10 Hidden Pitfalls to Avoid, By Bob DeWittPresident of Southwest Senior Benefits

Medicare Supplement Shopping:

By Bob DeWitt

President of Southwest Senior Benefits Office: 512-527-9105 | Email: Info@SouthwestSeniorBenefits.com

Let me tell you the worst feeling in the world.

For me, it’s helplessness. It’s when I realize that its too late to help - and there’s nothing I can do.

For many of my clients, when I first met them they were paying too much in either their Medicare Supplement premiums or in their medical expenses because they: •

Didn’t have a plan

•

Had the wrong plan

•

Were paying too much for the right plan or

•

Didn’t understand how their plan worked.

Here’s the worst part. In some cases, my help came too late. They had already missed an important one-time-only enrollment period or had to pay thousands of dollars in medical bills. I don’t want this to happen to you.

You’ve Got to Get This Right…

It’s the reason I wrote this report. I’d like to help you understand a couple of very important concepts - and avoid a couple of very big pitfalls - with your Medicare planning.

Then, I’ll give you some ideas on how to take this knowledge and partner with a trusted agent who focuses on your needs and helps you implement your plan.

I’m going to assume that you have a basic understanding of Medicare and Medicare Supplements. (If you’d like a quick refresher, I’ve included a short summary in the appendix that you might want to read first.)

Also, understand that Medicare has very strict rules on marketing. Please note that I am not an employee of Medicare nor is this a Medicare-endorsed document. Official Medicare documentation can be found at www.Medicare.gov. The information presented here are my opinions only. Let’s begin.

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Medicare Supplement Shopping: Table of Contents

1

Thinking I don’t need a supplemental policy

4

2

Assuming that timing doesn’t impact price

6

3

Believing that if the plans are all the same, then the premiums will be the same

7

4

Thinking a bigger company is better

8

5

Assuming that I can always switch companies to save money

9

6

Expecting that an online quote is a way to avoid agents from calling you

11

7

Thinking that pre-existing conditions don’t matter

12

8

Thinking that there are never any problems with Medicare Supplements

13

9

Believing that I don’t need a Medicare Part D Drug Coverage

14

10

Presuming that all agents provide the same service

15

Appendix

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A Brief Description of How Medicare and Medicare Supplements Work

17

Medicare Supplement Plan Components

18

An Overview of the ‘Modern’ Medicare Supplement Plans

19

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1

Thinking I don’t need a supplemental policy Before we discuss Medicare Supplements, let’s

have paid the first $40 and Medicare would pay

first talk about one of the alternatives you may be

the remainder for the first 60 days.

considering. You do have the option of simply us-

• In 1990, this deductible had soared to $592.

ing Medicare Part A and Part B for your health in-

• In 2010, the deductible will reach $1,100 with no

surance. After all, Part A provides hospital coverage and Part B provides medical insurance, right?

And

end in sight.

a Medicare supplement policy is designed to fill in the gaps of approved Medicare claims that Medicare

The Rising Costs of Part

Part A and B don’t cover. So, the reasoning goes,

A Deductable

why should you pay the extra money for a supplement if you are healthy and your annual medical bills are almost non-existent?

Well, you need to factor in a couple of risks to put this alternative in perspective.

First, the co-pays and deductibles for Medicare part A and part B are skyrocketing through the roof.

Consider, for example:

YEAR

1966

1990

2010

• In 1966 the Medicare Part A deductible for hospi-

As you can see, this means that you will continually

talization was set at $40, meaning that you would

have to pay more out of your own pocket if you only have Medicare part A and part B.

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The Real Risks If the risk was just one big deductable a year, then the

It continues to get worse. With just Medicare Part A

strategy of having just Medicare Part A and B may

and B coverage, you are also responsible for the ad-

still be viable. But its not! The number of days that

ditional co-payments that are based on the amount

Medicare covers care in hospitals and skilled nursing

of time you stay per visit. In the previous example,

facilities is measured in benefit periods - not annual

we assumed that each hospital stay was only a cou-

periods.

ple of days. Let’s now assume that your first hospital

This is slightly confusing, so allow me to

explain.

stay was extensive … and you were in the hospital for 4 months. Here’s a quick rundown of what that hos-

A benefit period begins on the first day you receive

pital stay will cost you for 2010:

services as a patient in a hospital or skilled nursing facility, and ends after you leave the hospital or

Timeframe

Cost

Days 1 thru Day 60

$1,100

number of benefit periods you can have are unlim-

Days 61 thru Day 90

$275 a day … or $8,250

ited. This means that you could have several benefit

Days 91 thru Day 120

$550 a day … or $16,500

skilled nursing facility and do not receive skill care at any other facility for 60 consecutive days. The

periods in one year with each benefit period having its own deductible.

