The Insurance Buying Guide: The Choices If You're a Senior

If you're one of 38 million Americans over 65 or permanently disabled you qualify for Medicare insurance. Medicare is a federally funded, national health insurance program run by the Health Care Financing Administration (HCFA) and administered by the Social Security Administration (SSA) that covers hospital and medical expenses. Anyone 65 years of age or older, disabled or with permanent kidney failure qualifies to have many of their medical bills paid by the government. There are two parts to Medicare: Part A is Hospital Expense and Part B is Medical Expense. Enrollment is either automatic or you must apply.

You are automatically enrolled if you're receiving benefits before you reach 65 from either the Railroad Retirement Board or Social Security Administration. Your Medicare card will be mailed to you approximately three months before your reach your 65th birthday. If you're disabled and receiving benefits from either organization for 24 months, your card will be automatically mailed as well.

However, if you're not receiving retirement benefits, you must apply directly to either the Social Security Administration or Railroad Retirement Board. Be sure to do it at least three months before you reach 65, to avoid any delays in coverage. You only have seven months to enroll, beginning three months prior to your 65th birthday, otherwise you'll have to wait until January 1 though March 31 just to enroll. Then your benefits don't kick in until July 1. So be sure you know your dates.

How much does it cost? Since Medicare is financed in part by payroll deductions paid by employers and their workers, the Social Security Administration funds a portion. The other comes from the Self-Employment Tax paid by self employed persons. If you or your spouse worked for at least 10 years in a Medicare covered job (meaning you were having deductions withheld from your paycheck for payroll withholding tax) and you are a citizen or permanent resident of the United States, eligible for Medicare, there is no charge for Part A (Hospital Insurance). Disabled individuals, kidney dialysis and certain transplant patients are not charged either.

If none of these fit your particular circumstances, you may purchase Medicare Part A if you are at least 65 years of age and meet other restrictions. The per-month cost in 1997 (based on 30 to 40 quarters of Medicare-qualifying employment) was $187. If you worked fewer than 30 quarters during your adult life, the monthly cost was $311.

There is, however, a fee for Medicare Part B (Medical Expenses) for all enrollees. In 1997 the monthly premium was $43.80 and automatically deducted from Social Security payments. Enrollment is automatic, unless you state you don't want it, when you are eligible for premium-free Part A. If you don't qualify for premium-free Part A and are 65 or older, generally you can purchase it.

Medicare is made up of two parts: Part A is Hospital Insurance and Part B, Medical Expense insurance. Medicare Part A covers costs associated with inpatient care in a hospital and skilled nursing facility care after a hospital stay. It also covers home health care and hospice care. It pays for the cost of whole blood or units of packed cells, after the first three pints during a covered stay in a hospital or skilled nursing facility as well. In addition, it pays 80 percent of durable medical equipment when approved, such as wheelchairs and walkers.

For this part of Medicare coverage, you will have to pay a deductible of $760 for each benefit period, beginning with the first day of admission to a hospital or skilled nursing facility and continuing for 60 days. If you are released or hospitalized for more than 60 days, a new benefit period begins and a new deductible applies. The good news is, there is no limit on the number of benefit periods you can have. The following chart illustrates what Medicare Part A covers, pays and what your portion is.

MEDICARE PART A (HOSPITAL EXPENSE)

YOUR COST	MEDICARE'S COST	TIME PERIOD	BENEFIT
$760	Everything after $760	Day 1 - 60	Hospitalization, including room and board (semi private); in-patient psychiatric care (if recieved in a Medicare participating psychiatric hospital, up to 190 days per lifetime only); general hospital and nursing supplies and services; Skilled Nursing Care, including room and board (semi-private); rehabilitative andskilled nursing services; other services and supplies approved; Home Healthcare, for medically necessary home health visits approved agency such as physical therapy and speech therapy, on intermittant or part-time basis; durable medical equipment; home health aides
$190 day	Everything after	Day 61 - 90
$380 a day	Everything after $380 a day	Day 91 - 150
All costs	Nothing	Over 150 days
Nothing	100% of approved	Day 1 - 20
Up to $95 a day	All but $95 a day	Day 21 - 100
All costs>	Nothing	Over 100 days
20% of approved amount for durable medical goods and no cost for all other approved services	80% of durable medical goods and 100% for all other approved services	No limit, as long as you're eligible for services

Medicare Part B is Medical Expense insurance covering costs associated with doctors' services, outpatient care, laboratory tests, x-rays, mammograms and pap smears, and medical supplies. You'll have to pay the first $100, which is the annual deductible, then Medicare will pay 80 percent of all approved charges for any eligible medical expense. The approved charge may or may not be close to the actual fee charged by your provider, and you are responsible for the difference, as well as the additional 20 percent of the approved charge. (Fortunately, when doctors accept a Medicare assignment, they agree to charge the patient no more than Medicare's approved charge.) Here's what Part B covers:

