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Continuation of existing coverage can meanyou will not have to wait before “pre-existing”medical conditions are covered. Group policiesare sometimes less expensive than individualpolicies, and may offer benefits such asprescription drugs and routine dental care. Butemployer group insurance is not necessarilyMedicare supplement insurance, and does notfall under the same rules. Furthermore, groupinsurance may not pay your medical expensesduring any period in which you were eligiblefor Medicare but did not sign up for it. If youcan continue your employer group coverage,be sure to ask how it covers the gaps notcovered by Medicare, for what length of timebenefits continue, and whether your spousewill remain covered in the event of your death.If you have a spouse younger than 65 who wascovered under an earlier policy, make sure youknow what effect your continued coverage willhave on his or her insurance protection. Youremployer or group insurance representativecan answer these questions.You may obtain a Medicare supplement planeven if it duplicates your retiree health planbenefits. However, this may not serve yourbest interests. Medicare supplement policiesmust pay full benefits even if the retiree planpays for the same service. However, if theretiree health plan contains a coordination ofbenefits clause, it will not pay duplicatebenefits.6 MEDICARE SUPPLEMENT

Basic Facts about MedicareSupplement InsuranceFlorida residents can buy any one of 10standard Medicare supplement plans as theirMedicare supplement insurance. Chart B onpages 24 and 25 summarizes the benefits ofeach plan. Under Florida law, any sale that willprovide an individual with more than oneMedicare supplement policy is prohibited. Anyadditional supplement coverage sold mustinclude a signed statement from the individualthat it will replace the existing policy. Thisstandardization of Medicare supplementpolicies offers many advantages to Floridaconsumers, including:Simplification – Insurance companies that sellMedicare supplement policies in Florida canonly provide 10 standard plans for you tochoose from. All companies that sell Medicaresupplements in Florida must offer Plan A.Remember, you can buy only one Medicaresupplement policy.MEDICARE SUPPLEMENT 7

Consistency – All companies mustconsistently label their plans. This labelingincludes Plans A through J, depending uponwhat each company offers. The benefits foreach plan are identical from company tocompany. For example, Plan B offered by onecompany has the same coverages and benefitsas Plan B offered by another company. Onlythe companies’ services and premiums mayvary.PremiumsFor policies currently being issued in Florida,premiums are established on an issue-agebasis. Issue age means the premiums dependon the policyholder’s age at the time ofpurchase. Premiums may increase due tobenefit changes or overall premiumadjustments, but not due to advancing age.Before Oct. 1, 1993, however, Floridians couldbuy policies on an attained or uniform agebasis. This meant the premiums depended ontheir age at the latest policy anniversary, or onother factors. Insurance companies no longeruse such methods to calculate premiums,except for policies sold before this date thatremain intact.Most companies will reserve the right to adjustpremiums because of inflation, claimsexperience and benefit adjustments in yourpolicy as Medicare benefits change. Forexample, when the Medicare Part A deductibleincreases, a company usually raises itspremiums to pay for the increased deductible itcovers in your policy.8 MEDICARE SUPPLEMENT

When a company increases its premiums, itmust do so for an entire policy class. It cannotsingle you out and raise your premiums basedon your health or the number of claims youhave filed.Protection against duplicate coverage –Duplicate coverage is expensive andunnecessary. Therefore, companies and theiragents may provide you, by law, only onepolicy. Agents may not sell you a Medicaresupplement policy if you already have one anddo not want to replace it.Pre-existing conditions – A pre-existingcondition refers to an illness diagnosed ortreated, or an illness for which an ordinary,prudent person would have sought treatment ordiagnoses within six months before a policy’sissue date. Florida law limits the reduction orlimitation of coverage for these conditions tosix months.Credit for Continuing Coverage – Floridalaw protects consumers changing from onepolicy to another. If a Medicare supplementpolicy replaces another Medicare supplementpolicy or other creditable coverage, thereplacing insurer must waive any time periodsapplicable to a pre-existing conditions clauseby the length of time under the previouscoverage. Most major medical insurance willqualify as creditable coverage.Therefore, if an individual has six months ormore of continuous coverage when applyingfor a new policy, the insurer would not applyMEDICARE SUPPLEMENT 9