Total Out-of-Pocket Costs from this one hospital stay: $25,850

To better illustrate this, let’s use an example: • Let’s say you have a bad year and go to the hos-

(Note: Almost all hospital stays are shorter than this

pital with pneumonia in January. That is your first

but my goal is to give you an example so you under-

benefit period and first deductible.

stand the risks. From this perspective, my example

• Then you return in April with a broken hip. New benefit period, second deductible.

• Then in August, you have a bronchial problem. Third benefit period, and third deductible, and so on.

doesn’t include possible excess doctor costs, normal follow up doctor visits costing an additional 20%, etc. Not to scare you, but I could make this example sound much worse!)

The end result is that you’d be responsible for several

The question now becomes, what would these large

$1,100 deductibles in just one year if you were in and

hospital bills do to your financial security during your

out of the hospital several times. This may not seem

retirement years where every penny counts? For the

likely for you right now, but for many seniors, three

most part, Medicare supplement insurance largely pro-

hospital admissions during a year are not uncommon.

tects you from this type of risk and this is why so many seniors choose to have one.

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2 Assuming that timing doesn’t impact price

The best time to buy a policy is during your Medicare Supplement Open Enrollment Period. This is during a six-month period starting the date you first enrolled in Medicare Part B and when you are age is 65 or older. During this period, you have the right to buy a Medicare supplement policy of your choice, at a preferred rate, without being denied insurance based on pre-existing conditions.

To restate this, you cannot be turned down or charged higher premiums because of poor health as long as you buy your policy during this period. Once your Medicare supplement open enrollment period ends however, Medicare supplement companies are allowed to accept you or reject you based on your health, which could significantly limit your options.

Warning – if you have some significant health issues and you miss signing up for a Medicare supplement policy with a preferred rate during this time period – you could pay over $1,000 a year more for the exact same policy … for years to come.

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3

Believing that if the plans are all the same, then the premiums will be the same

One of the biggest money saving tips that I can offer you is... you must make a habit of reviewing your policy and checking prices each and every year! Let me tell you a quick story to put this in perspective.

The $2,184 Dollar Mistake I recently received a call from a couple who asked me to do a cost comparison on their Medicare Supplement policies. They both recently had turned 65 and each had purchased a Plan F policy from a very well known company. Together, their two policies cost $4,536 dollars a year.

Medicare supplement plans are all highly regulated by the federal government. There are 12 different

We discussed their current situation to make sure

plans and they are all standardized, meaning Plan F

that they had the plan that was best for them. Then,

from one company is exactly the same as plan F from

I ran their information through my system and found

the other company. There are no differences in the

that they both could get the same exact same Plan F

core benefits – none!

coverage for only $2,352 dollars a year - for a combined annual savings of $2,184!

However, there is something you should know. Most busy people buy a policy, throw it in a drawer and

When they heard the price for the same exact policy,

forget about it, assuming that if the plans from com-

they couldn’t believe it. They actually asked me to

peting companies are all the same, then all the rates

check the rates again! Neither of them could get over

will be about the same.

how much of a difference there could be between insurance companies for basically the same exact

Wrong!

coverage.

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4 Thinking a bigger company is better

I often ask my new clients why they origionally chose

hospital submits your medical invoices to Medicare

their particular Medicare Supplement company. The

first - and not to your Medicare supplement compa-

two top responses are:

ny. if Medicare deems that the medical bill should be

• “I know/liked the brand name” and

paid, Medicare will pay their portion of the bill and

• “I assumed that a larger insurance company will

then request payment from the Medicare supple-

do a better job in paying my medical bills than

ment insurance company on your behalf.

a smaller, lessor known Medicare supplement Again, for the most part, the Medicare Supplement

company.”