MEDICARE PART B (MEDICAL EXPENSE)

YOUR COST MEDICARE'S COST TIME PERIOD BENEFIT

YOUR COST	MEDICARE'S COST	TIME PERIOD	BENEFIT
$100 deductible, then 20% of approved cost;	80% of approved charges after $100 deductible is met;	Unlimited if medically necessary except for independent occupational and physical therapy	Medical expenses such as doctor's fees; in-patient/out-patient medical services as well as surgical services laboratory tests; physical/occupational and speech therapy; durable medical supplies
50% for outpatient mental health and 20% of the first $900 for each physical and all each year	50% for outpatient mental health and $720 a year for each occupational and physical therapy	Unlimited if medically necesary
Nothing	100% of approved charges	Unlimited if medically necesary
After your $100, 20% of hospital charges	Approved charges for hospital costs	Unlimited if medically necesary

MEDICARE PART B (MEDICAL EXPENSE)

YOUR COST MEDICARE'S COST TIME PERIOD BENEFIT

Same as Medicare Part Same as Part A, only if Same as Part A, Home Healthcare: same as A, only if you do not you do not carry Part A only if you do Medicare if you do not carry carry Part A not carry Part A and paid only if you do.

Part A carry Part A

After $100 deductible, 80% of approved Unlimited if Blood first three pints plus amount beginning medically 20% for additional with fourth pint necessary pints.

The government estimates that Medicare really only pays about half of the costs needed to cover the elderly and there are large gaps in coverage. For instance, Medicare doesn't cover the cost of hearing aids or eye glasses, items virtually essential to seniors today, not to mention prescription drugs. As a consequence, approximately 89 percent of all Medicare recipients supplement their health care through what is commonly referred to as a Medicare Supplement.

Clearly, Medicare is not going to pick up the tab for all of your healthcare needs. Gaps in coverage and restrictions abound within this system. So, insurance companies stepped in to fill those gaps in coverage with what are called Medicare Supplement policies or "Medigap" insurance.

To clarify benefits and standardize the types of policies offered, Congress passed a law effective August 1, 1992, directing all insurance companies to standardize the policies they offer as Medicare Supplements. As a result, 10 standard plans were developed by the National Association of Insurance Commissioners (NAIC) and are the only plans that may be sold as Medicare Supplement policies.

And the best part is, no one can be turned down, for any reason, as long as you're 65 and apply within six months after you first enroll in Medicare Part B. The policies are guaranteed renewable, meaning you have the right to renew the policy with no change in terms, as long as you pay the premium. The only catch is the insurance company can and often does, increase the premium when claims costs exceed premium revenue.

Medicare Supplement policies have letter designations, corresponding to the level of benefits provided, beginning with the basic plan labeled "A" and progressively increasing in benefits to the most comprehensive plan labeled "J." All states must allow insurers to sell Plan A and all Medigap insurers must make Plan A available if they are to sell the more extensive and expensive plans. However, all insurers are not required to make all 10 plans available, they may only sell a few if they chose to, as long as Plan A is one of them.

The policies are designed specifically to work with Medicare, to provide supplemental accident and sickness insurance for hospital, medical or surgical expenses. Most, if not all, pick up Medicare's co-insurance charge to you -- and may even pay your deductible. Many charges not covered by Medicare are included in some of the plans, such as prescription drugs for out-patients. The more comprehensive plans also cover the co-payment required for hospital and skilled nursing facility stays. They also cover the 20 percent of approved charges you would ordinarily pay under Part B of Medicare. However, coverage for prescription drug costs may be subject to an annual limit. The following chart illustrates what each plan covers. It's a good idea to review it in conjunction with the Medicare charts previously outlined.

MEDICARE SUPPLEMENTS (MEDIGAP)

Plan	A	B	C	D	E	F	G	H	I	J
Basic Benefits	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Medicare Part A Deductible		Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Medicare Part B			Yes	No	No	Yes	No	No	No	Yes
Skilled Nursing Care			Yes	No	No	Yes	No	No	No	Yes
Foreign Travel Emergency			Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
At-Home Recovery				Yes	No	No	Yes	No	Yes	Yes
Preventive Care					Yes	No	No	No	No	Yes
Excess Charges, Medicare Part B				Yes at 100%			Yes at 80%	No	Yes at 100%	Yes at 100%
Prescription								Yes	Yes	Yes