Health Insurance - Top Ten Questions
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Medicare Supplement (“Medigap”) Insurance Coverage
- What companies issue Medigap insurance in New York?
The Department of Financial Services maintains and updates a list of insurance companies that issue Medicare supplement (“Medigap”) insurance policies in the state of New York. The names, addresses and telephone numbers of the insurance companies offering Medigap coverage can be found at http://www.dfs.ny.gov/insurance/caremain.htm. The Department is also available to offer assistance through its toll-free telephone number 1-800-342-3736.
- What Medigap insurance plans are available?
Medicare supplement (“Medigap”) insurance is health insurance that is sold by private insurance companies to cover some of the "gaps" in expenses that are not covered by Medicare. There are twelve standardized plans "A" through L”. Please note that while every Medigap insurer offers both Plan A and Plan B, not every company offers all 12 standardized plans. Each standardized Medigap policy must provide the same basic core benefits such as covering the cost of some Medicare copayments and deductibles. Some of the standardized Medigap policies also provide additional benefits such as at-home recovery care, foreign travel and emergency care. Until December 31, 2005, an outpatient prescription drug benefit is available in some of the standardized Medigap policies.
In order to be eligible for Medigap coverage, you must be enrolled in both Part A and Part B of Medicare. New York State law and regulation require that any insurer writing Medigap insurance must accept a Medicare enrollee’s application for coverage at any time throughout the year. Insurers may not deny the applicant a Medigap policy or make any premium rate distinctions because of health status, claims experience, medical condition or whether the applicant is receiving health care services. However, eligibility for policies offered on a group basis is limited to those individuals who are members of the group to which the policy is issued.
- What are the “core” benefits offered in the Medigap
Medigap plans A-J include the following basic “core” benefits:
- coverage of Part A Medicare eligible expenses for hospitalization to the extent not covered by Medicare from the 61st day through the 90th day in any Medicare benefit period;
- coverage of Part A Medicare eligible expenses incurred for hospitalization to the extent not covered by Medicare for each Medicare lifetime inpatient reserve day used;
- upon exhaustion of Medicare hospital inpatient coverage, including the lifetime reserve days, coverage of 100 percent of the costs incurred for hospitalization expenses of the kind covered by Medicare and recognized as medically necessary by Medicare, subject to a lifetime maximum benefit of an additional 365 days;
- coverage under Medicare Parts A and B for the reasonable cost of the first three pints of blood; and
- coverage for the coinsurance amount, or in the case of hospital outpatient department services paid under a prospective payment system, the copayment amount, of Medicare eligible expenses under Part B regardless of hospital confinement, subject to the Medicare Part B deductible.
- What do Medigap plans K and L cover?
Plans K and L include coverage of similar services as plans A-J, but you are responsible for more of the cost-sharing until you reach the annual out-of-pocket limit. Under plans K and L, once you reach the out-of-pocket annual limit, the plan pays 100% of the Medicare copayments, coinsurance, and deductibles for the rest of the calendar year. The out-of-pocket annual limit does NOT include charges from your provider that exceed Medicare-approved amounts, called “Excess Charges”. You will be responsible for paying excess charges.
For 2006, the annual out-of-pocket limit is $4000 for plan K and $2000 for plan L, and may increase for inflation annually.
- How much are the premiums?
Medigap plans vary by the premium rates charged. While the benefits offered under each Medigap plan are standardized, the premium rates charged for coverage under the plans vary by insurance company. Premium rates charged by an insurance company for a specific Medigap plan may only vary by geographic region.
Medicare supplement insurance premium comparison tables can be found at http://www.ins.state.ny.us/caremain.htm.
- Can Medicare Supplement insurance policies impose a pre-existing condition limitation?
