Comprehensive Overview of Medigap Policies and Medicare-Approved Drug Discount Cards

2005 REACH National Medicare Training Program

Medigap Module 3

Session Topics MMA • Overview • Medicare-approved drug discount cards • Medigap benefits • Medigap plans • Medigap costs • More information

Session Topics • Overview • Medicare-approved drug discount cards • Medigap benefits • Medigap plans • Medigap costs • More information

Overview What Is a Medigap Policy? • Policy sold by private insurance company • Fills the “gaps” in Original Medicare Plan • Currently 10 standard plans called A to J • Set of standard benefits for each standard plan • New and/or revised standard plans in 2006 • Costs may vary MMA

Overview What Is A Medigap Policy • Helps pay costs with Original Medicare • Don't need a Medigap policy if in • Medicare Managed Care plan • Private Fee-for-Service plan • Can go to any doctor, hospital, or provider • Unless you have a Medigap SELECT policy M+C plans or Medicare Advantage

Overview Medigap Is Not • Coverage you get from employer or union • A Medicare Managed Care plan • Like an HMO • A Private Fee-for-Service plan • Medicare Part B • Medicaid

Overview Who Can Buy Medigap? • Must have Medicare Parts A and B • May not be able to buy Medigap if under 65 • Medigap policies only work with the Original Medicare Plan • Except under certain circumstances

Overview Medigap & Medicare Advantage Plans • Medicare Advantage (formerly M+C) enrollees • May not need Medigap • Not legal to sell you a Medigap policy • May keep a Medigap policy you already have • Will not pay coinsurance and deductibles • Policy may provide little benefit • Learn about options before making a decision

Drug Discount Card Medicare-ApprovedDrug Discount Cards • New discount cards available for people with Medicare • Except those with outpatient prescription drug coverage through Medicaid • Cards have Medicare-approved seal • Cards help save on prescriptions • Other discount programs may also save money • Important to compare cards and programs • Some people may be eligible for up to a $600 credit annually

Drug Discount Card Discount Card Overview • This new program is • Voluntary • Temporary • An important first step • The program will provide • Access to discounts • Up to a $600 credit annually for those who qualify • Based on income and other drug coverage

Drug Discount Card $600 Credit Eligibility • Eligibility for $600 credit • Entitled to or enrolled in Part A and/or enrolled in Part B • No other health insurance with prescription drug coverage (except M+C or Medigap) • Income of $12,569 or less if single • Income of $16,862 (combined) or less if married • New levels will be available in February 2006

Medigap Benefits Why Do You Need Medigap? • Original Medicare does not pay all health care costs • Medigap policy may help you • Lower your out-of-pocket costs • Get more health insurance coverage

Medigap Benefits What to Consider • Whether your doctor accepts “assignment” • How often you need health care • What type of health care you need • Which Medigap policy you buy • Whether you have other health insurance

Hospital Stays Skilled Nursing Blood $912 deductible for days 1-60 $228 per day for days 61-90 $456 per day for days 91-150 Up to $114 for days 21-100 First 3 pints if not replaced Medigap Benefits Gaps in Original Medicare Plan What you pay for in2004

Part B Deductible Part B Services $110 per year 20% for most covered services 50% for outpatient mental health Outpatient copayments Medigap Benefits Gaps in Original Medicare Plan What you pay for in2005 (cont.)

Medigap Benefits What Do Medigap Policies Cover? • Basic core benefits (included in all plans) • Part A coinsurance for inpatient hospital care • Cost of 365 extra days of inpatient hospital care • Part B coinsurance • First 3 pints of blood each year • Most plans have additional benefits

Medigap Benefits Other Medigap Benefits • Some Medigap policies cover • Routine yearly check-ups • At-home recovery • Medicare Part B excess charges (limiting charge) • And more

Medigap Benefits Items Not Covered • Long-term care • Vision and dental care • Hearing aids • Private-duty nursing

Let’s look at a case study… Jonathan is a 65-year-old Medicare beneficiary who is enrolled in Original Medicare Parts A and B. He has a Medigap policy and thinks the first 3 pints of blood each year are covered by his Medigap policy. Is he correct? What are some core Medigap benefits?

