CHAPTER TWO - MEDICARE SUPPLEMENT INSURANCE

While many of the provisions of a Medicare Supplement policy mirrors many Health Insurance policy provisions, particularly those of Major Medical plans, there are several points of difference, primarily because their purpose is different. Whereas Most Health Insurance policies are designed to provide primary coverage, the Medicare Supplement policies are designed as supplemental (secondary) policies.

In 1992, federal regulations and guidelines were passed whereby all Medicare Supplement policies were to furnish certain specified benefits. They were to be designated as plans “A” through “J” with “A” being the most basic plan, and “J” being the policy with the most coverages. Plans “C” through “F” are the most popular, as they provide the best coverage’s at the most reasonable cost. Shortly thereafter, Insurers were allowed to offer “Select” plans, covering the same risks as the Plans A-J, but with limitations as to Providers (similar to PPO’s). The policyholder must use one of the approved Providers to receive the supplemental benefits. Medicare will still pay their share of the medical claims) except for an emergency, when any Provider may be used. The Select policy is quite popular because it is sold at a much lower cost because of contracts between insurance carriers and Providers.

The Balanced Budget Act of 1997 made changes in the Medicare program by making more choices available to Medicare Beneficiaries as to benefits and how they will receive these benefits. The intent of the Medicare program is to reduce costs of Medicare and at the same time, increase the choices of health insurance options.

This attempt to try to maintain the Medicare Hospital Insurance Trust Fund until year 2010 (at least) allows Medicare Beneficiaries to actively participate in their own health care by offering certain benefits with the flexibility of paying for part of their medical care. There is continual reduction of benefits and amounts paid to health providers but Medicare seems to have a life of its own and continues to grow.

Any of the plans must closely follow Federal guidelines, which include:

Medical Services must be available at all times, 24 hours a day, 7 days a week.
Certain Grievance and Appeal procedures must be documented and established.
All plans must not restrict a Provider’s advice to a patient about medical care or treatment.
Renal (kidney) Dialysis must be made available to all Medicare beneficiaries while he/she is temporarily outside of the health plan’s service area.
They must provide at least the same benefits as Medicare’s Fee-For-Service plans (with the exception of Hospice care), and may provide additional benefits.
The requirement of patient confidentiality, particularly patient’s medical records.
There are certain restrictions regarding the furnishing of medical services when using a compensation arrangement with doctors.

In addition to Medicare, Medicare Supplement Insurance Plans and Medicare HMO’s, the following plans are made available:

Provider Sponsored Organizations (PSO’s) - These are physician groups and hospitals that contract directly with Medicare to enroll Medicare Beneficiaries for a fixed and contracted payment. Medicare benefits are furnished independently of any Insurance Company.
Preferred Provider Organizations (PPO’s) - These are groups of doctors and hospitals that have contracted with insurance companies to provide medical services and care for their insured’s at a pre-determined and contracted price. The Providers may provide medical services to others who are not members of the PPO, but the PPO insured will receive lower charges. The PPO members may choose their Providers from lists of contracting Providers. They may use Providers who are not part of the PPO organization in most cases, but if they do so, they will pay higher out-of-pocket expenses in most cases.
Fee-For-Service Plans - Medicare Beneficiaries will be able to enroll in private plans that allow them to choose their own Providers. Medicare makes payments to these plans. Very similar to the original Medicare program, physicians will be unable to charge more than 15% above the amount that was contracted.
Medicare Medical Savings Accounts (MSAs) (See discussion of MSAs and other tax-related plans)—though highly touted, as of this date there have been no plans available to Medicare recipients.
Religious Fraternal Benefit Society Plans. These will be offered by some religious fraternal society, but only on its members, and they must meet the IRS and Medicare requirements to qualify.

MEDICARE SUPPLEMENT PROVISIONS

Guaranteed Issue Basis

Many Medicare Supplement policies, particularly if they are replacing other Medicare supplement plans, are issued on a guaranteed issue basis, and the application does not ask health questions. Therefore a material misrepresentation would not pertain to health conditions in these situations, but could reflect misrepresentation of date of birth, citizenship, Medicare coverage, or knowingly having duplicate coverage that was not revealed to the agent.

