Medicare Supplement Insurance Handbook and Rate Guide

(July 2006)

Click on the letter to view rates for that particular plan.

Key Changes in Medicare Supplement Insurance

Medicare now provides prescription drug coverage as a Medicare benefit. As a result, prescription drug coverage is no longer available as part of Medicare supplement insurance (Medigap) plans H, I, and J sold after January 1, 2006. If you currently have one of these three Medigap policies, here are your options:

• You can keep your current Medigap policy without any changes. However, you can expect to pay higher premiums than people who elect to participate in the Medicare drug plan.
• You can enroll in a Medicare prescription drug plan and keep your Medigap policy with the drug coverage removed. Your Medigap premiums will be adjusted to reflect the removal of the prescription drug benefit.
• You can enroll in a Medicare prescription drug plan by May 15, 2006, and buy a different Medigap policy without prescription drug coverage. You can buy a Medigap plan A, B, C, F, K, or L sold by your current Medigap insurance company. You are guaranteed this right only from your current company. If you apply to a different company, the company may consider your medical history to decide whether or not to accept you. You must purchase the new Medigap policy within 63 days after your Medicare prescription coverage starts. If you wait until after May 15, 2006, to enroll in a Medicare prescription drug plan, you will no longer have a guaranteed issue right to buy another Medigap policy from your current company. This means the company can evaluate your medical history to decide whether or not to sell you a policy.
• You can enroll by May 15, 2006, in a Medicare Advantage plan that includes prescription drug coverage. If you enroll in a Medicare Advantage plan, you won´t need a Medigap policy.

For more information on Medicare, including the Medicare prescription drug coverage, visit the Medicare website

www.medicare.gov

Medicare and Medicare Supplement Insurance

Medicare is a federal health insurance program for people 65 or older, some people under 65 with disabilities, and people with end-stage renal disease or Lou Gehrig´s disease. If you are on Medicare, it will pay for much - but not all - of your health care. Medicare supplement insurance can help you fill in some of the "gaps" that Medicare won´t pay. There are 12 standardized Medicare supplement insurance plans, labeled "A" through "L." Each plan offers a different combination of benefits. Four plans, F, J, K, and L offer a high-deductible option.

Not everyone needs a Medicare supplement policy. If you have certain other types of health coverage, the gaps in your Medicare coverage may already be covered. You probably don´t need Medicare supplement insurance if

• you have group health insurance through an employer or former employer, including government or military retiree plans
• you belong to a Medicare Advantage plan
• Medicaid or the Qualified Medicare Beneficiary (QMB) Program pays your Medicare premiums and other out-of-pocket costs.

Medicare Basics

Medicare Part A (hospital) pays for in-patient hospital services, skilled nursing facility care after a hospital stay, home health care, and hospice care. Medicare Part A also pays for all but the first three pints of blood in a calendar year.

Medicare Part B (medical) pays for medical expenses, clinical laboratory services, and outpatient hospital treatment. In most cases, Medicare pays 80 percent of the cost of covered services.

Covered medical expenses include physicians´ services and supplies. Some Medicare Part B services are paid as a fixed copayment under the outpatient prospective payment system.

Medicare also pays for some preventive services. Ask your physician about screening tests, flu shots, and vaccines covered by Medicare.

Medicare prescription drug coverage (also called Medicare Part D) pays for prescription drugs, both generic and brand name. You must join a prescription drug plan to have this coverage. The deadline for enrollment in Medicare Part D without a penalty is May 15, 2006.

Options for receiving Medicare benefits

Medicare enters into annual contracts with insurance companies and managed care plans to provide coverage through different types of health plans. The original Medicare plan is available to everyone. Original Medicare is also sometimes called Medicare fee-for-service or traditional Medicare. You can go to any doctor or hospital that accepts Medicare. Original Medicare coordinates with most group retirement plans, Medicaid, Medicare savings programs, and Medigap insurance.

You may have the option to join a Medicare Advantage plan (formerly called Medicare + Choice). Medicare Advantage plans include health maintenance organizations (HMOs), preferred provider plans (PPOs), private fee-for-service plans (PFFS), and medical special needs plans. You can only join a Medicare Advantage plan if a plan is available in your area and you have Medicare Parts A and Part B. Some plans may have additional eligibility requirements. The federal Centers for Medicare and Medicaid Services (CMS) administers Medicare Advantage plans. Plans provide their members with a handbook upon enrollment that outlines the complaints and appeals process for denial of services.

