Elderly Should Review Health-Care Policies

Millions of senior citizens should re-evaluate their health insurance and financial plans if Congress, as expected, repeals most or all of the Medicare catastrophic health-care program. Some policies may need to be expanded to pick up the slack.

But if you are a senior--or if you are a concerned son or daughter trying to help your elderly parents--be wary of premium price hikes, fast-talking sales pitches and other hype from insurers trying to capitalize on the confusion.

Repeal of catastrophic care--a response to protests from wealthy seniors angry about higher taxes to finance the program--was approved in the House this week while the Senate voted for a stripped-down version that retains expanded hospital benefits but eliminates other benefits.

That leaves open the possibility again that some severe illnesses or other medical calamities could subject you to extreme financial hardship if you do not have private “Medigap” insurance or other coverage to supplement Medicare.

Repeal of most or all catastrophic care benefitsmeans that enhanced Medigap policies may be a requirement for many seniors, consumer advocates say. With the catastrophic care program, they had said just the opposite, questioning whether the policies would really be needed at all starting next year, when catastrophic coverage was scheduled to take full effect.

“Repeal (of catastrophic care) puts pressure on people who don’t have Medigap policies to reconsider again,” says J. Robert Hunter, president of the National Insurance Consumer Organization in Alexandria, Va.

“It’s a whole new ball game again regarding Medigap,” says James P. Firman, president of the United Seniors Health Cooperative, a Washington consumer group.

But even if you have Medigap coverage, you may find that your policy must be expanded to cover long hospital stays and other items that the catastrophic program began to cover this year or would have covered next year.

Accordingly, some experts say, Medigap insurance providers may hike premiums as much as 20% to 30%, on top of similar increases last year that raised annual premiums to between $400 and $800, or even higher. And insurance marketers are likely to issue a barrage of new pitches to capture sales, including trying to get those with existing policies to buy new ones.

“Good companies will be conscientious in making sure existing policy holders don’t suffer too much and that there is a smooth transition,” says Robin Talbert, senior program specialist in consumer affairs at the American Assn. of Retired Persons. “But at the same time, some unscrupulous agents or brokers will try to make a quick buck off the confusion that will result.”

Basic Medigap policies will continue to cover many items not covered by Medicare, such as doctor bills and possibly such things as prescription drugs.

But if catastrophic care is repealed completely, as in the House version, Medigap plans must be expanded to restore coverage for long-term hospital stays. That is because if catastrophic care is repealed in entirety, Medicare will likely revert to its old coverage limits that provided for only up to 90 days of hospitalization with a $540 deductible in 1988. Patients also had to make co-payments of $135 per day in 1988 for days 61 through 90. Under that old plan, for any stay after 90 days, you were liable.

Medicare catastrophic coverage this year began covering hospitalization costs for up to 365 days a year--subject to one annual deductible of $560 this year and $592 next year. Accordingly, Medigap plans this year dropped long-term hospitalization coverage.

The Senate voted to retain this benefit, but if the House version prevails in conference committee and long hospital stays are not covered under Medicare, some Medigap policies are likely to restore that coverage automatically, consumer advocate Hunter says. State insurance regulators may also step in and require that all Medigap plans offer full hospitalization coverage.

“That’s extremely important,” Hunter says. “This is the one area that can wipe you out financially.”

But don’t panic and rush out and buy the first offer that comes around, consumer advocates say. Don’t be pressured into a quick decision. Read any policy carefully before you buy it.

Wait for the final result from Congress and for objective consumer-oriented information about Medigap revisions, such as that likely to be provided in Consumer Reports magazine and other journals.

Use free counseling services provided by many states. In California, the state-funded Health Insurance Counseling and Advocacy Program provides free health insurance counseling and legal assistance in certain circumstances involving claims or payments. For information and referrals, call the California Insurance Department’s consumer hot line at (800) 233-9045.

Avoid buying more than one policy because multiple policies are usually duplicative and force you to pay unnecessary extra dollars.

If you are considering changing policies--perhaps if your old one is hiking premiums sky high--check for pre-existing condition clauses that may limit your coverage.

Also, ask if you really need Medigap. If you have retiree group medical coverage through your old employer, you probably don’t need supplemental insurance. Ditto if you are enrolled in a solvent health maintenance organization or other prepaid health plan. And it still may make sense for people with a lot of money to self insure, Firman says.

And irrespective of your decision on Medigap, consider whether you need long-term care insurance to cover nursing home expenses. This was generally not covered in the catastrophic plan anyway. More and more long-term care policies are becoming available, with better terms and conditions.

Also consider meeting with a financial adviser to draw up a financial plan.

Bill Sing welcomes readers’ comments and suggestions for columns but regrets that he cannot respond individually to letters. Write to Bill Sing, Personal Finance, Los Angeles Times, Times Mirror Square, Los Angeles, Calif. 90053.