Don’t Buy More Policies Than You Need. Duplicate coverage can be expensive and generally is unnecessary. A single comprehensive policy is better than several policies with overlapping or duplicate coverage. Federal law prohibits an insurer from selling you a second Medigap policy unless you state in writing that you intend to cancel the first policy after the replacement policy goes into effect. Recent changes in the law affect beneficiaries who get help from the state through its Medicaid program in paying their health care costs. Anyone who sells you a policy in violation of the various anti-duplication provisions is subject to criminal and/or civil penalties under federal law. Call 1-800-638-6833 to report suspected violations.

Consider Your Alternatives. Depending on your health care needs and finances, you may want to consider continuing the group coverage you have at work, joining a managed care plan, buying a Medigap policy, or buying a long-term care insurance policy.

Check For Pre-existing Condition Exclusions. In evaluating a policy, you should determine whether it limits or excludes coverage for existing health conditions. Many policies do not cover health problems that you have at the time of purchase. Pre-existing conditions are generally health problems you saw a doctor about within the 6 months before the date the policy went into effect.

If you have had a health problem, the insurer might not cover you for expenses connected with that problem. Medigap policies, however, are required to cover pre-existing conditions after the policy has been in effect for 6 months. Some companies have shorter waiting periods before covering a pre-existing condition.

Beware of Replacing Existing Coverage. Be careful when buying a replacement Medigap policy. Make sure you have a good reason for switching from one policy to another—you should only switch for different benefits, better service, or a more affordable price. On the other hand, don’t keep inadequate policies simply because you have had them for a long time. If you decide to replace your Medigap policy, you must be given credit for the time spent under the old policy in determining whether and to what extent any pre-existing conditions restrictions apply under the new policy. You must also sign a statement that you intend to terminate the policy to be replaced. Do not cancel the first policy until you are sure that you want to keep the new policy. You have 30 days to decide.

Policy Delivery or Refunds Should be Prompt. The insurance company should deliver a policy within 30 days. If it does not, contact the company and obtain in writing the reason for the delay. If 60 days go by without a response, contact your state insurance department.

Prohibited Marketing Practices. It is unlawful for a company or agent to use high pressure tactics to force or frighten you into buying a Medigap policy, or to make fraudulent or misleading comparisons to get you to switch from one company or policy to another. Deceptive “cold lead” advertising also is prohibited. This tactic involves mailings to identify individuals who might be interested in buying insurance. If you fill in and return the card enclosed in the mailing, the card may be sold to an insurance agent who will try to sell you a policy.

Be Aware of Maximum Benefits. Most policies have some type of limit on benefits. They may restrict either the dollar amount that will be paid for treatment of a condition or the number of days of care for which payment will be made. Some insurance policies (but not Medigap policies) pay less than the Medicare-approved amounts for hospital outpatient medical services and for services provided in a doctor’s office. Others do not pay anything toward the cost of those services.

Policies to Supplement Medicare Are Neither Sold Nor Serviced by the State or Federal Governments. State insurance departments approve policies sold by private insurance companies but approval only means the company and policy meets requirements of state law. Do not believe statements that insurance to supplement Medicare is a government-sponsored program. If anyone tells you that they are from the government and later tries to sell you an insurance policy, report that person to your state insurance department or federal authorities.

This type of misrepresentation is a violation of federal and state law. It is also unlawful for a company or agent to claim that a policy has been approved for sale in any state in which it has not received state approval or to use fraudulent means to gain approval.

Know With Whom You’re Dealing. A company must meet certain qualifications to do business in your state. You should check with your state insurance department to make sure that any company you are considering is licensed in your state. This is for your protection. Agents also must be licensed by your state and may be required by the state to carry proof of licensure showing their name and the company they represent. If the agent cannot verify that he or she is licensed, do not buy from that person. A business card is not a license.

Keep Agents’ and/or Companies’ Names, Addresses and Telephone Numbers. Write down the agents’ and/or companies’ names, addresses and telephone numbers or ask for a business card that provides all that information.

Take Your Time. Do not be pressured into buying a policy. Principled sales people will not rush you. If you are not certain whether a policy is what you need, ask the salesperson to explain it to a friend. Keep in mind, however, that there is a limited time period in which new Medicare Part B enrollees can buy the Medigap policy of their choice without special conditions being imposed. Once this open enrollment period ends, you may be limited as to the Medigap policies available to you, especially if you have a pre-existing health condition.

If You Decide To Buy, Complete the Application Carefully. Do not believe an insurance agent who says your medical history on an application is not important. Some companies ask for detailed medical information. If you leave out any of the medical information requested, coverage could be refused for a period of time for any medical condition you neglected to mention. The company also could deny a claim for treatment of an undisclosed condition and/or cancel your policy.

Look For an Outline of Coverage. You must be given a clearly worded summary of the policy . . . READ IT CAREFULLY.

Do Not Pay Cash. Pay by check, money order or bank draft made payable to the insurance company, not to the agent or anyone else. Get a receipt with the insurance company’s name, address and telephone number for your records.

