Taking Care of Mom and Dad: Outline of Coverage

In most situations, a Medigap insurance company must provide an outline of coverage at the time of application, and obtain written acknowledgment that the insured person has received it. Outlines of coverage describe whether the insurance covers private duty nursing, skilled nursing home care (beyond what is covered by Medicare), custodial home care, intermediate nursing home care, home health care (above the number of visits covered by Medicare), physician charges, drugs, care received outside of the United States, dental care, cosmetic surgery and the cost of eyeglasses and hearing aids.

The outline of coverage must also describe the policy provisions that exclude, eliminate, resist, reduce, limit, delay or in any other way qualify the payment of benefits. This chart, however, only briefly describes the benefits. It will usually contain a disclaimer suggesting that the Health Care Financing Administration or its Medicare publications should be consulted for further details.

Policy provisions that restrict renewability or continuation of coverage, especially if the insurer has reserved its right to change your premium, must be explained. The amount of the policy premium to be charged must also be given.

A Medicare supplement policy, which provides for the payment of benefits based on standards described as "usual and customary," "reasonable and customary" or similar words, must define and explain those terms in the outline of coverage.

Many of the most important policy features such as renewability and exclusions or limitations must appear on the first page of the policy, and not be buried in the fine print at the end of the policy booklet. Policy forms that do not meet these requirements usually will not be approved for sale.