Because Medicare won't cover all your health-care costs during
retirement, you may want to consider purchasing a supplemental medical insurance
policy called Medigap. Medigap is specifically designed to fill some of the gaps
in your Medicare coverage.
When's the best time to buy a Medigap policy?
The best time to buy a Medigap policy is during your
open enrollment period, since you can't be turned down or charged more because
you are in poor health. If you are age 65 or older, your open enrollment period
starts when you first enroll in Medicare Part B. Or, if you are not yet 65, your
open enrollment period starts when you turn 65, and then lasts for six months. A
few states also require that a limited open enrollment period be offered to
Medicare beneficiaries under age 65.
If you don't buy a Medigap policy during your open enrollment
period, you may not be able to buy the policy you want later.
Note: If you are currently age 62 or younger, you should be
aware that your eligibility for Medicare may be affected by the increase in the
normal retirement age for Social Security. Starting in 2000, the age for
collecting full Social Security benefits will gradually increase from age 65 to
age 67 over a 22-year period. This means that the age at which you can begin
receiving Medicare benefits may be greater than 65 (if current law still
applies) because the date you become eligible for Medicare is the date you reach
normal retirement age. However, neither the Social Security Administration nor
the Health Care Financing Administration has yet published information on how
the change in normal retirement age will affect Medicare eligibility.
What does a Medigap policy cover?
Under federal law, only ten standardized plans can be offered as Medigap plans.
All ten must cover certain services, no matter in which state you live. Medigap
policies pay most, if not all, Medicare coinsurance amounts. Some also provide
coverage for deductibles and services that are not covered by Medicare such as
prescription drugs and preventive care.
Each Medigap policy is labeled with the letter "A"
through "J". You can buy the Medigap plan that best suits your needs.
Plan "A" is the basic benefit plan, while Plan "J" offers
the most coverage. However, it is important to note that not all ten plans are
available in every state.
What is Medicare SELECT?
bus Reconciliation Act of 1993 makes qualifying for
Medicaid more difficult for those people who transfer their assets away without
receiving fair value in return. If you transfer assets away for less than fair
consideration within 36 months of your application for Medicaid, the law creates
a waiting period before you can collect Medicaid benefits. Transfers into
certain trusts within 60 months of your Medicaid application also will also
cause a period of ineligibility.
Medicare SELECT is another Medicare supplemental health insurance product. It's
almost identical to standard Medigap insurance. When you buy a Medicare SELECT
policy, you are buying a standard Medigap plan. The only difference between a
Medicare SELECT plan and a Medigap plan is that Medicare SELECT is a managed
care plan. In order to be eligible for full benefits, you must use specific
hospitals, and sometimes specific doctors. That's why Medicare SELECT premiums
are usually lower than premiums for Medigap policies that do not require the use
of managed care.
However, it's still possible to plan for long-term care and
comply with the various Medicaid rules. Trusts, transfers of the family home,
purchase of exempt assets, outright transfers under the "half-a-loaf
strategy," and the purchase of long-term care insurance, among others, can
be effective planning tools and strategies for this purpose. For details, see
your financial adviser or an attorney experienced with Medicaid planning.