CMS publishes a handbook, called Medicare and You, that describes Medicare coverages and health plan options. The handbook is mailed to every Medicare beneficiary each year.

Services Not Covered by Medicare

• Long-term care services
  • Custodial care, such as help walking, getting in and out of bed, dressing, bathing, toileting, shopping, eating, and taking medicine (these are commonly referred to as activities of daily living)
  • More than 100 days of skilled nursing facility care during a benefit period following a hospital stay (the Medicare Part A benefit period begins the first day you receive a Medicare-covered service and ends when you have been out of the hospital or a skilled nursing facility for 60 consecutive days)
  • Homemaker services
• Private-duty nursing care
• Most dental care and dentures
• Health care received while traveling outside the United States, except under limited circumstances
• Cosmetic surgery and routine foot care
• Routine eye care, eyeglasses (except after cataract surgery), and hearing aids.

What You´ll Have to Pay with Medicare

Both Medicare Part A and Part B have costs that you must pay. These include monthly premiums, deductibles, copayments, and coinsurance. You also pay the full cost of services not covered by Medicare.

Premiums are amounts you pay regularly to keep your coverage. Most people do not have to pay a Part A premium, but everyone must pay the Part B premium. The premium amounts may change each year in January. A deductible is the amount you must pay for covered medical expenses before Medicare begins to pay. A copayment is a fixed charge for a medical service. Coinsurance is the percentage of the cost of a covered service that you pay after Medicare pays its portion of the cost.

Health care providers who accept "assignment" agree to limit their fee to the Medicare-approved amount for a service or supply, although you must pay any deductibles, coinsurance, or copayments due. Providers who do not accept assignment may charge as much as 15 percent above the Medicare-approved amount when treating Medicare patients. You must pay the excess amount. The amount you owe is shown on the Medicare Summary Notice that you receive from Medicare. If you were charged more than the 15 percent and paid it, your provider must refund the excess charges to you within 30 days. If you believe a provider has overcharged you, question the bill before you pay it and contact the Medicare carrier that processed your claim. TrailBlazer Health Enterprises is the Medicare carrier for Texas.

TrailBlazer maintains the Medicare Participating Physician/Supplier Directory. The directory lists physicians and other providers who accept assignment on Medicare claims. For a list of providers who accept assignment in your area, call 1-800-Medicare (1-800-633-4227) or visit the TrailBlazer website

www.the-medicare.com

Medicare Supplement Insurance

Medicare supplement insurance fills the "gaps" between Medicare benefits and what you must pay out-of-pocket for deductibles, coinsurance, and copayments. Therefore, it is often called Medigap insurance. Medigap policies only pay for services deemed by Medicare as medically necessary, and payments are generally based on the Medicare-approved charge. Some plans offer benefits that Medicare doesn´t, such as emergency care while in a foreign country. There are 12 standardized Medigap plans, labeled A through L. Each insurance company must use these same identifying letters. All companies that sell Medigap insurance must offer Plan A, but do not have to offer the other 11 plans.

If you bought a Medigap policy before standardized plans were first introduced in 1992, you may keep your existing policy. You do not have to switch to one of the 12 standardized plans.

Medigap policies are sold by private insurance companies that are licensed and regulated by the Texas Department of Insurance (TDI). Medigap benefits, however, are set by the federal government. The benefits provided by these plans are described in the appendix.

Medicare Select

Medicare Select is a type of Medigap policy that may give you a lower price in return for using only the providers on your company´s network providers list. Medicare Select coverage can be issued by an insurance company or a Medicare HMO. If you leave a Medicare Select plan, the company must make available any non-Medicare Select policy it has on the market with comparable or lesser benefits.

Alternatives to Medicare Supplement Insurance

Before you buy a Medigap policy, consider these other options:

Employee Group Plans

If you remain employed after your 65th birthday, you may continue your group health insurance where you work and may not need Medicare Part B or Medigap insurance. Likewise, if you become eligible for Medicare but are covered by your working spouse´s group health insurance, you may not need a Medigap policy.

Retirees who remain on their employers´ health plans or who have health coverage through a union or fraternal organization may not need Medigap coverage. Some employers offer their retirees coverage through a Medigap company. These are considered group Medigap plans. Because health plans work differently, talk to your employer´s benefits coordinator before making a decision about Medigap insurance.

