Guide To Health Insurance For People With Medicare


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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 ageing 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 AGEING

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 hospitalised 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 hospitalised 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 non participating physicians. Limiting charge information appears
on Medicare's Explanation of Medicare Benefits (EOMB) form.

Medicare Carrier: An insurance organisation 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
organisation (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 Counselling

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 organisations
and governmental agencies.

You first may want to turn to your state government for help, as all
states now offer insurance counselling in one-on-one confidential sessions
with trained counsellors. 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 counselling office is
listed in the directory of state insurance departments and agencies on ageing
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 enrolment.

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 hospitalised, 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
enrol 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, counselling,
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
specialised 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 enrolees, 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 recognise 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 non participating 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 organisations, all Social Security and Railroad
Retirement Board offices, hospitals, and all state and area offices of the
Administration on Ageing.

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 non participating 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, wilfully, 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 non participating 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
immunisations, 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 itemises 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 organisations
(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 standardisation programs in
effect before the federal legislation standardising 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 standardisation 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 summarise 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 standardised benefit plans, federal law permits states to
allow an insurer to add "new and innovative benefits" to a
standardised 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
enrol 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 enrolment 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 pre existing condition restrictions (see page 19) that
it applies to Medigap policies sold outside the open enrolment period.

Many individuals are enrolled automatically in Pan B as soon as they
rum 65, or they sign up during an initial 7-month enrolment 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 enrolment period
starts as soon as your Part B coverage starts.

Others may delay their enrolment 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 enrolment 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 enrolment 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
enrol in Part B the 6-month Medigap open enrolment period starts and cannot
be extended or repeated.

If you cannot defer Part B enrolment 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 enrolment period. It runs from
January 1 through March 31. If you sign-up during an open enrolment period,
both your Part B coverage and Medigap open enrolment 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 enrolment
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
enrolment. 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 enrolment unless your state requires open
enrolment 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 enrolment 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 standardised 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 standardised 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 pre
existing 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 labour organisation 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 organisations (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 organisations (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 enrol 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 enrol in a plan, you will be asked to provide an assurance that you
will give up the Medigap policy.

Should you enrol 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 enrol 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 enrol 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
enrolees 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 hospitalised, or use other covered services. Medicare's
deductibles and coinsurance do not apply to beneficiaries enrolled in plans
with Medicare contracts.

If you enrol 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 enrol 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 enrol 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 enrol Medicare beneficiaries in the
order of application, without health screening, during at least one open
enrolment 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 pre existing
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 subsidise 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 organisation 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 subsidise 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 dependants. 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 organisations, 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 long term 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 hospitalised 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 centre (FQHC). These facilities are
typically community health centres, migrant health centres and health centres
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 immunisation 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 centres 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 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 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 pre existing 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 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.

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 enrolees can
buy the Medigap policy of their choice without conditions being imposed (see
page 11). Once this open enrolment period elapses, 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 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 organisations 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 hospitalisation 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 AGEING

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 ageing, 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 counselling 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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