Taking Care of Mom and Dad: A Closer Look at the Standard Plans
Buying Medicare supplement coverage is like buying a car: The core benefits represent the basic sticker price of the vehicle; you can add optional benefits to the core package in much the same way that you can add options to a car. The optional benefits included depend on the needs and wants of the individual.
As we've mentioned, basic benefits (Plan A) supplement Medicare benefits by providing coverage for hospitalization coinsurance payments from day 61 to 90 and 91 to 150. This means that the daily copayment required under Medicare will be paid for by the supplement. If benefits end during a period of hospitalization, the supplement pays for an additional 365 days at 100 percent.
In addition, the 20 and 50 percent coinsurance payment due under Medicare Part B is covered after your parents pay the required deductible. The first three pints of blood or packed red blood cells are covered as well under both Medicare Parts A and B.
Plan B includes the basic benefits from Plan A and adds on coverage for the Medicare Part A deductible per benefit period. Therefore, if your parents had Plan B, they would have their deductible met along with all coinsurance payments.
Plan C includes everything in Plan A and B and adds the coinsurance amount per day for skilled nursing care your parents would be required to pay under Medicare Part A for days 21-100. It pays the deductible under Medicare Part B and 80 percent of emergency care while in a foreign country after a certain deductible. If your parents travel out of the country a lot, they may want to consider this.
Plan D includes everything in the plans that precede it except the Medicare Part B deductible and adds on coverage for custodial care (dressing, laundry, shopping, etc.). Medicare Part A home health care coverage doesn't pay for custodial care and many older people need assistance with daily life functions, especially after recovering from a serious illness or injury.
Plan E does not cover the Medicare Part B deductible or at-home recovery services but does include preventive care. The benefit amount is a dollar amount per year for physical exams, screening procedures and patient education.
Plan F does not include preventive care or at-home recovery but does add on excess charges for Medicare Part B expenses. This means if your parents go to a doctor who doesn't accept Medicare assignments, they would be obligated to pay the entire bill. This benefit pays the amount they'll be billed for at either 100 or 80 percent. (Under the 80 percent plan, they have to pay the balance.)
Plan G excludes the Medicare Part B deductible and preventive care and pays the excess charges at a level of 80 percent, rather than 100 percent as in Plan F.
Plan H includes coverage for prescription drugs at 50 percent with an annual limit after a deductible is met. An extended benefit is available in Plan J that increases the annual amount to a higher limit. This is the least expensive plan that includes drug coverage.
Plan I excludes Medicare Part B deductible and preventive care but includes prescription drugs at an annual basic level.
Plan J is the most comprehensive and includes coverage for all benefits previously listed at the maximum levels.
Which one of these plans should your parents buy? Plan A is the least expensive and should be priced most competitively because all health insurance companies are required to offer it. Plan A works well as catastrophic coverage -- it will keep your parents from being wiped out if one gets sick. But it will leave them on the hook for routine health care expenses, including the ever-increasing cost of prescription drugs.
Which plan is the most popular? Data from the federal government shows that Plan F is most often selected. Why? Because it allows the greatest choice among doctors and hospitals.
Since supplement plans are the same -- Plan C is Plan C, no matter which company is offering it -- when you shop for coverage for your parents, you'll be looking at price, service and reliability. Prices vary from state to state and company to company. That's because states have different medical costs and insurance companies have different claims experience.
It's also vital to find an insurance company you feel comfortable with -- and one that is reputable and in good shape financially. Or, said another way, it's important to avoid companies that have histories of financial problems and bad customer service. Your state insurance department can alert you to problem companies.
Of the various provisions found in Medicare supplement policies, there are a number which are of special importance to the policyholder. These include: premium payment and renewability; treatment of pre-existing conditions; benefit provisions; the claims process; exclusions and limitations.
Most insurers band premiums by age. That is, all applicants ages 65 to 70 pay the same premium, ages 71 to 75 pay the same premium, etc. Most insurers do not make any distinction regarding male or female rates. So, the premium is the same for both sexes.
Medicare supplement policies must be issued as guaranteed renewable, which means the insurer guarantees to renew (and cannot cancel the policy) but does not guarantee the premium. The premium is often increased at certain ages or on the policy's anniversary.
A caveat: Always find out whether or not a premium is guaranteed, and ask to see a schedule or scale of the increasing premium payments.
Because these policies are guaranteed renewable, they can't be canceled solely because a person's health has deteriorated or because of age. And termination of a policy cannot reduce the benefits for any continuous loss or claim that began before the termination.
The death of one of your parents will not terminate coverage for the other if they are covered under the same policy, as long as the surviving parent pays his or her portion of the premium.