NON‑DUPLICATION

Federal and State regulations are very strict in regards to marketing duplication of coverage to Medicare beneficiaries. Any agent that sells a Medicare beneficiary a second supplemental policy will lose their insurance license and are liable for other damages. This provision provides that any benefits due the Medicare Beneficiary under Medicare will not be duplicated by the policy.

PROVIDERS

Hospital

The definition of a “Hospital” is an institution licensed as a Hospital and operated pursuant to law; and which is primarily and continuously engaged in providing or operating, either on its premises or in facilities available to the Hospital on a prearranged basis and under the supervision of a staff of physicians, and has medical, diagnostic and major surgery facilities for the medical care and treatment of sick or injured persons on an Inpatient basis for which a charge is made; and provides 24 hour nursing service by or under the supervision of Registered Nurses (R.N.'s).

The term "Hospital" DOES NOT include: convalescent homes, convalescent, rest, or nursing facilities; or facilities primarily affording custodial, educational or rehabilitative care, whether or not licensed as "Hospitals" or facilities for the aged, drug addicts or alcoholics.

References to Participating Hospitals is peculiar to Medicare Select policies (very popular plans) In most cases, with Select programs, only certain Hospitals are participating, however the policyholder may use any physician or health Provider covered under Medicare. On Select programs, Participating hospitals have entered into agreements with the insurer to participate in their network program. A list is always furnished for participating hospitals and other health providers if applicable.

Accepting Assignment

“Accepting Assignment” means that the Provider (which can be a Hospital, Doctors, or other Medical professionals) will accept the amount that Medicare pays for health services, as payment in full for their services. By law, a Provider who does not accept assignment, may treat a Medicare Beneficiary and charge a maximum of 15% more than the Medicare Allowance. This percentage may be changed by future legislation.

A Federal law states that if a referring physician accepts Assignment [i.e. accepts the Medicare payment as payment in full for their medical services] then the specialist must also accept the Medicare payment. Therefore, although not stated in policy provisions, in practice if the original doctor accepted Assignment, then so must the specialist.

Physician

Physicians include a wide variety of health providers and include Doctor of Medicine (M.D.) or Doctor of Osteopathy (D.O.) legally qualified to practice medicine and perform surgery; Doctor of Dental Surgery (D.D.S. or D.M.D.); Doctor of Surgical Chiropody (D.S.C.); Doctor of Podiatric Medicine (D.P.M.); Doctor of Chiropractic (D.C.); Optometrist (O.D.); Psychologist (Ph.D.). One should always review the policy provisions as certain types of doctors may be added in the future. For instance, those practicing the ancient art of acupuncture are not considered as health providers but there is increased pressure to accept them in the future.

Registered Nurse

A Registered Nurse (R.N.) is a person duly licensed by the state to engage in the practice of nursing.

Skilled Nursing Facility

Skilled Nursing Facility (referred to herein as "Facility") means a licensed Facility which:

is operated pursuant to law;
is approved for payment of Medicare benefits or is qualified to receive such approval, if so requested;
is primarily engaged in providing, in addition to room and board accommodations, skilled nursing care under the supervision of a duly licensed Physician;
provides continuous twenty‑four (24) hours a day nursing service by or under the supervision of a Registered Nurse (R.N.); and
maintains a daily medical record of each patient.

This definition does not include:

any home, place or part thereof used primarily for rest, custodial, educational, convalescent, or rehabilitative care;
a home or place for the aged or for the care of drug addicts or alcoholics; or
a home or place primarily used for the care and treatment of mental diseases or disorders.

DEFINITIONS

Certain definitions are well-known and understood, however there are some definitions in the policies that should be better understood to avoid erroneous assumptions.

Accident means accidental bodily injuries sustained by the Contract Holder which are the direct cause, independent of disease, bodily infirmity or other cause, of the loss which occurs while the Contract is in force. Injuries shall not include injuries to the extent benefits are paid under any worker's compensation, employers' liability or similar law, State Automobile Reparations Reform Act (motor vehicle no‑fault plan or similar law) unless prohibited by law.

A Benefit Period is an interval of time during which the insured is confined in a Hospital or Facility as an Inpatient. The Confinement may be continuous or intermittent. A Benefit Period begins the day the insured entered a Hospital or Facility and ends when he has not been a patient in a Hospital or Facility for sixty (60) consecutive days.

