TN 9 (06-92)
HI 00820.065 Tailoring Interview to the Individual Situation
There are limitations on reenrollment and premium penalties for late enrollment. Therefore, the individual should be given necessary information to make sure that terminating SMI is best for him or her. The information provided in HI 00820.060 should be helpful in this regard, as well as whichever of the following background information is pertinent.
B. BACKGROUND - OTHER INSURANCE
1. Retired Individuals
Employees and/or their spouses who are covered under an EGHP/LGHP that is primary payer to Medicare (see HI 00620.177 and HI 00620.178) may not want SMI until the EGHP/LGHP coverage based on current employment ends. (See HI 00805.265ff.)
Retired individuals may believe that they can also rely on other insurance when SMI is terminated. However, this is not the case. Medicare is primary payer if the EGHP/LGHP is not based on current employment. Therefore, retired individuals should make sure that such other coverage does not depend on continuing SMI.
2. GPPP and HMO Coverage
Many group practice prepayment plans (GPPP) and Health Maintenance Organization (HMO) plans will drop an eligible member from their rolls if he or she does not continue SMI coverage.
3. “Medigap” Policies
“Medigap” insurance generally offers only complementary protection. This, in effect, covers certain gaps in SMI or HI (such as the deductible or coinsurance) or may provide only specified weekly cash payments during extended hospitalization. (Also, see B.5. below.) The value of such insurance, in the absence of SMI entitlement, is questionable.
4. Medicare as Primary Payer
Where services are covered both by SMI and other insurance, and Medicare is the primary payer of benefits, SMI benefits are payable first, without regard to what the other insurance may pay.
Medicare is the primary payer of benefits where the individual is covered under an EGHP from an employer with fewer than 20 employees, or is entitled to SMI only, or has Premium-HI.
NOTE: See HI 00620.178 for information about Medicare as primary payer of benefits for the disabled Medicare beneficiary.
5. Medicare as Secondary Payer
Many EGHP/LGHPs have deductible and coinsurance requirements that Medicare, as secondary payer, will cover. Nevertheless, the monthly SMI premium may be viewed by some enrollees as excessive when SMI will pay only secondary benefits.
However, even for those with primary coverage under an EGHP or LGHP, having SMI as a secondary payer of benefits may be preferable to not having SMI at all. The controlling factor here would be the extent of the coverage provided by the EGHP/LGHP. Some plans provide excellent coverage, but others do not.
6. FEHBA Coverage
It may sometimes be beneficial to an individual enrolled in the high option of a plan under the Federal Employees Health Benefits Act (FEHBA) to retain SMI coverage and switch to the low option of the FEHBA plan. Most low options adequately supplement full Medicare coverage (hospital and medical insurance). The combined cost of SMI and the low option is often less than for the high option alone.
An annuitant's former personnel office, or the Office of Personnel Management, Washington, D.C. 20415, can give the annuitant the information needed about the effect of electing the low option.
7. Veterans' Care
Many veterans indicate that they do not need SMI because the Department of Veterans Affairs (VA) will provide them with medical care. However, the VA has certain priorities for providing care in VA hospitals and for approving services by a private physician or hospital. Only the VA can discuss particular aspects of eligibility under its program.
Before a veteran terminates SMI in reliance on VA care, he or she should contact the VA to make sure of eligibility.
8. CHAMPUS and CHAMPVA
CHAMPUS beneficiaries lose that coverage when they become eligible for Medicare Part A (except for dependents of active-duty personnel). They should, therefore, be cautious about terminating SMI unless they have received definite information from the Department of Defense about not needing SMI.
The CHAMPVA program, while administered by the VA, is not for veterans. CHAMPVA coverage is for the spouse, surviving spouse, and children of certain veterans. CHAMPVA beneficiaries also lose coverage under that program upon becoming eligible for Part A. These people should also be cautious about terminating SMI and should not do so without contacting the VA.
9. Compare Private Coverage
The person planning to buy private (non-SMI) insurance to take the place of SMI should first determine the availability and cost of comparable comprehensive medical insurance.
Blue Shield and other private insurance companies have publicly advised eligible individuals that SMI is a good buy, particularly with Government contributions paying more than three-quarters of the cost.
In many cases, private companies limit their protection for SMI-eligible individuals to complementary insurance because the premium for comprehensive insurance would be prohibitive.
C. BACKGROUND - OTHER REASONS FOR ENDING SMI
1. Few Medical Expenses
Some enrollees, who have had infrequent medical expenses to date, may think they do not need SMI. However, most people can expect illness as they grow older. As with other types of insurance protection, people hope that they will not have to use the insurance, but protection (such as life, fire, auto, casualty and theft insurance) is important in case of loss.
2. Delay in Processing Part B Claims
Beneficiaries may complain about problems with filing claims and delays in receiving notices or payment. They may be unaware that, effective with services received on or after 9/1/90, doctors, suppliers, and other providers of services must submit the claims to Medicare for the patient. In addition, to saving effort by the enrollee, this procedure reduces processing time.
More physicians now take assignment than in the past, which saves both time and money for the enrollee.
3. Cannot Afford Premium
If inability to afford the SMI premium is a problem, it is likely that the individual will not be able to meet his or her medical expenses either.
Where income is limited, the enrollee may be able to qualify for Medicaid, and in some States will be covered (and have premiums paid) under a State buy-in agreement.
If the individual is planning to pay medical bills out of savings or current income, he or she may be able to save substantial amounts in the long run by continuing SMI coverage.