Medigap Plans Specific Medigap Plans • Plans with prescription drug coverage (plans H, I, J) • Medicare-approved drug discount cards • Also offer help with prescription drug costs • Not a Medigap plan • High deductible plans (plans F, J) • Medicare SELECT MMA

Medigap Plans 2004 Prescription Drug Coverage • Plans H and I • “Basic” prescription drug benefit • $250 deductible • 50% up to $1,250 per year • Plan J • “Extended” prescription drug benefit • $250 deductible • 50% up to $3,000 per year

Medigap Plans What to Consider With H, I, or J • Plans H and I • You should have at least $2,750 per year in drug costs for maximum benefits • Cover half your costs after deductible • Plan J • You should have at least $6,250 per year in drug costs for maximum benefits

Medigap Plans Medigap Plans H, I, and J in 2006 • On or after 1/1/06 may not be • Sold • Issued • Renewed • Policy can be renewed if modified to exclude drug coverage or if you do not enroll in a Medicare prescription drug plan MMA

Medigap Plans High Deductible Option • “High deductible option” on plans F and J • $1,690 deductible for 2004 • Amount can go up each year • Often cost less • Out-of-pocket costs will be higher • May not be able to change plans • Additional deductibles • Prescription drugs • Foreign travel

Medigap Plans Medicare SELECT • Type of Medigap policy • One of 10 current Medigap plans A to J • Use specific hospitals and doctors to get full benefits • Except in an emergency • Generally cost less • Might not be offered in your state • If you have SELECT, can switch to Medigap of same or lower value

Medigap Plans Minnesota, Massachusetts, and Wisconsin • Standardized plans • NOT labeled “Plans A to J” • Offer comparable benefits • For information • Call your state insurance department

Medigap Costs How Much Does Medigap Cost? • Depends on • Your age (in some states) • Where you live • Company selling the policy • Can be big differences in premiums for exactly the same coverage • Compare the same Medigap policies

Medigap Costs Medigap Policy Premiums • Three ways of pricing policies based on age 1. No-age-rated (community-rated) • Everyone pays same rate 2. Issue-age-rated • Based on age when purchased • Price does not go up as you get older 3. Attained-age-rated • Costs go up automatically as you get older

Medigap Costs What is Underwriting? • Review of health status and medical history • Insurance company determines • Whether to accept your application • How much to charge you • Whether to make you wait for some benefits • You usually answer medical questions • Fill out the application carefully

Medigap Costs Buying a Medigap Policy • May be able to buy a policy any time • Best time is during open enrollment period • Lasts for 6 months • Starts on the first day of the month you are • Age 65 or older AND • Enrolled in Medicare Part B • Once 6-month Medigap open enrollment period starts, it can't be changed

Medigap Costs Waiting to Enroll in Part B • Medigap open enrollment period starts • Age 65 and enrolled in Part B • Consider waiting to enroll in Part B • If you or your spouse are working and • You have group health coverage • Once 6-month Medigap open enrollment period starts, it can't be changed

Medigap Costs Buying a Medigap Policy • Important decision • Shop carefully and follow five steps • Look at which benefits best meet your needs • Find out which insurance companies sell Medigap policies in your State • Call the companies and compare costs • Choose the best Medigap policy for you • Buy the Medigap policy

Let’s look at a case study… It is October 1, 2004, and Sam (who is 65) wants to buy a Medigap policy. He needs to know if he is in his open enrollment period. He looks at his Medicare card. His Medicare Part B coverage started August 1, 2004. Is Sam in his open enrollment period?

More information Getting Information • Call your state insurance department • See if your state has a rate guide or shopper’s guide • Call 1-800-MEDICARE • Call your SHIP • Visit www.medicare.gov

Local Information

Medigap in Detail

Session Topics • Medigap coverage • Under age 65 • Medigap & Medicaid • Guaranteed issue • More information

Medigap Coverage Pre-existing Condition • A health problem you had before the date a new insurance policy starts • Medigap insurance company can refuse to cover health problems for up to 6 months in some cases • Called a "pre-existing condition waiting period" • Only if your health problem was diagnosed or treated during the 6 months before the policy started

Medigap Coverage Prior Creditable Coverage • Previous health coverage that reduces the time you have to wait before pre-existing health conditions are covered by a policy you buy during your Medigap open enrollment period • With no break in coverage over 63 days

Union/employer GHP Health insurance policy Medicare Part A or B Medicaid IHS or tribal organization A state health benefits risk pool TRICARE FEHBP Public health plan Health plan under the Peace Corps Act Medigap Coverage Types of Prior Creditable Coverage

Let’s look at a case study Harry is 65 and has heart disease. His Medicare Part A and B started November 1, 2003. Before that date, he had no health insurance coverage. On March 1, 2004, Harry buys a Medigap policy. His Medigap insurance company refuses to cover his heart disease condition for 6 months (the pre-existing condition waiting period). Does Harry have prior creditable coverage?

Session Topics • Medigap coverage • Under age 65 • Medigap & Medicaid • Guaranteed issue • Other supplemental insurance • More information

Under age 65 Medigap for People Under 65 • Medicare due to a disability or ESRD • May not be able to buy a Medigap policy • Right to choose and buy any Medigap policy at age 65 • Companies cannot refuse to sell Medigap because of disability or other health problem • 6-month open enrollment period

Comprehensive Overview of Medigap Policies and Medicare-Approved Drug Discount Cards