Confinement means the number of days spent as a registered Inpatient following each admission to a Hospital or Facility. If seven or more days have not elapsed between the date of discharge from a Hospital or Facility and the date of the next admission, the days will be counted as one Confinement. This occurs whether or not benefits were provided during the Confinement. One Confinement may consist of several admissions.

An Inpatient means a patient who is admitted to a Hospital or Facility as a bed patient and is charged for room and board for Medically Necessary care or treatment upon the orders of a Physician working within the scope of his license.

A Medical Emergency/Accident means the sudden, unexpected onset of a condition of such a severe nature that immediate care must be given to prevent death or serious impairment of his health or bodily function. Some examples of Medical Emergencies include, but are not limited to the following: unusual or excessive bleeding; serious burns; poisoning; unconsciousness; and convulsions.

Medically Necessary means that in the opinion of Medicare and/or the Insurance Company, a specific medical, health care, or Hospital service is required for the identification, treatment, or management of a medical symptom or condition. A service, care, or supply is Medically Necessary if, in the opinion of the Insurance Company and/or Medicare (see also Medicare Eligible Expenses), it is: (1) consistent with the symptom, diagnosis, and treatment of the Contract Holder's condition; and (2) in accordance with standards of good medical practice; and (3) approved by the appropriate medical body or board for the condition in question; and (4) is not primarily for the convenience of the Contract Holder, a Physician, or other Provider; and (5) is the most appropriate, efficient, and economical medical supply, service, or level of care which can be safely provided.

Medicare means the two programs of health insurance provided under Title XVIII of the Social Security Act. The two programs are sometimes referred to as Health Insurance for the Aged and Disabled Act. Medicare also includes any later amendments to this initial law.

The first program, called Medicare Part A, provides basic protection against the cost of Inpatient and outpatient Hospital care, as well as other institutional care. Medicare Part A is financed through the Social Security tax.

The second of these programs, Medicare Part B, is a voluntary program which covers the cost of Physicians' services and certain other services which are not covered under Medicare Part A. It is funded through monthly premiums from participating Medicare beneficiaries and contributions from the federal government.

Medicare Eligible Expenses are expenses of the kind covered by Medicare to the extent recognized as reasonable and necessary by Medicare. The Contract may provide reimbursement which is based upon a percentage or fixed amount of Medicare's determination of what charge is reasonable or permitted for this service. The Medicare Supplement’s reimbursement, in those circumstances, is based upon Medicare's determination. This determination by Medicare of the reasonable or permitted charge is the Eligible Expense.

When Medicare does not provide coverage for a service, this Contract may provide reimbursement. In those circumstances, the reimbursement is based upon a percentage of or fixed amount that is what Medicare would have paid if the service were covered. The insurer reserves the right to make the determination of what is an Eligible Expense when Medicare does not provide coverage.

Sickness means any illness or disease of the Contract Holder. This will exclude Sickness or disease to the extent benefits are paid under any worker's compensation, occupational disease, employer's liability or similar law.

The United States refers to all 50 states, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and America Samoa and includes the territorial waters adjoining the land areas of the United States.

GRACE PERIOD

The grace period for a Medicare Supplement policy is 31 days.

PRE‑EXISTING CONDITIONS LIMITATION

The Pre-existing condition provision is usually waived if the insured is transferring from one Medicare Supplement policy to another Medicare Supplement policy. The question may arise when a Medicare Beneficiary is covered under a Medicare HMO, and then decides to return to a traditional Medicare Supplement plan. In most situations, either by regulation or company practice, they will now allow this with a waiver of pre-existing conditions. This particular exclusion also excludes those who are confined to a hospital or SNF on the effective date of the policy.

Under the Medicare provisions of the Balanced Budget Act of 1997, if a Medicare Beneficiary has had a Medicare Supplement policy for at least 6 months, and decides to change policies, there will be no pre-existing condition period as a general rule. However, if the Beneficiary transfers to a plan that provides coverage that was not provided under the original plan, there may be a Pre-Existing Condition applied. Under the regulations, a Pre-Existing Condition is defined as health problems that required a doctor’s visit within the six months before the effective date of the policy.