For Your Protection

As previously noted, federal criminal and civil penalties can be imposed against anyone who sells a Medigap or other health insurance policy in violation of the anti-duplication and other insurance laws. Penalties may also be imposed for claiming that a Medigap policy meets legal standards for federal certification when it does not, or for using the mail for the delivery of advertisements offering for sale a Medigap policy in a state in which it has not received approval.

Additionally, it is illegal under federal law for an individual or company to misuse the names, letters, symbols or emblems of the U.S. Department of Health and Human Services (DHHS), the Social Security Administration, or the Health Care Financing Administration. It also is illegal to use the names, letters, symbols or emblems of their various programs.

This law is aimed primarily at mass marketers that use this information on mail solicitations to imply that the product is either endorsed or is being sold by the U.S. government. The advertising literature is often designed to look like it came from a government agency. If you believe that you have been the victim of any unlawful insurance sales practices, contact your state insurance department immediately.

If you believe that federal law has been violated, you may call 1-800-638-6833. In most cases, however, your state insurance department can offer the most assistance in resolving insurance-related problems.

Source: 1997 Guide to Health Insurance for People With Medicare, HCFA

A new study released in December by the Gerontology Institute, the John W. McCormack Graduate School of Policy Studies, University of Massachusetts Boston and Wider Opportunities for Women, concludes that many Massachusetts elders regularly struggle to make ends meet. Living costs are among the highest in the nation, especially in housing and health care. In the face of rising expenses, many elders’ incomes at best see a modest cost of living adjustment each year; they are spending down retirement savings, and/or face growing debt. At the same time, seniors may be prepared for the present but face a challenging future if their life circumstances change due to illness, loss of a spouse, or need for help with daily tasks.

This report focuses on the challenges of meeting expenses for low- and moderate-income older adults. Census data reports that 22% of Massachusetts elder households aged 65-74 had 1999 incomes under $15,000 and 38% had incomes under $25,000; of those 75 years and older, 34% had incomes under $15,000 and over half had incomes under $25,000. With inflation, $15,000 represents $17,584 in today’s dollars, and $25,000 represents $29,307 today.

The study found that:

1. Elders who live alone in Massachusetts cannot make ends meet at the poverty level or at the

average Social Security payment without subsidies for housing and health care.

• Depending on their housing, health and geography, elders living alone in Massachusetts need between

$14,700 and $28,100 to cover basic living costs. The federal poverty level for a one-person household in

2006 is $9,800.

• The average Social Security payment for a retired elder in 2006 is $12,024, less than half of what some

elders in Massachusetts need to cover their basic expenses.

• Social Security is the only source of income for three out of ten retired elders.

2. Elder couples in Massachusetts cannot make ends meet at the federal poverty level or at the average

Social Security payment without subsidies for housing and health care.

• Depending on their housing, health and geography, elderly couples in Massachusetts need between

$21,400 and $39,100 to meet their basic household budgets. The federal poverty level for a two-person

household in 2006 is $13,200.

• The average Social Security payment for a retired elder couple in 2006 is $19,776, half of what some

elder couples in Massachusetts need for basic costs.

• Social Security is the only source of income for one out of nine retired couples.

3. Massachusetts’ high housing costs put a heavy burden on elder households, from 33 to 52 percent of total expenses, depending on their living circumstances.

• The Elder Standard reflects wide variation in housing costs depending on whether elders own or rent and

by community. Elders who own a home without a mortgage typically face lower housing costs than

those paying fair market rents. Elders paying a mortgage face even higher housing costs.

• The monthly cost for elder homeowners without a mortgage ranges from a low of $419/month in

Hampden County (33%  of total budget) to $605/ month in Norfolk County (41% of total budget).

• The monthly cost for elders paying fair market rent for a 1-bedroom apartment ranges from a low of

$545/month in Berkshire County (36% of total budget) to a high of $1,200/month in Nantucket

County (52% of total budget).

4. The Elder Standard shows health care costs are the second largest expense for Massachusetts elders,

who need to purchase full supplemental health and prescription drug coverage to Medicare.

• The Elder Standard includes premium costs of full supplemental health and prescription drug coverage

to Medicare, because they are needed to have protection against high medical and prescription drug

costs. Co-pays, deductibles and fees are added which vary according to elders’ health status.

• Elders in Massachusetts face combined health care costs (premiums plus co-pays, deductibles and fees) of $252-$390 per month to have protection against high medical and prescription drug costs. The highest costs are in Berkshire, Dukes and Nantucket counties, because there are no lower cost managed care plans available.

• Retired couples are unable to purchase supplemental health insurance through a “family plan;” they must

each buy it as individuals. For elder couples, the costs are doubled, ranging from $504-$780 per month.

5. Some elders who are currently making ends meet face uncertainty if their life circumstances change,

such as losing a spouse or experiencing a change in health status.

• A member of an elder couple paying market rate rent in Massachusetts has expenses reduced by only 25-36% when a spouse dies yet their income can decrease substantially based on the mix of Social Security and/

or pension income.

• Having full supplemental health and prescription drug coverage to Medicare (including Prescription

Advantage) helps protect elders from a dramatic rise in health care costs with a decline in health, but the

added cost is still sizable.