Unfortunately, many of these brand name insurance companies will charge a hefty premium for their plans, knowing that many seniors will sign up with them simply because they recognize their name.

company has relatively little influence on how your medical bills get paid. Generally, there is no more risk in going with a smaller company than a well-known company.

(If, in the rare case that your Medicare

Supplement Company does stop servicing your

Don’t be fooled.

We’ve all heard the hor-

state, you’d be issued a special enrollment period to

ror stories of some mean insurance company deny-

move to another company.) The bottom line is don’t

ing someone’s aunt coverage. Well the good news is

allow company branding or company size to influ-

that the Medicare system is different. Your doctor or

ence you in paying significantly higher rates.

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5

Assuming that I can always switch companies to save money

Within the past two years, have you been diagnosed with or treated for: • cancer • stroke • heart attack • ALS (also known as Lou Gehrig’s Disease) • Multiple Sclerosis • Parkinson’s

Most all Medicare supplement companies tend to

• Alzheimer’s

raise their premiums every year. It’s an unfortunate fact of life. Sometimes their rate increases will only

In addition, you’ll be asked if you use insulin for dia-

be a couple dollars but I’ve also seen rate increases

betes or if you use oxygen.

of 20% or more.

When this happens, you’ll want

to check alternative Medicare supplement rates and

If you still have your good health and can answer “no”

switch your policy to a different company and save

to these questions then you can likely switch compa-

money.

nies and save money.

The key though in being able to switch is having rela-

But, take a moment and look at that list of illnesses

tively good health. Most Medicare supplement com-

again - the chances are that you may be diagnosed with

panies will ask you health related questions before

one of those illnesses sooner or later. It’s another rather

they accept you. Here are some of the typical ques-

unfortunate truth about getting older – we tend to get

tions you will encounter:

sick more often.

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Here is the pitfall. Let’s say you have Medicare sup-

confirm that they are in the best plan possible and

plement plan C. It’s a good plan but it doesn’t have

at the lowest price. It doesn’t take long and it is well

all the benefits that Medicare supplement plan F has.

worth the peace of mind to know you’re getting the

You first selected that plan because it was saving

best healthcare at an affordable price.

you a couple dollars in premiums per month.

Your

premiums have been constantly rising but you just

Let me make sure you understand the impact of all

haven’t gotten around to comparing prices.

this. When you get sick, you may get ‘locked in’ to the supplement plan you’re currently in as well as

Now, you become sick with one of the illnesses listed

locked in to the supplement company you’re cur-

above. When this happens, you will not be able to shop

rently with because you won’t have any other cost-

rates and switch for a lower-priced plan C policy be-

effective choices. (Sure, there are a couple of other

cause the other insurance companies offering preferred

companies that will still accept you – rates will typi-

rates will typically not accept you..

cally be much higher, so it doesn’t make much sense to jump.)

If you want to move to plan F, you may have to pay hundreds of dollars more per year by moving to a

Thus, the unfortunate truth is you always need to be

supplement company that offers community rates -

looking out for the plan that is best for you and with

not preferred rates. This is why I check my clients’

the one that is offered at the lowest possible price

circumstances and supplement plans every year to

because you never know when you’ll be diagnosed with an illness that will stop you from changing.

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6

Expecting that an online quote is a way to avoid agents from calling you

Nowadays, you can search for almost anything on the Internet. One of them is a Medicare supplement price quote. Most of the companies offering this service will promise you a free rate comparison when you visit their site, but this is where you have to be careful. They will often have you fill out an online form to request your “free� quote - and then sell your name simultaneously to 3 to 5 different insurance agents who will then bombard you with phone calls.

Medicare has very specific rules about telephone solicitation. But since you gave up your phone number, these companies can get around this rule - even when all you wanted was just an e-mail reply. I know, ugh.

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7 Thinking that preexisting conditions don’t matter.

