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Buying a Medigap Policy

What are my Medigap policy choices? In all but three states (Massachusetts, Minnesota, and Wisconsin), you can buy any one of up to 10 standardized Medigap policies that are sold in your state. Plan A is the "basic" benefit package and is included in all the other plans. Insurance companies must give you the benefits offered under each policy.

Federal law lets states allow an insurer to add "new and innovative benefits" to the benefits in a standardized policy. Check with your insurance company to find out if these benefits are available.

What is Medicare SELECT?

Medicare SELECT is a type of Medigap insurance policy. If you buy a Medicare SELECT policy, you are buying one of the 10 standardized Medigap plans A through J. With a Medicare SELECT policy you need to use specific hospitals and doctors to get full insurance benefits (except in an emergency). For this reason, Medicare SELECT policies generally have lower premiums.

If you do not use a Medicare SELECT provider for non-emergency services, you will have to pay what Medicare doesn't pay. Medicare will pay its share approved charges no matter what provider you choose. Medicare SELECT might not be offered ill your state.

Is there any other important information I need know?

There are many situations when your health coverage changes (like losing your Medicare managed care plan or employer coverage) that can affect what Medigap policies you can buy and when. For more information on your rights to buy a Medigap policy in these situations, see pages 42-61.

What are the basic (core) benefits in all standardized Medigap plans?

Coverage for the Part A coinsurance amount ($194 per day in 2000) for days 61-90 of a hospital stay in each Medicare benefit period.

Coverage for the Part A coinsurance amount ($388 per day in 2000) for days 91-150 of a hospital stay while using Medicare's 60 lifetime reserve days (which you may only use once).

After you use up all Medicare hospital benefits, coverage for 100% of the Medicare Part A eligible hospital expenses. You have this coverage for up to 365 more days of inpatient hospital care during your lifetime. After you use up your Medigap hospital benefits, you may have to pay the full cost of hospital expenses.

Coverage under Medicare Part A and Part B for the reasonable cost of the first 3 pints of blood or equivalent quantities of packed red blood cells per calendar year unless this blood is replaced.

Coverage for the coinsurance amount for Part B services (generally 20% of Medicare-approved amount) after you meet the $100 annual deductible.

For a higher Medigap premium, you can buy extra benefits.

Medigap Extra Benefits

Before you make any decisions about your health care coverage, think about your personal needs. Then, decide if the extra benefits offered are worth the extra premium costs.

Medicare Hospital Deductible Plans B, C, D, E, F, G, H, I, and J

Medigap Plans B through J cover the Medicare hospital deductible, which is $776 in 2000. Keep in mind that the additional cost that you pay in premiums for this benefit is generally less than the cost of paying the hospital deductible. Each time you have to stay in the hospital you will have to pay the deductible if it's the beginning of a new benefit period.

Skilled Nursing Facility Coinsurance Plans C, D, E, F, G, H, I, and J

Plans C through J cover the skilled nursing facility coinsurance, which is $97 a day in 2000. Medicare pays all of the covered costs for the first 20 days of care in a skilled nursing facility. If you are in a nursing facility for more than 20 days, Plans C through J will pay the $97 a day coinsurance for days 21 through 100.

Medicare Part B - Annual Deductible Plans C, F, and J

Plans C, F, and J cover the Medicare Part B deductible, which is $100 per year in 2000.

Foreign Travel - Emergency Plans C, D, E, F, G, H, I, and J

Plans C through J cover foreign travel emergencies. This benefit pays for emergency care outside the United States beginning the first 60 days of each trip. After you meet the $250 deductible, this benefit pays 80% of the cost of your care for up to $50,000 in your lifetime. If you travel, this benefit could save you money for emergency care.

At-Home Recovery Plans D, G, I, and J

Plans D, G, I, and J cover the cost of at-home help with activities of daily living (like bathing and dressing) in addition to Medicare-covered home health visits. You can get this benefit if you are already getting Medicare- covered home health care services. It also covers home health care for up to 8 weeks after skilled care is no longer needed. However, it will not pay more than $40 each visit and $1,600 each year.

Medicare Part B Excess Charge Plans F, G, I, and J

Plans F, G, I, and J cover Medicare Part B excess charges when your doctor charges more than Medicare will pay. These policies pay the difference between your doctor's charge and Medicare's approved amount. Plans F, I, and J pay all of the excess charges. Plan 0 pays 80% of the excess charges. Under federal law, doctors who don't accept "assignment" (take Medicare's approved amount as payment in full) may charge up to 15% more than the Medicare-approved amount (some states have even stricter limits). For example, if Medicare approves $100, your doctor can charge as much as $115. Plan F, I, or J would cover the $15 difference. Plan U would pay you $12 (80% of $15).

Preventive Care Plans E and J

Plans E and J cover preventive care, which is limited to $120 each year. The preventive care benefit helps pay for routine yearly check-ups, serum cholesterol screening, hearing test, diabetes screening, and thyroid function test.

Prescription Drugs Plans H, I, and J

Plans H, I, and J offer some prescription drug coverage. This benefit has a $250 yearly deductible and pays 50% of drug costs that Medicare doesn't cover. It will only pay up to $1,250 a year under Plans H and I, and up to $3,000 a year under Plan J. You may think about this benefit if you have high prescription drug costs. Because it covers half your drug costs after the yearly deductible, to get the full benefit under Plans H and I, you should have at least $2,750 in drug costs in a year (you pay $1,250 plus $250; plan pays $1,250). To get the full benefit under Plan J, you should have at least $6,250 in drug costs in a year (you pay $3000 plus $250; plan pays $3,000). Note: In some states, you may not be able to get policies with a prescription drug benefit unless you enroll during your open enrollment period.

More Information

For more information on Medigap policies on the Internet go to www.medicare.gov. Click on "Medigap Compare."

What should I keep in mind as I shop for a Medigap policy?

As you shop for a Medigap policy, keep in mind that each company's benefits are alike, so they are competing on service, reliability, and price. Compare premiums and make sure that the insurance company is honest and reliable before buying. Insurer rating services look at the financial health of insurance companies. Different rating services use different rating scales. Be sure to find out how the rating service labels its highest ratings and the meaning of the ratings for the companies you are considering. You can get ratings from some insurer rating services for free at most public libraries. Your State Insurance Department can also give you information about the insurance companies (see pages 86-87). You can also use a computer to look on the Internet at www.medicare.gov. Click on "Medigap Compare."