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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 and

the 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-administerable prescription

     drugs or immunizations, except for pneumococcal, 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 providers

outside 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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