Pre-existing conditions is another issue you need to be aware of. While it makes sense to switch supplement plans to save money, you have to be. Medicare has a series of rules that specifically cover pre-existing conditions when you switch from one Medicare supplement company to another. It’s based in part on the time frame of how long you held your previous Medicare supplement plan. If your policy falls within in this time frame, you may be forced to go through a waiting period before your coverage for these pre-existing conditions begin. (In this case, it is much wiser to stay with your existing plan until this time period expired.)

There are other rules and enrollment periods that pertain when moving from an advantage plan to a supplement plan so you should keep these considerations in mind when deciding to stay or move plans. This is one of the areas I always check when we do my initial discussions with clients.

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8

Thinking that there are never any problems with Medicare Supplements

Here’s an example. Suppose you are in the hospital on a Friday morning, and hospital personnel tell you that you’ll be released that afternoon. You find this incredible because you don’t feel like you are ready to be released.

In essence, the hospital wants to

‘treat you and street you’. What would you do?

Well, there’s a specific organization in your area that you and your agent, should call - pronto. Called the QIO (the Quality Improvement Organization) it is a group of practicing doctors and other health care

Medicare is in financial trouble – we’re reading about

experts that’s part of your Medicare appeal process.

it in the news every day. I recently read a report from

They are contracted by Medicare regionally through-

the president of NAMSA (the National Association

out the United States. If you appeal to the QIO be-

of Medicare Supplement Advisors) stating that the

fore being discharged, the hospital cannot force

percentage of medical invoices being automatically

you to leave before they make a decision on your

rejected by Medicare is rising. There are many rea-

situation.

sons for this; just realize that the screws within the system are tightening and that you may experience

This little known law allows you the right to stay in the

more Medicare related issues in the future.

hospital, without charge, until noon the day after this review committee has made its decision on whether the

It is now becoming more important that your agent

planned discharge was appropriate or not. Hopefully,

is able to help you not only with pricing but with

you’ll never have reason to use them. It’s good know-

your Medicare related issues when they arise.

ing that they’re available for you if you do.

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9

Believing that I don’t need a Medicare Part D Drug Coverage

financial penalty for late enrollment that is equal to one percent of the average out-of-pocket premium that are paid per month. Right now the average Part D premium is around $31, so the penalty today would be approximately an additional 31 cents for every month that you waited to enroll. Not a big deal, but note that this financial penalty for late enrollment is permanent and will follow you for the rest of your life.

The last component that you need to take care of is picking up a Medicare Part D prescription drug plan

2) Your bigger risk in waiting is that Part D plans

to go along with your supplement.

have a limited annual enrollment period. This can create a possible delay between when you need

Don’t ignore this step. My younger and healthier

your prescriptions filled to when your prescription

Medicare clients often ask me why they should enroll

drug coverage begins. This lag period can be nine

in a Part D drug plan and pay the monthly premi-

months or longer – during which you’ll typically have

um – especially if they aren’t taking any prescription

to pay the retail price for your more expensive pre-

drugs. It seems to them that it makes better sense

scription drugs. Depending on the drugs your need,

to wait to enroll when they start taking medications.

your monthly costs could be hundreds of dollars per month during this waiting period.

You have two risks if you choose not to enroll immediately:

In a recent study, The Robert Wood Johnson Foundation evaluated these risks and their findings suggest that, in

1) Your Part D premiums are based in part on when

general, it’s best to enroll in part D as soon as you are

you enroll in a prescription drug plan. There is a

eligible.

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Presuming that all agents provide the same service

• Do you also handle Medicare Advantage plans – and which ones?

• Have you participated in any advanced Medicarerelated training?

• How many clients do you have on Medicare supplement plans?

• What is your process for handling Medicare related problems when they arise?

• Can I speak to one of your existing clients about the level of service they’ve received?

One of your key tasks will be deciding on whom you want to work with. To implement this plan, you need

During your initial Medicare supplement-planning

to find an agent who is independent, is contracted

meeting, your agent should lightly interview you to

with a large number of Medicare supplement com-

understand what you do know and don’t know about

panies and who has a process in place to find you

this process. Part of his role is then educating you

the lowest rate that you qualify for. In addition, it

on some of the relevant Medicare concepts you’re

should be someone who you feel comfortable with

not familiar with so that you understand the process.

as a partner - who will watch out for your best inter-

He should also have a method in place to keep you

ests, keep you updated on the changes occurring to

abreast of the upcoming Medicare changes and what

Medicare and whom you can trust to lean on when

affects they may have on you. Our agency sends our

Medicare related issues arise. Some great questions

clients a quarterly newsletter for general updates

to ask your potential advisor include:

and uses follow up phone calls to clients when the

• How many supplement companies do you repre-

information is pertinent to them.