The typical preexisting condition clause states that any stay which occurs, or medical expenses the insured incurred, during the first 3 months following the Effective Date of Insurance will not be covered, under the Medicare Supplement - Pre‑existing Condition provision. If the insured is confined as an Inpatient in a Hospital or Skilled Nursing Facility on the day before the Effective Date of Insurance, then the Effective Date of Coverage for that Condition will not begin until that Confinement ends, or six months have passed, whichever comes first.

PREMIUMS

The policies provide that “from time to time, Premium adjustments for this Contract may be necessary” and in actual practice, they increase each year. One reason that they increase, it should be noted, is that the benefits increase each year also as they are indexed for inflation. The insurer must notify the insured at least 45 days in advance in writing of any increase.

Misstatement of Age

If any age, sex, or geographical area information for any Contract Holder has been misstated on the application, all amounts payable will be what the Premium would have been at the time purchased according to the correct age, sex or geographical area.

SERVICES COVERED BY MEDICARE PART A

When the insured is confined as an inpatient in a hospital and the confinement is medically necessary and approved by Medicare, and caused by injury or sickness, and starts while the contract is in force, the following benefits will be paid:

First 60 Days per Benefit Period - Inpatient Medicare Part A Deductible. Benefits are provided if the hospital is a Participating Hospital except in case of medical emergency when any hospital can be used.

61st Day through 90th Day per Benefit Period - Daily Coinsurance Amount

Benefits are paid which is equal to one‑fourth (1/4) of the Inpatient Medicare Part A Deductible per day from the 61st through the 90th day of care during each Benefit period when confined to a Participating Hospital, except in case of medical emergency when any hospital can be used.

Lifetime Reserve Days‑91st Day through 150th Day Daily Coinsurance Amount

The policy provides benefits for the daily coinsurance amount which is equal to one‑half (1/2) of the Inpatient Medicare Part A Deductible per day for the 91st through the 150th day of care when the insured is confined to a Participating Hospital (unless it is a medical emergency).

Beyond The Lifetime Reserve Days‑151st Day and Thereafter

The policy provides benefits beyond the insured’s lifetime reserve days if he is confined to a Participating Hospital (except for medical emergency) of 100% of Medicare's eligible expenses up to a lifetime maximum benefit of an additional 365 days.

Calendar Year Blood Deductible

The policy pays for the first three (3) pints of blood or blood derivatives each Calendar Year, provided the blood is not replaced or already paid-for under Medicare Part B.

Facility Services

To receive Facility benefits, the insured must first be a Medicare patient in a Hospital for at least three consecutive days and then enter the Facility within 30 days after he gets out of the Hospital.

Medicare Part A will pay, in full, charges for semi‑private room and other covered services for the first 20 days of care in the Facility.

Coinsurance 21st ‑ 100th day for Facility Services. After 20 days, the insured is responsible for the coinsurance amount each day for the next 80 days. This coinsurance amount which is equal to one‑eighth (1/8) of the Medicare Part A deductible per day is not paid by Medicare Part A. The policy provides benefits to pay the daily coinsurance amount (equal to one‑eighth of the Medicare Part A deductible) each day for the 80 days.

Payment will not exceed the amount for which the insured is actually billed and for which he has liability to pay. After the insured has exhausted the insured’s 100 days of coverage during any one Benefit Period, Medicare will pay nothing for Facility benefits and the policy does not provide benefits to pay after the 100th day of care in a Facility.

SERVICES COVERED BY MEDICARE PART B

Medicare Part B covers, in part, the cost of Physicians' services, outpatient Hospital care, and many services and supplies not covered by Medicare Part A.

The following costs are not paid by Medicare Part B:

The deductible. The amount you are responsible for before you can receive Medicare Part B benefits. This deductible applies once each Calendar Year. There is no deductible on Forms C, F and J.

The 20% coinsurance. Medicare does not pay the 20% coinsurance amount. Medicare Part B has a schedule of allowances for all covered services. After the Medicare Part B deductible is paid, Medicare Part B pays 80% of its Eligible Expense for the covered services you receive. The Medicare Supplement will cover the 20%.

Calendar Year Blood Deductible

Medicare does not cover the first three (3) pints of blood or blood derivatives that the insured receives during a Calendar Year. Medicare supplement policies cover this “deductible.”

