Briefly, Medicare is a federal health insurance program for people 65 and over and the disabled of any
age. Under Medicare Part A, the federal government will pay a portion of your expenses for
hospitalization, skilled nursing facility care or Hospice care (not long term care). Medicare Part B will pay
a portion of medical expenses such as charges made by doctors, therapists or ambulances, and the cost
of laboratory tests.
For each medical service Medicare covers, there is some part Medicare DOES NOT PAY: Medicare Part A (hospitalization) and Medicare Part B (medical expenses) each has a deductible (the amount you must pay before Medicare will begin paying). After paying the applicable deductible, you must also pay a portion of the hospital or medical expenses called, “co-insurance” or “co-payment” (the portion of the expense you are responsible for paying). Medicare Supplemental policies (also known as Medigap policies), are designed to cover some of the gaps in the Medicare coverage. In July 1992, Congress passed legislation creating federal standards for Medicare Supplement insurance policies. As a result of “standardization,” comparison shopping for insurance benefits is relatively easy. However, since most health insurance sold to seniors is sold by insurance agents in the home of the purchaser, it is easy to forget that the purchase of insurance is a business transaction.
Whether you need more health insurance is a decision that only you can make. If you decide to buy more insurance, shop carefully and buy a policy that you can afford and offers the benefits you think you need most. Here are some helpful tips written by James Amaro- who owns an Austin auto accident firm and is an insurance expert- for you to keep in mind when 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 can be expensive and generally is unnecessary. A single comprehensive policy is better than several policies with overlapping or duplicate coverage. Federal law prohibits an insurer from selling you a second Medigap policy unless you state in writing that you intend to cancel the first policy after the replacement policy goes into effect. Recent changes in the law affect beneficiaries who get help from the state through its Medicaid program in paying their health care costs. Anyone who sells you a policy in violation of the various 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 a managed care plan, buying a Medigap policy, or buying a long-term care insurance policy.
Check For Pre-existing 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. Pre-existing conditions are generally health problems you saw a doctor about within the 6 months before the date the policy went into effect.
If you have had a health problem, the insurer might not cover you for expenses connected with that problem. Medigap policies, however, are required to cover pre-existing conditions after the policy has been in effect for 6 months. Some companies have shorter waiting periods before covering a pre-existing condition.
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 for 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 whether and to what extent any pre-existing 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. You have 30 days to decide.
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.
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 tactic 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.
Policies to Supplement Medicare Are Neither Sold Nor Serviced by the State or Federal Governments
State insurance departments approve policies sold by private insurance companies, but approval only means the company and policy meets 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 sales people will not rush you. If you are not certain whether a policy is what you need, 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 special conditions being imposed. Once this open enrollment period ends, you may be limited as to the Medigap policies available to you, especially if you have a pre-existing health condition.
If You Decide To Buy, Complete the Application Carefully
Do not believe an insurance agent who says 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.