Knowing what

sent? (In most markets there are at least 25 differ-

your agent’s ongoing update process is an important

ent companies),

component of the partnership.

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I hope this report has given you good ‘food for thought’ as you plan for your Medicare benefits.

Of course, as my favorite uncle was fond of saying, “We reap the benefits of what we actually do, not what we plan on doing someday when we’re not so busy.”

If you’re serious about taking a look at your Medicare plan and implementing a process that can continuously provide you with the lowest rates – not only today but in the future, please contact us to discuss how we can help you - quickly and easily.

I really appreciate your interest in our work and wish you much success with your health, your happiness and your Medicare plan.

Best regards, Bob DeWitt

About

the Southwest Senior Benefits

Southwest Senior Benefits is an insurance agency and financial planning organization in Austin Texas that’s dedicated to helping seniors. Our belief is that seniors need pertinent and timely information in order to make the right decisions for themselves. This free report is one example in how we try to provide value to our clients.

If you want to explore your Medicare supplement options or get answers to questions that came up while reading this report, please get in with touch with us: Office: 512-527-9105 Email: Info@SouthwestSeniorBenefits.com

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Appendix A Brief Description of How Medicare and Medicare Supplements Work Medicare is a federal health insurance program for

From a billing and payment perspective, Medicare is

people age 65 or older, some disabled people un-

set up in a ‘payment per service’ arrangement. This

der 65, and people of all ages with endstage renal

simply means that in order to receive services you’re

disease. Medicare Part A is hospital insurance and

going to be responsible for paying some deductibles

covers necessary medical care and services that are

and copayments – which could become significant, if

furnished by:

your health falters.

• Medicare certified hospitals, • skilled nursing facilities, • some skilled home health care agencies, • and hospices.

A Medicare supplement is a private health insurance plan that’s designed to fill in the gaps of original Medicare coverage. (The government often refers to these plans as ‘Medigap policies’, please note that a Medicare supplement and a Medigap policy are the

Medicare Part B is medical insurance and helps pay for:

same thing). Your Medicare supplement acts like a

• Doctor services

puzzle piece in ‘snapping in’ to your Medicare Part

• Outpatient hospital services including emergency room visits

A and Part B coverage and paying for particular copays or deductibles.

• Ambulance transportation

Here is a big caveat.

• Diagnostic tests and lab services

that a Medicare supplement policy will not supple-

• Some preventive care like mammograms and Pap

ment items that Medicare doesn’t pay for in the first

smear screening • Outpatient therapy services • Durable medical equipment and supplies • And a variety of other health services

Please understand

place. In other words, Medicare must first approve the cost, and then and only then, will your supplement pay for the covered co-pays and deductibles.

For example, Medicare typically does not approve acupuncture. If your acupuncturist submits your invoice to Medicare and Medicare rejects it – your Medicare supplement will reject it as well.

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Medicare Supplement Plan Components Below is a sample first page of an ‘Outline of Medicare Coverage’ - a required document that is provided to you by the Medicare supplement company before you enroll. It’s designed to describe for you each plan the supplement company offers in an easy-to-read manner.

As you can see, the plans are labeled A through J across the top. Note that in most cases, the higher the letter, the greater the benefits.