MENTAL HEALTH SERVICES COVERED BY MEDICARE PART B

Medicare Part B covers, in part after a 50% coinsurance, the cost of covered outpatient mental health services received from professionals such as Physicians, clinical psychologists, clinical social workers and other non-physician practitioners. After the Medicare Part B deductible is paid, Medicare Part B pays 50% of its Eligible Expense for the covered outpatient mental health services. The Medicare Supplement provides benefits to pay the 50% coinsurance amount after the insured satisfy the Medicare Part B deductible.

PREVENTIVE MEDICAL CARE

This provision is peculiar only to Plans E and J)

The policy provides benefits to pay 100% of charges not covered by Medicare up to the Medicare approved amount for each service as if Medicare were to cover the service as identified in American Medical Association current procedural terminology (AMA CPT) codes to a maximum of $120 annually for the following preventive health services:

an annual clinical preventive medical history and physical examination that may include tests and services listed in the following provision and patient education to address preventive health care measures;
any one or a combination of the following preventive screening tests or preventive services, the frequency of which is considered a Medically Necessary: 1) fecal occult blood test and/or 2) digital rectal examination;
mammogram; ‑ dipstick urinalysis for hematuria, bacteriuria and proteinuria; ‑ pure tone (air only) hearing screening test, administered or ordered by a Physician; ‑ serum cholesterol screening (every five [5] years); ‑ thyroid function test; ‑ diabetes screening.
influenza vaccine administered at any appropriate time during the year and Tetanus and Diphtheria booster (every ten [10] years).
any other tests or preventive measures determined appropriate by the attending Physician.

This benefit shall not include payment for any procedure covered by Medicare.

In addition to the above standard Preventative Benefits, the following benefits must be offered:

Annual Mammograms: All Medicare-eligible women over the age of 40 will be allowed to have an annual mammogram, and the Part B deductible will not apply
Annual PAP Smears and Pelvic Examinations. For certain “High-Risk” women, annual PAP smears and pelvic examinations will be allowed. For those women who are not “High Risk”, they will be covered every 3^rd year.
Colon Cancer Screenings. Colon Cancer Screenings will be allowed for all beneficiaries over age 50. How often these will be allowed has not as yet been determined.
Diabetes Self-Management Training Services: Diabetes outpatient self-management training services including blood glucose monitors and testing strips for all diabetics will be provided.
Bone Mass Measurement: For high-risk beneficiaries, Bone Mass Measurement will be expanded.

LIMITATIONS

The Contract does not provide benefits to pay for the following services or supplies:

Services or supplies not covered or approved by Medicare, and considered eligible as a Medicare Eligible Expense, except as provided for under the “Out of Country Claims” and “Preventive Medical Care” provisions.
Services or supplies in excess of what Medicare determines or would have determined is a covered service and a Medicare Eligible Expense.
Services or supplies which would duplicate what Medicare has paid or would have paid had a claim for services been submitted to Medicare.
No payment will be made for services provided by a Non‑ Participating Hospital unless specified in this Contract.
Sometimes the insured might receive services for which there is no charge or for which he has no legal liability to pay. The policy does not provide benefits to pay for these services.

EXCLUSIONS

In addition to the above, payments for services or supplies related to the following are also excluded from this Contract:

Mental or nervous disorders, alcoholism and drug addiction in excess of what Medicare allows.
Illness, treatment or medical conditions arising out of War or act of war (whether declared or undeclared); participation in a felony, riot or insurrection, engaging in an illegal occupation, service in the armed forces or auxiliary units thereto; suicide or attempted suicide, whether sane or insane, or intentionally self‑inflicted injury; aviation; being intoxicated or under the influence of any narcotic unless taken on the advice of a physician.
Cosmetic surgery, except that "cosmetic surgery" does not exclude benefits for reconstructive surgery when such service is incidental to or follows surgery resulting from trauma, infection or other diseases of the involved part, or to restore normal bodily function.
Hearing aids and eyeglasses and examinations for their prescription or fitting.
Rest cures, custodial care, transportation and routine physical examinations.
Care received outside of the United States that is not Medically Necessary and of an emergency nature.

The Medicare Supplement policy does not contain limitations or exclusions on coverage that are more restrictive than those of Medicare.

NON‑DUPLICATION OF COVERAGE

Basically, if the policyholder is eligible for other health benefits duplicated by the Medicare Supplement policy, the policy will not pay even if the insured did not apply for or receive the other benefits. This includes workers’ compensation benefits, auto insurance policies, or any other health insurance program.

