Must cover you for all pre-existing conditions

– Can't charge you more for a policy because of past or present health problems

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Summary of Medigap Protections

• You may have “guaranteed issue” if – Your M+C plan or PACE coverage ends– Your employer group health plan coverage ends– You move out of the plan's service area– You joined a plan when first eligible for Medicare at age 65– You dropped a Medigap policy to join a M+C plan, Medicare

SELECT policy, or PACE program for the first time• You have been in the plan less than a year and want to leave

– Your Medigap coverage ends through no fault of your own– Your plan or insurance company has committed fraud

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Your Rights

• Depending upon your situation, you have a guaranteed right to purchase– Medigap A, B, C, or F

OR– Your previous Medigap policy if available

OR– Any Medigap policy

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If Your M +C Plan Leaves

• Right to buy Medigap plan A, B, C, or F

• Can buy the policy at best premium price

• No review of your medical records even if you have health problems

• Can apply as soon as you get the final notification letter from your plan

• You may have three choices

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3 Possible Choices--#1

1. Switch to another M+C plan in your area– The final notification letter will tell you if there

are other plans available in your area– You will not need a Medigap policy

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3 Possible Choices--#2

2. Leave your M+C plan or PACE program– Any time between the date you get your final

notification letter and when your health coverage ends

– You will automatically return to the Original Medicare Plan

– You have 63 calendar days from the day you leave your plan or PACE program to apply for a Medigap policy

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3 Possible Choices--#3

3. Stay in your plan or PACE program until the date your coverage ends– You will automatically return to the Original

Medicare Plan when your coverage ends– You have 63 calendar days after your health

coverage ends to apply for a Medigap policy

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Important Message When Your Plan Leaves

• Plan will send final notification letter• Keep

– Copy of letter (make sure your name is on letter)– The envelope– Dated copy of Medigap application– Any insurance company denial letters

• If you leave before final notification letter, you may not have “guaranteed issue”

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New ESRD Rights

• Can enroll in another M+C plan if plan terminated or reduced its service area

• Retroactive– Includes those whose enrollment terminated

involuntarily on or after December 31, 1998

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Other Supplemental Insurance

• Group health coverage– Employer– Union– Organization– Association– TRICARE for Life

• COBRA• Understand your benefits and costs

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Information Sources for Medigap

• 2002 Guide to Health Insurance for People with Medicare: Choosing A Medigap Policy

• State Insurance Department• SHIP• Medigap Compare at www.medicare.gov• 1-800-MEDICARE

– (1-800-633-4227)– TTY 1-877-486-2048

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Summary

• Medigap plans – Fill gaps in the Original Medicare Plan– Are standardized

• Medigap “guaranteed issue” protections– Guaranteed through legislation

• Information sources are available

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Centers for Medicare & Medicaid Services