Outline of Medicare Supplement Coverage Benefits Plans A-J A

B

C

D

E

F/F*

G

H

I

J*

Basic Benefits Basic Benefits Basic Benefits Basic Benefits Basic Benefits Basic Benefits Basic Benefits Basic Benefits Basic Benefits Basic Benefits

Part A Deductible

Skilled Nursing Co-Insuranse

Skilled Nursing Co-Insuranse

Skilled Nursing Co-Insuranse

Skilled Nursing Co-Insuranse

Skilled Nursing Co-Insuranse

Skilled Nursing Co-Insuranse

Skilled Nursing Co-Insuranse

Skilled Nursing Co-Insuranse

Part A Deductible

Part A Deductible

Part A Deductible

Part A Deductible

Part A Deductible

Part A Deductible

Part A Deductible

Part A Deductible

Part B Deductible

Foreign Travel Emergency

Part B Deductible

Foreign Travel Emergency

Foreign Travel Emergency

At-Home Recovery

Part B Deductible

Part B Excess (100%)

Part B Excess (80%)

Foreign Travel Emergency

Foreign Travel Emergency

Foreign Travel Emergency

At-Home Recovery

Part B Excess (100%)

Part B Excess (100%)

Foreign Travel Emergency

Foreign Travel Emergency

At-Home Recovery

At-Home Recovery Preventative Care not covered by Medicare

Preventative Care not covered by Medicare

(Since January 1, 2006, two additional plans were added: K and L. These are cost-sharing plans with copayments and deductibles. They are rarely purchased and beyond the scope of this report.)

The benefits are listed vertically, in columns. if you count the benefits, you’ll find eight different and separate types of benefit coverage. Each benefit is described in detail in the outline coverage book that you’ll receive.

By looking at the chart, you can see that if you select Plan C, you will have a plan that includes coverage for Basic Benefits, Part A Deductible, Part B Deductible and Foreign Travel Emergency. Blanks in the plan’s collumn indicate benefits that are not covered by your chosen plan. So, Plan C will not provide coverage for Part B Excess, At Home Recovery and and Preventative Care not Covered by Medicare.

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Overview of the Modernized Medicare Supplement Plans Medicare Supplement Changes: June 1, 2010 Medicare is making some significant changes to the

Here’s the logic behind all this. The two benefits be-

Supplement plans that include dropping some ben-

ing dropped were difficult to administer, seldom used

efits and adding others. (You’ll hear these new plans

by consumers and cost money to insure against. Plan

referred to as the ’Modernized’ Medicare Supplement

G is now simplified and and the new hospice benefit

Plans.).

will provide room and board coverage for all plans.

The two new plans, N annd M, will offer significant

These changes go into affect on June 1, 2010. At

coverage but since they include co-pays, their pre-

this time, the ‘Original’ Medicare Supplement Plans

mium costs will be a lot less. The two new plans will

(shown above) will no longer offered; only the new

offer significant coverage but since they include co-

‘Modernized’ plans will be.

pays, their premium costs will be a lot less.

Here’s a list of the key changes:

With these changes, several current plans became duplicates – and thus the redundant plans were

1) Two current benefits: the ‘At-Home Recovery

dropped.

benefit’ and the ‘Preventative Care not covered

by Medicare benefit’ will be dropped from all 2010

Please note that if you have an existing (‘original’)

Modern Medicare Supplement plans.

medicare Supplement Plan that you can keep your plan - and all the benefits - forever. You can never be

2) Plan G will be modified to increase excess doctors

dropped from your plan as long as you continue to

charge coverage from 80% to 100%.

pay your premiums.

3) A New ‘Hospice Benefit’ will be added to all plans.

Also note that the new modernized plans will use the same letters as the old plans (thus the importance

4) Medigap Plans E, H, I and J will discontinued and

of knowing if it’s an ‘origional’ supplement plan or a

no longer be available for new sales.

‘Modernized’ supplement plan).

5) Two new Medigap Plans M & N will be available in

Here’s how the new modernizes plans look:

2010.

6) Insurance carriers will be allowed to offer plans that include “New” or Innovative Benefits, such as eyewear or hearing aid benefits. (They may not include outpatient prescription drug benefits.)