CROSSOVER

The following Automatic Crossover service is not offered by all insurance companies but is often offered and is a source of confusion with many Medicare Supplement insureds.

The Medicare Supplement policy may provide a service that is called Automatic Crossover. The Automatic Crossover is a process by which Medicare automatically transfers the Explanation of Medicare Benefits (EOMB) (also called “the gray form”)—which is sent to the Medicare beneficiary when a claim has been submitted to Medicare and is sent as “information only—those who are new to Medicare are often confused as they believe the EOMB to be a “bill” for the medical services—to the Medicare Supplement insurer for payment of covered benefits under the Medicare Supplement policy.

“Crossover” works, as follows: When the insured applied for coverage under the policy, he signed an authorization for the ongoing release of any and all information, including but not limited to, Explanation of Medicare Benefits and Part B billing and enrollment forms, regarding any and all of the Medicare claims, to the Medicare Supplement Insurance Company.

If the Medicare claim is processed by the Medicare Supplement Insurance Company, an explanation of what Medicare allowed will automatically be transferred to the insurer’s supplemental coverage claim processing unit. This will be a Notice and Proof of Loss. The insurer will determine from these documents whether the insured has coinsurance due and the insurer will then pay the amounts for which they are obligated.

OUT OF COUNTRY CLAIMS

(Foreign Travel Emergency benefits are not available for Plans A and B).

Medicare does not pay for services received outside the United States. However, the Medicare Supplement provides that after the insured has satisfied a $250 Calendar Year deductible, the policy will pay 80% of Medicare Eligible Expenses, up to a lifetime maximum of $50,000 for Medical Emergency/Accident services received outside of the United States under the following conditions:

While out of the United States, the insured is confined in a Hospital or receive Medically Necessary care which is needed immediately;
the care begins within sixty (60) days of the insured being outside of the United States; and
the care would have been covered by Medicare if provided in the United States.

FRAUDULENT SUBMISSION OF CLAIMS

Because of the open enrollment and abbreviated applications used, there is arguably more misrepresentation in claims handling than in applications. However, problems with fraud seem to be as much with the Providers as the policyholder.

If, in the opinion of Medicare Supplement insurer, any Contract Holder commits fraud, or misrepresents or omits material information in requesting the receipt of benefits, that Contract Holder's coverage may be cancelled or rescinded at any time by the Insurance Company. This remedy is available in addition to any other remedies which may be available to the insurer.

REINSTATEMENT

Reinstatement of a Medicare Supplement policy differs from the reinstatement of a Major Medical policy in that there is no waiting period for sickness or injuries sustained after the date of reinstatement, unless the reinstatement does not require an application for reinstatement. In actual practice, insurance companies are quite liberal in reinstating an expired policy, frequently taking the age of the insured into consideration when the insured states that a momentary loss of memory was the reason the premium was not submitted on time. The following is typical of the majority of Medicare Supplement policies.

“If the renewal Premium is not paid before the Grace Period ends, the Contract will lapse. Later acceptance of the Premium by the insurance company or by an agent authorized to accept payment without requiring an application for reinstatement, will reinstate the Contract. When the insurance company or its agent requires an application, and if the application is approved, the Contract will be reinstated as of the approval date. Lacking such approval, the Contract will be reinstated on the first billing date after the date of receipt of the Premium unless the insurer has previously written and advised the insured of its disapproval. The reinstated Contract will cover only losses that result from an injury sustained after the date of reinstatement or Sickness that starts after such date. In all other respects, the rights of the insured and the insurer’s rights remain the same. Any premiums that the insurer accepts for reinstatement will be applied to a period for which Premiums have not been paid. No Premiums will be applied to any period for more than 60 days before the reinstatement date.”

ENDORSEMENTS

Endorsements are frequently used with Medicare Supplement policies for the same purpose as with Major Medical policies. The following is a recent Endorsement dictated by regulation:

OUTPATIENT MENTAL HEALTH SERVICES & AVIATION EXCLUSION ENDORSEMENT

“The exclusions provision under "Illness, treatment or medical conditions arising out of: War or act of war . . . physician", is modified by deleting the word "aviation", and now reads as follows:”

"Illness, treatment or medical conditions arising out of War or act of war (whether declared or undeclared); participation in a felony, riot or insurrection, engaging in an illegal occupation, service in the armed forces or auxiliary units thereto; suicide or attempted suicide, whether sane or insane, or intentionally self‑inflicted injury; coverage for air related accidents which occur outside of the United States; being intoxicated or under the influence of any narcotic unless taken on the advice of a Physician."