COBRA Coverage from an Employer Plan

Federal and state law allows employees who leave their jobs to continue their employer-sponsored group health coverage for a period of time. In some cases, family coverage may also be continued. If you continue your employer-sponsored coverage, you may not need a Medigap policy. Be advised that COBRA coverage impacts the timeframes for enrolling in Medicare Part B without a penalty.

Additional information on employer coverage and COBRA is available in the CMS publication, Guide to Health Insurance for People with Medicare, which is available from TDI.

Medicare Advantage Plans

Depending on where you live, you may have the option to choose between Medicare or a Medicare Advantage plan. If you are in a Medicare Advantage plan, you don´t need a Medigap policy. Medicare Advantage plans provide at least the same benefits as Medicare. There are two types of Medicare Advantage plans:

• managed care plans, which include HMOs, PPOs, provider-sponsored organizations, and religious fraternal benefit society plans
• private fee-for-service plans.

Medicare pays a monthly premium to the Medicare Advantage plan to provide your health care. The plan may require you to pay an additional premium and may charge you a copayment each time you go to the doctor or get a prescription. To join a Medicare Advantage plan, you must have both Medicare Part A and Part B, not have end-stage renal disease, and live in an area that has a plan. Not all plans are available in all areas of the state. Call Medicare or visit the Medicare web page and select the Medicare Personal Health Plan Finder interactive page. You may also call TDI´s Consumer Help Line to learn whether any plans are available in your area.

Medicare HMOs require you, in most instances, to use only physicians and hospitals in the HMO´s network. A Medicare HMO with a point-of-service option allows you to choose your own doctors, but you will have to pay extra. You can generally go to any doctor or provider you want with a private fee-for-service plan and may receive care anywhere in the United States. The doctor and provider, however, must agree to treat you and to accept the plan´s payment terms.

If your Medicare Advantage plan terminates its contract in your service area, you have the right to purchase any Medigap plan A, B, C, F, K, or L offered in Texas without regard to your medical history or condition. If your Medicare Advantage plan ends services in your area, it must explain to you in writing your options and timeframes to buy a Medigap policy.

Medicaid and Medicare Savings Programs

If your income and assets are below a certain level, you might be eligible for Medicaid. Medicaid is a federal program administered by the states that pays for health coverage for people with low incomes. If you qualify for Medicaid, the state will pay your Medicare premiums and other Medicare out-of pocket costs. Medicaid also will pay for some services not covered by Medicare. If you receive Medicaid, you generally do not need Medigap insurance.

Medicaid-sponsored Medicare Savings Programs may pay Medicare premiums, deductibles, and coinsurance amounts for eligible Medicare beneficiaries. These programs enable Medicare beneficiaries to apply their savings to cover other expenses or buy more coverage.

The Qualified Medicare Beneficiary (QMB) program, the Specified Low-Income Medicare Beneficiary (SLMB) program, the Qualified Individuals (QI), and the Qualified Disabled Working Individuals (QDWI) program are all Medicare Savings Programs.

The federal QMB program pays the Medicare Part B premium and covers all Medicare deductibles and copayments for people with incomes below a certain level. You do not need Medigap insurance if you are in the QMB Program. QDWI pays Medicare Part A premiums. The other plans pay all or part of your Medicare Part B premium. Medicaid and the Medicare Savings Programs are administered by the Texas Health and Human Services Commission.

Texas Health Insurance Risk Pool (Health Pool)

The Health Pool offers health insurance to Texans who can´t find coverage because of their medical condition and to certain individuals who have recently lost their employer-sponsored health coverage. The Health Pool offers more comprehensive coverage than Medigap Plan A and is an option that people under age 65 may want to consider. If you have Medicare Part A and Medicare Part B and need more coverage than a Medigap Plan A offers, consider this option to supplement your Medicare coverage.

For more information, including eligibility requirements and benefits information, call the Health Pool or visit its website

http://www.txhealthpool.com/index.html
1-888-398-3927
1-800-735-2989 (TDD)

Your Rights as a Medicare Supplement Consumer

Open Enrollment

Seniors: Medigap companies must sell you a policy - even if you have health problems - if you are at least 65 and apply within six months after enrolling in Medicare Part B. These six months are called your "open enrollment" period. During open enrollment, a company must allow you to buy any of the Medigap plans it offers. You can use your open enrollment rights more than once during this six-month period. For instance, you may change your mind about a policy you bought, cancel it, and still have the right to buy any other Medigap policy, so long as the sale takes place during the six months after you enroll in Medicare Part B.

