Section 5 Medicare Supplement Information I. Purpose of a Supplement Insurance ............................................................................ 1 II. Types ......................................................................................................................... 1 A. Federal Employee Health Benefits (FEHB) ........................................................... 1 B. Employer Group Health Plan (EGHP)................................................................... 1 C. Consolidated Omnibus Budget Reconciliation Act (COBRA) ............................... 2 D. Specific Disease or Accident Policy ...................................................................... 3 E. Tri-Care for Life ................................................................................................... 3 F. Veterans Benefits .................................................................................................. 3 H. Medigap ................................................................................................................ 4 I. Tips for Beneficiaries When Choosing a Medigap Policy ................................... 12 III. Explanation of Terms ............................................................................................... 13 IV. Section 5 Review ..................................................................................................... 14
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Section 5 Medicare Supplement Information - Missouri CLAIM · 2019. 11. 5. · 5-1 CLAIM Manual February 2019 I. Purpose of a Supplement Insurance A person with Medicare buys or has
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Section 5
Medicare Supplement
Information
I. Purpose of a Supplement Insurance ............................................................................ 1
II. Types ......................................................................................................................... 1
A. Federal Employee Health Benefits (FEHB) ........................................................... 1
B. Employer Group Health Plan (EGHP)................................................................... 1
C. Consolidated Omnibus Budget Reconciliation Act (COBRA) ............................... 2
D. Specific Disease or Accident Policy ...................................................................... 3
E. Tri-Care for Life ................................................................................................... 3
F. Veterans Benefits .................................................................................................. 3
H. Medigap ................................................................................................................ 4
I. Tips for Beneficiaries When Choosing a Medigap Policy ................................... 12
III. Explanation of Terms ............................................................................................... 13
IV. Section 5 Review ..................................................................................................... 14
5-1 CLAIM Manual
February 2019
I. Purpose of a Supplement Insurance
A person with Medicare buys or has supplemental insurance because:
a. Medicare was never designed to pay all the health care costs for its beneficiaries.
b. Medicare coverage has not kept pace with the rising costs of medical care.
c. Medicare coverage has many gaps.
d. Medicare cost sharing has continued to increase since 1965.
e. The percentage of income that people pay for their health care has continued to
increase.
II. Types
A. Federal Employee Health Benefits (FEHB)
1. Overview
a. Coverage for federal civilian employees and their dependents.
b. Offers a choice of fee-for-service or health maintenance organizations.
c. Check with the Office of Personnel Management about accepting Part B.
FEHB plans continue paying primary for retirees who do not enroll in Part B. FEHB
is only secondary if they enroll in Part B. Whether to enroll in Part B or use FEHB
as primary coverage is a personal decision based on the circumstances, but there may
be a late enrollment penalty if a person doesn’t enroll within 8 months after active
employment ends.
2. Advantages
a. An FEHB offers coverage for family members.
b. An FEHB offers additional benefits beyond Medicare-covered services, such as
prescription drugs and yearly physicals.
3. Disadvantages
a. Some options, such as the fee-for-service and the HMO, are limited in certain
areas. People on Medicare must read through their handbooks carefully and make
an informed decision.
b. There are limitations to enrolling and dis-enrolling from a Federal Employee
Health Plan. Members should read through their handbooks carefully or call the
Office of Personnel Management at 1-888-767-6738.
B. Employer Group Health Plan (EGHP)
1. Overview
EGHP can refer to two different types of coverage. For those who are still employed,
it refers to the health insurance they have with their employers. For retirees, it refers
to the continuation or conversion health insurance policy offered as a retirement
benefit. A retiree plan is always a secondary payer and Medicare is the primary
payer. A continuation of an employer plan after a person’s active employment
ends would be considered a retiree plan. Without Medicare enrollment, a retiree
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February 2019
plan may provide little or no coverage for a person. The person can also be
subject to Medicare late enrollment penalties.
2. Advantages
a. An EGHP may offer additional benefits beyond Medicare covered services, such
as prescription drugs and yearly physicals.
b. An EGHP has no health underwriting or waiting periods.
c. The company may pay part of or the entire premium.
d. An EGHP may offer coverage for family members.
3. Disadvantages
a. Premiums may be expensive. If a person is responsible for the entire cost, it may
be more cost-effective to use a different type of supplement.
b. There may be limits to how long a person is allowed to continue coverage.
c. Coverage may not supplement Medicare well.
C. Consolidated Omnibus Budget Reconciliation Act (COBRA)
1. Overview
a. COBRA coverage is an option to continue employer group health coverage for
individuals that are terminated from work or have a reduction in work hours.
b. COBRA may allow coverage for an employee and dependents.
c. Coverage may be continued from 18 to 36 months, depending on the situation.
d. If a person has COBRA and then becomes eligible for Medicare, his or her
COBRA coverage will end.
e. If a person is on Medicare and becomes eligible for COBRA, then COBRA is
secondary to Medicare.
f. The beneficiary has eight months after active employment ends to enroll in Part
B. Beneficiaries who do not enroll in Part B within that time frame may face a
penalty. Since COBRA is secondary to Medicare, it would be important for a
person to enroll in Part B at the time active employment ends.
2. Advantages
a. COBRA may offer additional benefits beyond Medicare covered services, such as
prescription drug and yearly physicals.
b. COBRA has no health underwriting or waiting periods.
c. COBRA may offer coverage for family members.
3. Disadvantages
a. Premiums may be expensive. The beneficiary is responsible for 100% of the
premium and possibly a 2% administration fee.
b. There are limits to how long a person is allowed to continue coverage.
c. Coverage may not supplement Medicare well.
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February 2019
D. Specific Disease or Accident Policy
1. Overview
This type of policy covers expenses associated with specific diseases, like cancer,
or injuries.
2. Advantages
a. It may not restrict coverage to Medicare approved expenses.
b. Premiums tend to be inexpensive.
3. Disadvantages
a. This type of policy only pays in the event of a specific disease or accident.
b. It may duplicate Medicare coverage.
c. It may not keep up with inflation.
d. It may limit total amount of coverage.
E. Tri-Care for Life
1. Overview
a. Tri-Care for Life is a health insurance for retired military service members and
their immediate family.
b. Tri-Care for Life is for those who served 20 or more years of active military
service.
2. Tri-Care for Life
a. Medicare beneficiaries who are eligible for Tri-Care can use its prescription drug
benefit to assist with medication costs. They do not need to enroll in a Part D
plan.
b. Medicare beneficiaries who are eligible for Tri-Care can use it to supplement
Medicare.
c. Tri-Care has no premium but the beneficiary must enroll in Part B.
d. For more information on Tri-Care, call 866-773-0404 or visit