“This Endorsement shall not extend, vary, alter, replace, or waive any of the provisions, benefits, exclusions, limitations, or conditions contained in the Contract, other than as specifically stated in this Endorsement. In the event of any inconsistencies between the provisions contained in this Endorsement and the provisions contained in your Contract, the provisions contained in this Endorsement shall control to the extent necessary to effectuate the intent of Your Insurance Company as expressed herein.”

ADDITIONAL BENEFITS

There are other modifications that will appear in the policies, depending upon the type of policy chosen, such as the following:

PART B EXCESS

Health Providers either accept “assignment”, i.e. will accept the Medicare payment as payment in full for their services, or they will not accept assignment. Presently, Providers that do not accept assignment may charge 15% above what Medicare allows for the medical service. This is known as Part B Excess. Plan G covers 80% of the excess, Plans F, I and J covers 100% of this excess.

AT-HOME RECOVERY

This benefit offers up to $1500 for at-home recovery after a person has been hospitalized, and supplements home health care. It is available Plans D, G, I and J.

BASIC DRUGS

These provisions pay a portion of prescription drugs with an annual limit of $1,250 for Plans H and I, and $3,000 for Plan J. The new Medicare Prescription Drug Plan (Medicare Part D) may have a decided negative effect on these prescription drug provisions available on plans H, I and J – which are not particularly attractive because of the high premiums.

STUDY QUESTIONS

1. Medicare Supplement Insurance plans are limited to

A. 10 plans.

B. 8 plans.

C. unlimited, if approved by Medicare.

D. marketing by direct mail, television or radio.

2. Today (2005) all of the Medicare Supplement plans must include

A. coverage for experimental drugs.

B. prescription drugs

C. renal (kidney) dialysis coverage.

D. nursing home coverage for custodial care.

3. Medicare Supplement policies are

A. issued on a guaranteed issue basis.

B. subject to severe underwriting if the applicant is over age 75.

C. entirely paid for by taxes.

D. restricted to no more than 3 such policies per insured.

4. “Accepting Assignment” means

A. the insured must accept the Medicare supplement policy recommended by Medicare.

B. the cash value of a Medicare supplement policy can be borrowed against.

C. the provider will accept the Medicare amount for payment in full for health services.

D. an agent may reduce the premium by a maximum of 25% if it appears the applicant can

not otherwise afford the policy.

5. A “Skilled Nursing Facility” according to Medicare, would include

A. 24-hour nursing service by or under supervision of a Registered Nurse.

B. a convalescent center.

C. a drug rehabilitation center.

D. a retirement home with an RN on duty 24 hours a day.

6. A Medicare program that provides basic protection against the cost of inpatient and outpatient hospital care is

A. Medicare Part A.

B. Medicare Part B.

C. Medicare Part C.

D. Medicare Part D.

7. Medicare eligible expenses are expenses of the kind covered by Medicare to the extent

A. that no other insurer or health provider would cover the expenses.

B. that treatment is for a life-threatening disease or condition.

C. that the insured is mentally incompetent to determine proper treatment.

D. recognized as reasonable and necessary by Medicare.

8. Medicare premiums

A. remain level and constant by law.

B. must increase in proportion to the increase in the Stock Market.

C. will increase as they are adjusted for inflation.

D. are limited to an annual increase of 2.47% per year.

9. Then the Medicare supplement policy provides a service whereby Medicare automatically transfers the Explanation of Medicare Benefits to the Medicare supplement insurers, is

A. transferability.

B. direct routing.

C. EOMB transfer.

D. cross over.

10. Medicare supplement policies differ from a Major Medical plans inasmuch as

A. there is no waiting period for sickness or injuries sustained after the date of reinstatement.

B. Medicare supplement policies are underwritten.

C. Major Medical policies are issued by the Social Security Administration.

D. the insured pays no premium for Medicare supplement policies.

ANSWERS TO STUDY QUESTIONS

1A 2C 3A 4C 5A 6A 7D 8C 9D 10A