Medigap policies may contain up to a six (6) month waiting period before pre-existing conditions are covered. A pre-existing condition is a condition for which medical advice was given or treatment was recommended or received from a physician within six months before the effective date of coverage. However, under New York State regulation, the waiting period may be either reduced or waived entirely, depending upon your individual circumstances. Medigap insurers are required to reduce the waiting period by the number of days that you were covered under some form of "creditable" coverage so long as there were no breaks in coverage of more than 63 calendar days. Coverage is considered "creditable" if it is one of the following types of coverage:
- A group health plan;
- Health insurance coverage;
- CHAMPUS AND TRICARE health care programs for the uniformed military services;
- A medical care program of the Indian Health Service or of a tribal organization;
- A State health benefits risk pool;
- Federal Employees Health Benefits Program;
- A public health plan;
- A health benefit plan issued under the Peace Corps Act; and
- Medicare supplement insurance, Medicare select coverage or Medicare Advantage plan (Medicare HMO Plan).
* Credit for the time that a person was previously covered under Medicare shall be required only if the applicant submits an application for Medigap insurance prior to or during the six month period beginning with the first day of the first month in which an individual is both 65 years of age or older and is enrolled for benefits under Medicare Part B.
NOTE: New York’s Open Enrollment and Portability provisions protect you whether you are Medicare eligible by reason of age or disability. The provisions also apply to Medicare beneficiaries with end stage renal disease.
- What is Medicare Select?
Medicare Select is a type of Medigap policy that requires insureds to use specific hospitals and in some cases specific doctors (except in an emergency) in order to be eligible for full benefits. Other than the limitation on hospitals and providers, Medicare Select policies must meet all the requirements that apply to a Medigap policy. Medicare Select policies may have lower premiums because of this requirement.
When you use the Medicare Select network hospitals and providers, Medicare pays its share of approved charges and the insurance company is responsible for all supplemental benefits in the Medicare Select policy. In general, Medicare Select policies are not required to pay any benefits if you do not use a network provider for non-emergency services. However, Medicare will still pay its share of approved charges no matter what provider you use.
The availability of Medicare Select coverage is limited to the geographic areas of the state serviced by the particular policy’s network of hospitals and doctors.
A list of insurance companies offering Medicare Select insurance is provided at http://www.ins.state.ny.us/caremain.htm.
- What is Medicare Advantage?
The Medicare Advantage (formerly Medicare + Choice) program is administered by the federal Centers for Medicare and Medicaid Services (CMS). Medicare Advantage plans are managed care plans and are available in many areas. If you have one of these plans, you do not need a Medigap policy. Medicare Advantage plans contract with Medicare to provide all of the benefits of Medicare and may also provide extra benefits like vision coverage.
Medicare Advantage plans include:
- Medicare Managed Care Plans
- Medicare Preferred Provider Organization Plans (PPO)
- Medicare Private Fee-for-Service Plans
- Medicare Specialty Plans
To join a Medicare Advantage Plan, you must have Medicare Part A and Part B. You will have to pay the monthly Medicare Part B premium to Medicare. In addition, you might have to pay a monthly premium to your Medicare Advantage Plan for the extra benefits that they offer.
- How does Medicare Part D affect Medigap plans H, I and J after December 31, 2005?
Starting January 1, 2006, Medicare will offer insurance coverage for prescription drugs through Medicare prescriptions drug plans and other health plan options. The program is called Medicare Part D. The outpatient prescription drug benefit in Medigap plans H, I and J will not be included in plans sold after December 31, 2005. However, if you are currently enrolled in a Medigap plan H, I or J, you may keep it with the prescription drug coverage if you chose not to enroll in Medicare Part D. For more information about Medicare Part D, call 1-800-MEDICARE or go to http://www.medicare.gov.
- Do I need to buy a Medicare Supplement insurance policy?
Review any potential insurance coverage carefully. Compare it with all health coverage you now have and evaluate the need for coverage that may duplicate existing coverage. If you have coverage through an employer or former employer, it may be more comprehensive coverage.
If you enroll in a Medicare supplement insurance policy, it will provide thirty (30) days within which you may decide without cost whether you desire to keep the policy. Terminate other insurance coverage only if, after due consideration, you find that the purchase of the Medicare supplement insurance policy is a wise decision.