the pre-existing condition exclusion. If theindividual has three months of previouscontinuous coverage, the insurer would reducethe pre-existing condition exclusion from a sixmonth period to three months.Guaranteed renewal – All individualMedicare supplement plans sold in Floridamust be guaranteed renewable. This meansFlorida law prohibits companies fromcanceling these policies except for nonpaymentof premium or for a “materialmisrepresentation” on your originalapplication. Material misrepresentationmeans deliberately providing false informationor leaving out key facts.Open enrollment periods – Many companiesoffering Medicare supplement policies reservethe right to underwrite your application — toask you questions about your health and habits— when deciding whether or not to issue youone of their policies. Although underwriting isa legal and acceptable business practice,federal law requires all companies to provideresidents with an open enrollment periodwhen the company must accept yourapplication and cannot discriminate in thepricing of the policy, regardless of yourmedical history, health status or claimsexperience.Your open enrollment period for Medicaresupplement insurance begins the first day ofthe month in which you turn 65 and areenrolled in Medicare Part B. If your birthdayfalls on the first day of the month, however,10 MEDICARE SUPPLEMENT

your Medicare Part B coverage and yourMedicare supplement insurance openenrollment begin the first day of the previousmonth.In addition, if you are 65 years or older andenrolled in Medicare Part B, you have a twomonth open enrollment period when you arechanging from a group health insurance policyto a Medicare supplement insurance policy.Persons receiving Medicare before age 65because of a disability or end-stage renaldisease can also take advantage of openenrollment when they turn 65. If you fall intothis category, you will qualify for a six-monthopen enrollment period for Medicaresupplement insurance as outlined above.For most others, you can determine whetheryou are in your open enrollment period bychecking your Medicare card for your Part Bcoverage effective date. Add six months to thatdate. If the current date falls within that sixmonth period, you may participate in openenrollment.MEDICARE SUPPLEMENT 11

During open enrollment, a company cannotrefuse to issue you any of their Medicaresupplement policies or discriminate in thepricing of these benefits because of healthstatus, claims experience, receipt of health careor medical condition. Although this provisionguarantees that your policy will be issued,Medicare supplement insurance companiesmay impose the same waiting period for preexisting conditions that they apply to policiessold outside the open enrollment period.Regulations for your protection — A numberof statements must appear on any Medicaresupplement application (or on a separate form)to help ensure that Florida policyholders areaware of their Medicare supplement options.These statements include the following: You do not need more than one Medicaresupplement policy. If you are 65 or older, you may qualify forbenefits under Medicaid and may notrequire a Medicare supplement policy. The benefits and premiums under yourMedicare supplement policy will besuspended for 24 months during yourentitlement to benefits under Medicaid.Youmust request the suspension within 90 daysof becoming eligible for Medicaid. If youare no longer entitled to Medicaid, yourpolicy will be reinstated if requested within90 days of losing Medicaid eligibility. Counseling services may be available inyour community to provide advice12 MEDICARE SUPPLEMENT

concerning your purchase of Medicaresupplement insurance. Be sure you read and understand thesestatements before you sign the form. Agents who sell Medicare supplementinsurance plans must ask questions todetermine if you have other Medicaresupplement or health insurance policies.Your responses are important. Companiesmust report this information to the FloridaDepartment of Insurance.What about Medicaid Eligibility?You may buy Medicare supplement insuranceand later qualify for Medicaid. If so, you maysuspend your Medicare supplement coveragefor up to 24 months. To do so, you must makea written request to the insurance companywithin 90 days of qualifying for Medicaid.During the suspension period, you are notcharged premiums and you do not receivebenefits from the Medicare supplement policy.You may become ineligible for Medicaidwithin 24 months of the suspension of yourMedicare supplement policy. If so, your insurermust reinstate your Medicare supplementpolicy. You must notify your company,however, within 90 days after becomingineligible for Medicaid.MEDICARE SUPPLEMENT 13

