Senior citizens who think passage of the Medicare Catastrophic Coverage Act of 1988, signed by President Reagan on Friday, means supplemental insurance is no longer necessary could be in for a nasty surprise, according to a representative of Blue Cross/Blue Shield of Utah, which administers Medicare here.
"In many ways, the new law is good," said Dennis B. Tierney, vice president of research and development for Blue Cross. "But to say it's the kiss of death for supplemental insurance is not responsible - and could be very harmful."The act, which will be phased in over a three-year period beginning Jan. 1, 1989, makes several changes. Part A, which deals with the hospital side of Medicare, appears likely to benefit all recipients, since it calls for one deductible for the entire year. Currently, there is a $540 deductible for each "occurrence" - any hospitalization() in a 60-day period. The deductible will be set in September and is expected to be about $565. All co-insurance co-payment features have been eliminated.
Part B, which deals with physicians, outpatient charges and other non-hospitalization items, doesn't change until 1990. It will continue to pay 80 percent of the Medicare-set "reasonable and customary" charges for an approved service, with a cap of $1,370 on out-of-pocket expenses.
That's the part, according to Tierney, that makes people think they won't need supplements. "Consumers are saying there will be no more need for insurance after that $1,370," he said. "But Medicare's definition of allowed charges can cause many people additional expense that will not be covered."
For example, if a doctor charges $150 for a procedure and Medicare approves $100 of that, it will pay 80 percent - or $80. That leaves $70 that the doctor expects to be paid. Only $20 of that, however, applies toward the $1,370 cap, because the other was not Medicare-approved expense. If a doctor takes "assignment" (hich means he accepts Medicare's figure as full payment), then nothing changes. "But fewer than half accept assignment in Utah," Tierney said.
"The target for the Part B cap was to benefit 7 percent of the group that uses Medicare. The majority, by design, were left out," he said.
In the third year of phase-in, Medicare will pay 50 percent of the cost of prescriptions above a $600 a year deductible.
To cover the costs, the Part B premium, paid by Medicare recipients, will increase by $4 a month. And another feature - one Tierney said isn't talked about much - adds a surcharge tax fee of up to $800 on the income tax bill of the Medicare cardholder. So the program, with all its benefits, is still costing everyone on Medicare, regardless of how much they use the program.
Tierney offered some suggestions to determine whether supplemental insurance is a good idea - something that can only be figured on an individual basis. "As a general rule," he said, "if you use a supplement now, you'll probably still need it." Senior citizens should also consider their current health status, but since it is impossible to predict the future, they have to consider whether they'll need a supplement later. And most supplements have an age limit, so you can't enroll if you wait too long.
Equally important is finding out if the insurance policy conforms with the laws. "Watch the fine print, because some policies won't pay if another policy is in force," Tierney said. "I would err on the side of caution, because if you cancel your supplemental policy and need it later, you may not be able to get back in."
To find out if a policy conforms with the law, call the Utah State Insurance Department, 530-6400.