Although a company must sell you a policy during your open enrollment period, it may require a waiting period of up to six months before covering your pre-existing conditions. Pre-existing conditions are conditions for which you received treatment or medical advice from a physician within the previous six months.

Your right to open enrollment is absolute, even if you wait for several years after you become 65 to enroll in Medicare Part B because of continued employment or other reasons.

Texans with disabilities: In Texas, people under age 65 who receive Medicare because of disabilities have a six-month open enrollment period beginning the day they enroll in Medicare Part B. This open enrollment right is only applicable to Medigap Plan A. Companies selling Medicare supplement insurance in Texas may not deny you a Plan A policy because you have pre-existing conditions. Companies are not required to offer the other plans to Texans with disabilities, but they may do so if they wish. During the first six months after you turn 65 and are enrolled in Medicare Part B, you will have a right to buy any of the 12 plans.

Guaranteed Issue

You may have the right to buy a Medigap policy outside of your open enrollment period if you lose certain types of health coverage. For people over age 65, the guaranteed issue right applies to Medigap plans A, B, C, F, K, and L. For people under age 65, this guaranteed issue right applies only to Medigap Plan A. In general, this right is for 63 days from the date coverage ends or from the date of notice that coverage will end. Companies may not place any restrictions, such as pre-existing condition waiting periods or exclusions, on these policies. This is called "guaranteed issue." You must provide proof of the loss of your health care coverage. Texans under age 65 with disabilities who enroll in Medicare Part B also have guaranteed issue rights, but they are only eligible for Medigap coverage under Plan A. This guaranteed issue right is also extended to people on Medicare who lose Medicaid because of a change in their financial situation. For more information, read the Guide to Health Insurance for People with Medicare.

30-Day "Free Look"

You can return your Medigap policy within 30 days after receiving it and get your money back-with no questions asked. Be sure to keep a record of the date you received the policy. Read the policy as soon as you get it. If you return the policy to the company, use certified mail with a return receipt as proof that it was returned within the 30-day time limit.

Renewability

All Medigap policies are guaranteed renewable. A company cannot cancel your policy or refuse to renew it unless you made intentional material false statements on your application or failed to pay your premium. However, the amount of the premium is not guaranteed. An insurance company may raise your premium as often as once a year on a class basis. In addition, if you have an "attained-age policy," a company may raise your premium on your birthday.

Medicare Supplement Claims

Your doctor and other health care providers must submit Medicare claims to the appropriate carrier or fiscal intermediary for you. In most cases, the carrier or intermediary will send your Medigap claim directly to your insurance company.

Medigap policies won´t pay for services that Medicare does not deem medically necessary.

Therefore, if the carrier or intermediary denies your claim as medically unnecessary, your Medigap company won´t pay it. You have the right to appeal the decision to deny a claim. The appeal process and timeframes to request an appeal are described in your Medicare Summary Notice.

Texas law requires insurance companies to pay claims promptly. If your Medigap company refuses to pay a claim for a Medicare-approved charge or delays payment of your claims, you may file a complaint with TDI.

Group Medicare Supplement Insurance

Your rights with a group Medigap policy are essentially the same as with an individual policy. Because the group might make decisions that are out of your control, you have the following additional protections:

• If the group changes insurance companies, the new company must offer coverage to everyone previously covered. The new Medigap policy must cover pre-existing conditions that were covered by the old policy.
• If you leave the group, the insurance company must offer to provide unbroken Medigap coverage with an individual policy or continuation of your group insurance.
• If the group cancels its coverage, the insurance company must offer you either an individual policy continuing the benefits you had before or a different policy meeting Texas requirements.

Shopping Wisely for Medigap Insurance

• The best time to buy a Medigap policy is during your Medicare open enrollment period because companies must sell you any plan they offer without regard to pre-existing conditions.
• Shop around. Prices can vary considerably. Use the rate guide section of this handbook to compare the prices of the plans that interest you.
• Consider other factors. Price should not be your only consideration. You can learn a company´s complaint record and A.M. Best financial rating by calling TDI´s Consumer Help Line. Both are important indicators of the service you can expect from a company. Your family and friends are other sources of information about a company´s customer service. Ask them if they have had any experiences with the companies you are considering.
• Consider your needs. Although it is illegal to sell you more than one Medigap policy, insurers may offer other policies with benefits that may overlap Medigap coverage. These include cancer, specified disease, hospital indemnity, and long-term care policies. Any duplication of benefits must be disclosed in writing. In general, duplicate coverage wastes money because you are paying twice for the same coverage.
• Look into Medicare prescription drug coverage. Medicare Part D can help you pay your prescription drug costs. There are exclusions for certain drugs, however, and Medicare Part D won´t pay for drugs covered by Medicare Part A or Part B. Medicare Part D coverage is not automatic. You must select a Medicare-approved prescription drug plan and enroll in it. Plans are offered by private insurers. You are eligible if you have Medicare Part A or Part B.