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Outline of ‘Modernized’ Medicare Supplement Plans Sold with Effective Dates on or After Jun1, 2010

A

B

C

D

F/F*

G

Basic, Including 100% Part B coinsurance

Basic, Including 100% Part B coinsurance

Basic, Including 100% Part B coinsurance

Basic, Including 100% Part B coinsurance

Basic, Including 100% Part B coinsurance

Basic, Including 100% Part B coinsurance

Skilled Nursing Facility Coinsurance

Skilled Nursing Facility Coinsurance

Skilled Nursing Facility Coinsurance

Skilled Nursing Facility Coinsurance

Part A Deducible

Part A Deducible

Part A Deducible

Part A Deducible

Part A Deducible

Part B Deductible

Foreign Travel Emergency

Part B Deductible

Foreign Travel Emergency

Part B Excess (100%)

Part B Excess (80%)

Foreign Travel Emergency

Foreign Travel Emergency

At-Home Recovery

At-Home Recovery Preventive Care not covered by Medicare

K

L

M

N

Hospitalization and preventive care paid at 100%, other basic benefits paid at 50%

Hospitalization and preventive care paid at 100%, other basic benefits paid at 75%

Basic, Including 100% Part B coinsurance

Basic, Including 100% Part B coinsurance, except up to $20 copayment for office visit, and up to $50 copayment for ER

50% Skilled Nursing Facility Co-insurance

75% Skilled Nursing Facility Co-insurance

Skilled Nursing Facility insurance

Skilled Nursing Facility insurance

50% Part A Deducible

75% Part A Deducible

50% Part A Deducible

Part A Deducible

Part B Deductible Part B Excess (100%)

Part B Excess (100%) Foreign Travel Emergency

At-Home Recovery

Foreign Travel Emergency

At-Home Recovery Preventive Care not covered

by Medicare

Out-of-pocket Limit $(4440) paid at 100% after limit reached

Out-of-pocket Limit $(2220) paid at 100% after limit reached

* Plan F also has an option called a high deductible plan F. The high deductible plan pays the same benefits as Plan F after one has paid a calender year ($1900) deductible. Benefits from high deductible plan F will not begin until out-of-pocket expenses exceed ($1900). Out-of-pocket expenses for this deductible are expenses that would ordinarily be paid by the policy. These expenses include the Medicare deductibles for Part A and B, but do not include the plan’s separate foreign travel emergency deductible.

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Key Action Items

Are You in a Dead Risk Pool?

As of June 2010, you will no longer be able to pur-

Plan M and plan N may be a viable alternative for

chase Plans E, H, I and J. They are being phased out

you, especially if you face a large premium increase/

and will no longer be available for sale. If you are

benefit decrease that are anticipated in these plans

currently enrolled in one of these four plans prior to

in the coming years.

June 1st, you are entitled to keep it - along with your existing benefits -if you wish.

Both plans M and N will use cost-sharing to allow for lower premiums. Plan M will make the insured re-

I strongly suggest that you consider converting to a

ponsible for 50% of the Part A deductible, while Plan

new modernized plan.. Hereʼs why:

N will have a $20 doctor’s office co-pay and a $50 emergency room co-pay.

If you stay in your existing plan and no new customers are allowed in, then the only people in your plan

Key Note: In this report, I can’t do justice in ex-

will be existing customers - who presumably will use

plaining all the key mechanisms in how Medicare and

their insurance more as they age. The more insurance

Medicare supplement plans work. The Medicare sys-

usage – the higher the rates go up.

tem is documented with thousands of pages. There are lots of ongoing rulings and legislative changes.

In essence, you’ll be in what’s referred to as a dead risk pool. In the long term, this may result in you hav-

I personally think that there will be more changes

ing to pay to higher than normal renewal premiums

happening to Medicare in the next 3 years then there

for staying in a discontinued plan.

have been in the last 25 to meet the ever-stretching needs of the system. In fact, by the time you read

Some insurance companies will allow you to migrate

this, there’s a chance that some of this information

to a Modernized Plan without medical underwriting.

may have changed.

It’s worth investigating.

Also, this report primarily applies to the state of Texas. While Medicare suplements are available na-

Consider Plan M and Plan N if you have a Medicare Advantage Plan

tionally, several states have unique rules. For instance,

In the past, many of my clients have selected to go

Wisconsin have adopted their own state plans.

Missouri and California have different rules regarding Guaranteed Issue. Minnestoa, Massachusetts and

with a Medicare Advantage plan because the premiums for these plans were typically less than a

Now, it’s more important than ever to work with a trust-

Medicare Supplement.

ed agent who can keep you apprised of these changes and advise you on the actions you need to take.

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