What about New Medicare Options?The options you have to choose from forcovering the expenses that Medicare does notchange from time to time.Seniors may choose between original Medicareand several health care alternatives. Here aresome of the options currently available.Medicare Choice (Medicare Plus Choice) –These plans provide health care services toenrolled members under a contract withMedicare. These plans offer care in return forregular payments from Medicare, and mayreduce your out-of-pocket expenses or provideadditional benefits.There are two Medicare Choice options: Medicare “managed care” plans – Thisoption features a network of Medicareapproved doctors and hospitals, whichincludes Medicare HMOs and providersponsored organizations (PSOs). Someplans may restrict your health care access14 MEDICARE SUPPLEMENT

to only those professionals within thenetwork, while others may allow you to useoutside doctors or hospitals for an extrafee. Private “fee-for-service” plans – Withthese plans you choose a private insuranceplan that accepts Medicare beneficiaries.The plan provides benefits in return forfederal compensation. Plan administratorsdecide how much to pay for coveredservices; however, your health-careprovider may charge you a limited fee forwhat your plan does not pay. You will alsolikely owe a regular premium in addition toyour Medicare Part B premium.In considering Medicare Choice, seniorsshould realize that the availability of someoptions depends upon private business andmarketing decisions. It may take several years,if ever, for some of these options to becomeavailable in your area. If you enroll in aMedicare Choice plan, then you do not needany other Medicare supplement coverage.Religious fraternal benefit plan – Onlymembers of a particular society may join oneof these plans. The society must meetMedicare and federal tax standards.Medicare medical savings account (MSA) –You obtain a health insurance policy with ahigh yearly deductible. Medicare pays aregular premium, which it deposits into yoursavings account. You can build up this accountto pay for extra medical costs. However, youMEDICARE SUPPLEMENT 15

must pay a “high deductible,” which oftencosts several thousand dollars for coveredservices. In addition, providers can charge youany amount beyond what your plan will pay.“High deductible” plans –“High deductible”plans – Some beneficiaries may likecontrolling costs through a high deductible, butmay not want to obtain an MSA. The lawallows — but does not require —insurancecompanies to offer two new Medicaresupplement plans. These “high deductibile”options that fall under plans F and J, like theremaining standard plans, fill some costs notcovered by Medicare. For 2002, thepolicyholder must pay a 1,620 deductibleannually for covered services. This amountwill increase in future years.In considering Medicare Choice, seniorsshould realize that the availability of someoptions depends upon private business andmarketing decisions. It may take several years,if ever, for each option to become widelyavailable.Medicare HMOsSee “Medicare Choice” in this section, orpage 4 of this guide.Seniors with general Medicare questions maycall 1-800-MEDICARE (1-800- 633-4227), orthe Elder Helpline at 1-800-96-ELDER(1-800-963-5337). They may also log on to theMedicare’s Web site at www.medicare.gov.16 MEDICARE SUPPLEMENT

Medicare Select Policies“Medicare Select” began as a demonstrationprogram in 15 states, including Florida, butwas later expanded to include all 50 states.Medicare Select offers the same basic coverageas the 10 standard plans available throughtraditional Medicare supplement insurance.However, companies may require consumerswho obtain Medicare Select policies to use aspecific network of health care providers and/or facilities. Except for an emergency case, itdepends upon the company policy whetheryour coverage will include care from aphysician outside the network. Insurancecompanies usually charge lower premiums forMedicare Select policies than for traditionalMedicare supplement policies.When a Medicare Select policyholder receivescovered services from a network provider,Medicare will pay its share of the approvedcharges. The Medicare Select plan will coverthe rest up to the limits of the policy. Ingeneral, Medicare Select polices will denypayment or pay less than the full benefit if yougo outside the network for non-emergencyservices. Medicare, however, will still pay itsshare of approved charges in such situations.MEDICARE SUPPLEMENT 17

Medicare Select CompaniesThe following list shows some of thecompanies offering Medicare Select policies inFlorida as of December 2001. This list maychange due to factors such as consumerdemand and marketing decisions. Companiesother than those listed here may offer MedicareSelect policies. You may wish to contactcompanies that offer Medicare supplementinsurance in Florida to see if they also offerMedicare Select policies.American Pioneer LifeInsurance Co.(407) 628-1776Mutual of Omaha1-800-775-6000Bankers Life and Casualty Co.1-800-621-3724Physicians MutualInsurance Co.1-800-228-9100Blue Cross and Blue Shield ofFlorida, Inc.1-800-876-2227Pyramid Life Insurance Co.1-800-444-0321Continental Life Insurance Co.of Brentwood, Tenn.(615) 377-1300Gerber Life Insurance Co.1-800-253-3074State Mutual InsuranceCompany1-888-717-6200*United HealthcareInsurance Co.(860) 702-5000*Available only to members of the AmericanAssociation of Retired Persons18 MEDICARE SUPPLEMENT

