Check-Up On
Health Insurance Choices
... Continued From Previous Page
Other Types of Insurance
Medicare
Medicare is the Federal health insurance program for Americans age 65 and older and for certain disabled
Americans. If you are eligible for Social Security or Railroad Retirement benefits and are age 65, you and
your spouse automatically qualify for Medicare.
Medicare has two parts: hospital insurance, known as Part A, and supplementary medical insurance, known
as Part B, which provides payments for doctors and related services and supplies ordered by the doctor. If
you are eligible for Medicare, Part A is free, but you must pay a premium for Part B.
Medicare will pay for many of your health care expenses, but not all of them. In particular, Medicare does
not cover most nursing home care, long-term care services in the home, or prescription drugs. There are
also special rules on when Medicare pays your bills that apply if you have employer group health insurance
coverage through your own job or the employment of a spouse.
Medicare usually operates on a fee-for-service basis. HMOs and similar forms of prepaid health care plans
are now available to Medicare enrollees in some locations.
The best source of information on the Medicare program is the Medicare Handbook. This booklet
explains how the Medicare program works and what your benefits are. To order a free copy, write to:
Health Care Financing Administration, Publications, N1-26-27, 7500 Security Blvd., Baltimore, MD
21244-1850. You also can contact your local Social Security office for information.
Some people who are covered by Medicare buy private insurance, called "Medigap" policies, to pay the
medical bills that Medicare doesn't cover. Some Medigap policies cover Medicare's deductibles; most pay
the coinsurance amount. Some also pay for health services not covered by Medicare. There are 10 standard
plans from which you can choose. (Some States may have fewer than 10.) If you buy a Medigap policy,
make sure you do not purchase more than one.
You need to shop carefully before deciding on the best policy to fit your needs. You may get another
booklet, Guide to Health Insurance for People with Medicare, to help you in making the right choice. To
order a free copy, write to: Health Care Financing Administration, Publications, N1-26-27, 7500 Security
Blvd., Baltimore, MD 21244-1850.
Another good source of information on the same topic is The Consumer's Guide to Medicare Supplement
Insurance. To order a free copy, write to: Health Insurance Association of America, 555 13th St., N.W.,
Suite 600 East, Washington, D.C. 20004.
Medicaid
Medicaid provides health care coverage for some low-income people who cannot afford it. This includes
people who are eligible because they are aged, blind, or disabled or certain people in families with
dependent children. Medicaid is a Federal program that is operated by the States, and each State decides
who is eligible and the scope of health services offered.
General information on the Medicaid program is given in the Medicaid Fact Sheet. For a free copy, write
to: Health Care Financing Administration, Publications, N1-26-27, 7500 Security Blvd., Baltimore, MD
21244-1850. For specifics on Medicaid eligibility and the health services offered, contact your State
Medicaid Program Office.
Disability Insurance
Disability insurance replaces income you lose if you have a long-term illness or injury and cannot work.
This is an important type of coverage for working-age people to consider. Disability insurance does not
cover the cost of rehabilitation if you are injured. Check your major medical insurance to see if it is covered
there.
Some employers offer group disability insurance and this may be one of the benefits where you work. Or
you might be eligible for some government-sponsored programs that provide disability benefits. Many
different kinds of individual policies are also available.
The Consumer's Guide to Disability Insurance explains disability insurance and sources of disability
income to help you decide if you need this coverage. It will also help you compare your choices of policies.
For a free copy, write to: Health Insurance Association of America, 555 13th St., N.W., Suite 600 East,
Washington, D.C. 20004.
Hospital Indemnity Insurance
This insurance offers limited coverage. It pays a fixed amount for each day, up to a maximum number of
days. You may use it for medical or other expenses. Usually, the amount you receive will be less than the
cost of a hospital stay.
Some hospital indemnity policies will pay the specified daily amount even if you have other health
insurance. Others may coordinate benefits, so that the money you receive does not equal more than 100
percent of the hospital bill.
Long-Term Care Insurance
Long-term care insurance is designed to cover the costs of nursing home care, which can be several
thousand dollars each month. Long-term care is usually not covered by health insurance except in a very
limited way. Medicare covers very few long-term care expenses. There are many plans and they vary in
costs and services covered, each with its own limits.
More detailed information is given in A Shopper's Guide to Long-Term Care Insurance. Contact your
State Insurance Department or write: National Association of Insurance Commissioners, 120 W. 12th
Street, Suite 1100, Kansas City, MO 64105.
Another good source of information is The Consumer's Guide to Long-Term Care Insurance. For a free
copy, write to: Health Insurance Association of America, 555 13th St., N.W., Suite 600 East, Washington,
D.C. 20004.
A Final Word
There's no doubt that choosing among health insurance plans takes time and effort. Now that you have
read this information, you know what questions to ask so you will be able to carefully compare various
plans and find the one that best fits your needs.
Understanding Health Insurance Terms
Coinsurance: The amount you are required to pay for medical care in a fee-for-service plan after you have
met your deductible. The coinsurance rate is usually expressed as a percentage. For example, if the
insurance company pays 80 percent of the claim, you pay 20 percent.
Coordination of Benefits: A system to eliminate duplication of benefits when you are covered under more
than one group plan. Benefits under the two plans usually are limited to no more than 100 percent of the
claim.
Copayment: Another way of sharing medical costs. You pay a flat fee every time you receive a medical
service (for example, $5 for every visit to the doctor). The insurance company pays the rest.
Covered Expenses: Most insurance plans, whether they are fee-for-service, HMOs, or PPOs, do not pay
for all services. Some may not pay for prescription drugs. Others may not pay for mental health care.
Covered services are those medical procedures the insurer agrees to pay for. They are listed in the policy.
Deductible: The amount of money you must pay each year to cover your medical care expenses before
your insurance policy starts paying.
Exclusions: Specific conditions or circumstances for which the policy will not provide benefits.
HMO (Health Maintenance Organization): Prepaid health plans. You pay a monthly premium and the
HMO covers your doctors' visits, hospital stays, emergency care, surgery, checkups, lab tests, x-rays, and
therapy. You must use the doctors and hospitals designated by the HMO.
Managed Care: Ways to manage costs, use, and quality of the health care system. All HMOs and PPOs,
and many fee-for-service plans, have managed care.
Maximum Out-of-Pocket: The most money you will be required pay a year for deductibles and
coinsurance. It is a stated dollar amount set by the insurance company, in addition to regular
premiums.
Noncancellable Policy: A policy that guarantees you can receive insurance, as long as you pay
the premium. It is also called a guaranteed renewable policy.
PPO (Preferred Provider Organization): A combination of traditional fee-for-service and an
HMO. When you use the doctors and hospitals that are part of the PPO, you can have a larger
part of your medical bills covered. You can use other doctors, but at a higher cost.
Preexisting Condition: A health problem that existed before the date your insurance became
effective.
Premium: The amount you or your employer pays in exchange for insurance coverage.
Primary Care Doctor: Usually your first contact for health care. This is often a family
physician or internist, but some women use their gynecologist. A primary care doctor
monitors your health and diagnoses and treats minor health problems, and refers you to
specialists if another level of care is needed.
Provider: Any person (doctor, nurse, dentist) or institution (hospital or clinic) that provides
medical care.
Third-Party Payer: Any payer for health care services other than you. This can be an
insurance company, an HMO, a PPO, or the Federal Government.
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