Protect Yourself

• Read what you are asked to sign before you sign it. Never sign a blank application form.
• If an agent tries to rush you, be suspicious! Tell the agent you need more time.
• If you buy insurance by mail, ask if the company has a local agent or a toll-free number that you can call if you have questions.
• Try to buy from an agent you know and trust. Ask questions and take notes when you talk to an agent. These could help you later if there is a dispute over what you were told about a policy.
• Make sure the agent and company are licensed. You can verify company and agent licenses by calling TDI´s Consumer Help Line.
• Don´t buy a policy on the agent´s first visit. Invite someone you trust to be present during the second visit. An agent shouldn´t object.
• Answer all questions on the application accurately. If an agent helps you complete the application, make sure the information is correct and complete before you sign. Omitting or falsifying information could cause the company to deny your claims or cancel your policy.
• Do not pay cash or make a check out to an individual agent. Always pay by check or money order so you have a clear record of payment. Make checks payable only to the insurance company or insurance agency. Insist on a receipt signed by the agent on the company´s letterhead.
• Before making a lump-sum payment, ask the agent or company about reimbursement of unearned premium. This is especially important during the open enrollment period when you have the right to change companies.
• Be sure you have the names and addresses of the agent and the insurance company. Know how to contact the agent and the company if you need help.
• Read your policy carefully when you receive it. You can return a policy for any reason and receive a full refund within 30 days of the date you received it.

Unfair Practices

Agents and companies who engage in any of the following activities are breaking the law:

• Knowingly making misleading statements that causes you to drop a policy and buy a replacement from another company. This is called twisting.
• Using high-pressure tactics, including the use of force, fright, or threat to pressure you into buying a policy.
• Obtaining sales leads through advertising that hides the fact that an agent or company may try to sell you insurance. This is called cold lead advertising.
• Using misleading advertisements made to look like mail from the government by using eagles or similar graphics or a return address with a name that sounds like an official government agency or bureau.
• Posing as a representative of Medicare or a government agency.
• Selling you a Medigap policy that duplicates Medicare benefits or health insurance coverage you already have. An agent is required to review and compare your other health coverages.
• Suggesting that you falsify an application.

If you believe that an agent or company has used unfair and illegal practices with you, file a complaint with TDI.

Standard Medicare Supplement Insurance Plans. This chart summarizes the benefits offered with each plan.

For more Information about Medicare, Medicare Supplement Insurance, and Medicaid

For basic Medicare eligibility and benefits questions or information about Medicare Advantage plan options available by county or ZIP code, call Medicare or go to the Medicare Personal Health Plan Finder on Medicare´s website

1-800-MEDICARE (633-4227)
1-877-486-2048 (TDD)
www.medicare.gov

For Medicare claims or denial of service, call 1-800-Medicare (1-800-633-4227) or visit the TrailBlazer website. TrailBlazer is the Medicare carrier for Texas and is responsible for paying Medicare claims.

www.the-medicare.com

To reach other carriers or fiscal intermediaries, use the telephone numbers listed on your Medicare Summary of Benefits Notice.

For information about Medicaid or the Medicare Savings programs under Medicaid which help Medicare beneficiaries with low incomes, dial 211 on your telephone to ask about applying for these programs or call

1-888-834-7406
1-888-425-6889 (TDD)

To reach a benefits counselor or to learn about Medicare education events in your area, call the Texas Department on Aging and Disability Services (DADS) or visit their website

1-800-252-9240
www.dads.state.tx.us/index.cfm

To verify the license status of an agent or company, to file an insurance complaint, or to get information about Medicare supplement insurance, call TDI´s Consumer Help Line or visit TDI´s website

1-800-252-3439
1-800-735-2989 (Relay Texas)
www.tdi.state.tx.us

For information about your rights and public assistance benefits, call the Legal Hot Line for Older Texans or visit its website

1-800-622-2520
1-877-526-9953 (TDD)
www.tlsc.org/index.htm

Standard Medicare Supplement Insurance Plans. This chart summarizes the benefits offered with each plan.

For more information contact: ConsumerProtection@tdi.state.tx.us