If You Have a Policy Other than one ofthe Standard PlansMedicare supplement policies sold in Floridaon or after Jan. 1, 1992 must be one of 10standard plans. However, policies issued withan effective date before 1992 are still valid.If you have a policy issued before 1992, youmay replace it with one of the 10 standardplans. However, if you switch to one of thestandard plans, you will not be allowed to goback to your old policy.You do not need to replace your existing policywith one of the 10 standard plans. Manypolicies with an effective date before 1992include coverages and benefits not found inany of the 10 standard plans. Also, theirpremiums may cost less than a comparablenew policy. Before you make any changes,compare all benefits and rates between yourexisting policy and any new policy. (See page46 for a comparison-shopping checklist andcontact your current company for anyadditional questions about your existingpolicy.) To ensure continuous coverage, do notcancel your existing policy until you receiveconfirmation that your new policy has takeneffect.MEDICARE SUPPLEMENT 19

Effects of Other Coverage on YourMedicare Supplement PolicyIn addition to your Medicare supplementpolicy, you may be considering or have alreadybought other health coverage, such as a majormedical plan, indemnity plan, or a limitedbenefit plan such as a cancer-expense plan.Although a Floridian may own any of theseplans, this may create a duplication ofcoverage when combined with Medicare and aMedicare supplement policy. This means youmay pay twice for the same coverage. Federallaw now requires that a statement appear onthe policy that discloses this information.Policyholders who obtain Medicaresupplement insurance usually do not needother coverage.Comparison Shopping Examples forMedicare Supplement InsuranceThe next few pages contain charts and otherbenefit summaries that: describe what Medicare pays, outline the 10 standard Medicaresupplement plans and offer a checklist for comparison shopping.You may use the checklist on pages 49-50 tocompare the services and costs amongcompanies once you become familiar with the20 MEDICARE SUPPLEMENT

benefits of Medicare and supplementalinsurance plans A-J.Each of the 10 standard Medicare supplementplans offers a different combination ofbenefits. Be sure you understand plandifferences.All companies selling Medicare supplementinsurance in Florida must provide Plan A. Inaddition, they may provide any of theremaining nine standard plans, but do notnecessarily have to do so. Discuss thecombination of benefits for each plan withyour agent.MEDICARE SUPPLEMENT 21

Chart A — Medicare PaysWhat Medicare PaysServicesMedicare Paysin 2002For Each Period*HOSPITALIZATION (PART A)Semiprivate room andmeals, general nursingand miscellaneousservices and suppliesAll but 812All but 203/dayAll but 406/dayFirst 60 days61st-90th daysNothingAfter 150 days91st day and after:while using 60reserve days*SKILLED NURSING FACILITY CARESemiprivate room andmeals, skilledrehabilitative andnursing services andmiscellaneous servicesand supplies (after athree-day hospital stay)All approved costsFirst 20 daysAll but 101.50/day 21st-100th daysNothing101st day and afterBlood–First three pintsPer calendar yearBLOODWhen provided during acovered stay*Payments depend upon a “benefit period,” which begins on the first day you receive services as aninpatient in a qualified hospital. This period ends after you have been out of the hospital or skillednursing facility for 60 days in a row.22 MEDICARE SUPPLEMENT

Chart A — Medicare Pays (continued)What Medicare PaysServicesFor Each PeriodMedicare Paysin 2002HOSPICE CARECare for thete

Insurance Consumer Helpline toll-free at 1-800-342-2762. If you have questions after reading this guide, please call our Insurance Consumer Helpline toll-free at 1-800-342-2762 between 8 a.m. and 4:45 p.m. Monday through Friday. The hearing impaired may use a TDD to call 1-800-640-0886. You may also contact the service office in your area (listed inside the back cover of this guide). Sincerely .