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Federal Consumer Information Center Medicare Questions and Federal Consumer Information Center: Medicare - Questions and Answers

Section 1: The Original Medicare Plan (continued)

Q: What is a Private Contract?

A: A private contract is a contract between a Medicare beneficiary and a doctor or other practitioner who has decided not to provide services through the Medicare program (not bill for any service or supplies to any Medicare beneficiary for at least 2 years). Under a private contract:

  • No Medicare payment will be made for the services you receive.
  • You will have to pay whatever the doctor or practitioner charges you with no limit on the charges (the limiting charge will not apply).
  • Medicare managed care plans will not pay for these services.
  • No claim should be submitted, and Medicare will not pay if one is.
  • If you have a Supplemental Insurance (Medigap) Policy, it will not pay anything for this service. Contact your insurer before you receive the service.
  • Many other insurance plans also will not pay for the service.

The private contract only applies to the services provided by the doctor who asked you to sign it. You cannot be asked to sign a private contract when you are facing an emergency or urgent health situation. You may want to talk with someone in your State Health Insurance Assistance Program* before signing a private contract. If you want to pay on your own for services the Original Medicare Plan doesn’t cover, your doctor does not have to leave Medicare or ask you to sign a private contract. You are always free to obtain non- covered services on your own if you choose to pay for the service yourself.

* You can find phone numbers for your area in your copy of Medicare & You or on the Internet at under Important Contacts.

Q: What is a Medicare Supplemental Insurance (Medigap) Policy?

A: There are many types of private health insurance/ coverage that will pay for some or all of your health care costs not covered by Medicare. These types of private health insurance/ coverage include:

• Employee Coverage (from your employer or union);

• Retiree Coverage (from your employer or union); and

• Medigap Insurance (from a private company or group).

People often refer to all of these types of private health insurance / coverage as “supplemental.” However, “Medicare Supplemental” or “Medigap” insurance is a specific type of private insurance that is subject to federal and state laws.

If you choose the Original Medicare Plan rather than a Medicare managed care plan, you may decide that you need more coverage than the Original Medicare Plan provides. Medigap policies only work with the Original Medicare Plan. Many private insurance companies sell Medigap policies for the specific purpose of filling the “gaps” in Original Medicare Plan coverage. These policies must be clearly identified as Medigap policies and must provide specific benefits that help fill in gaps in your Original Medicare Plan coverage. Similar coverage may also be available to retirees through an employer or union health coverage. Other types of insurance may also be available to you to help with out-of-pocket health care costs, but they are not Medigap policies.

For more information about Supplemental Insurance Policies, call 1-800-MEDICARE (1-800-633-4227 or TTY/TDD: 1-877-486-2048 for the speech and hearing impaired).

In all States except Minnesota, Massachusetts, and Wisconsin, federal law limits the Medigap policies that companies may sell up to 10 standardized supplemental policies. These 10 plans must be labeled with the letters A through J to make it simple to compare plans. State law may limit the types of Medigap policies that are actually sold in your State.

Medigap policies pay most, if not all, of the Original Medicare Plan coinsurance amounts and may provide coverage for the Original Medicare Plan deductibles. Some of the 10 standardized plans pay for services not covered by Medicare such as outpatient prescription drugs, preventive screening, and emergency medical care while traveling outside the United States. Some Medigap policies cover health care provider charges in excess of Medicare’s approved amount, and for some care in your home.

Medicare SELECT is a type of standardized Medigap insurance policy. If you buy a Medicare SELECT policy, you are buying one of the 10 standardized Medigap plans. The only difference between Medicare SELECT and standardized Medigap insurance is that each insurance company has specific hospitals, and in some cases specific doctors, that you must use, except in an emergency, to be eligible for full supplemental insurance benefits. Medicare SELECT policies generally have lower premiums because of this requirement.

For more information on Medigap policies, you may get a copy of the Guide to Health Insurance for People with Medicare from the Health Care Financing Administration by calling 1-800-MEDICARE (1-800-633-4227 or TTY/TDD: 1-877-486-2048 for the hearing and speech impaired).

Q: What happens if I retire and I or my spouse has employer or union-provided health insurance?

A: You may have health coverage through your or your spouse’s current employer or union membership. If you have this kind of coverage, find out if it can be continued after you retire. Check the price and the benefits, including benefits for your spouse.

Group health coverage continued after retirement usually has the advantage of having no waiting periods or exclusions for pre- existing conditions. Coverage is usually based on group premium rates, which may be lower than the premium rates for a policy you buy yourself.

Caution: If you have a spouse under age 65 who was covered under your group health plan, make sure you know what effect your continued coverage will have on his or her insurance protection. Call your health plan administrator for more information.

Q: What health benefits must be provided if I am age 65 or older and still work?

A: Employers with 20 or more employees must offer the same benefits, including health benefits under the same conditions, to current employees age 65 and over as they offer to younger employees. If they offer coverage to spouses, they most offer the same coverage to spouses age 65 and over that they offer to spouses under age 65. If your employer and/or employer group health coverage does not follow this rule, you should call the Department of Labor.

Caution: If you drop your employer-based group health coverage, you probably won’t be able to get it back. Call your health plan administrator for more information.

Q: What happens if I or my spouse stops working and I am already enrolled in Part B?

A: If you or your spouse stops working and you are already enrolled in Part B, you should:

• Tell your Medicare Carrier by phone or in writing that your or your spouse’s employment situation has changed.

• Give the Medicare Carrier the name and address of the employer plan, your policy number with the plan, the date coverage stopped, and why.

• When you get health care services, tell the doctor or hospital that Medicare now pays first and should be billed first. Give the date your group health plan coverage stopped.

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