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Customers of Sterling Life Insurance Company’s Option 1 Medicare plan can soon expect greater flexibility, more benefits toward an active lifestyle, and even lower rates.
“People have been very receptive to the changes,” said Bob Schmidt, a Sterling agent from the St. Louis area. “And then they find out about our great customer service, and they’re even happier.”
Sterling Option 1 is a Medicare+Choice private fee for service (PFFS) plan, which means it is offered by a private health insurer, in contrast to the customer’s original Medicare plan, which is offered by the federal government. In a PFFS plan, Medicare pays a set amount of money each month to the insurer in exchange for providing health care services.
The Option 1 Medicare Advantage Plan is geared toward those that want greater flexibility with their choice. It is also accepted nationally and offered to residents in over 30 states. Most users are people that have been on Medicare part A+B plans, or people that are receiving disability benefits.
PFFS plans are a hybrid between Medicare HMOs and traditional Medicare fee-for-service plans. The plans offer both costs benefits and freedom of choice.
Schmidt explained that Option 1 supports active seniors by covering out of network costs they may incur while on vacation.
“It’s different because it’s not an HMO,” he said. “Beneficiaries are free to choose their doctors, which is important for those that spend winters in Florida. With other plans, you may incur costs using out of network care. Ours allows you to go anywhere.”
Advocates of PFFS plans say the plans could reduce costs for senior citizens and disabled people by charging co-payments and eliminating the need to buy supplemental Medicare policies. Traditional Medicare fee-for-service plans require deductibles and 20 percent coinsurance, and they leave many gaps in care.
Beneficiaries must pay a monthly premium, plus co-payments. The plans cover all Medicare Part A and Part B services. Although they do not cover prescriptions, many preventative health benefits are offered:
Routine physicals up to $150 per year
Vision tests up to $100 per year
Eyewear (frames and lenses) up to $200 bi-annually
Hearing test up to $100 per year
Routine dental up to $300 per year
Gym fees up to $36 per month
Some of the costs include:
$9 per month monthly premium, plus an $88.50 monthly premium for part B of Medicare
$10 co-pays for care from primary care doctors and specialists
$50 co-pays for ER visits (waived if admitted)
$36 co-pays per day for admission to skilled nursing facilities
$150 per day co-pays for each hospital admission days one through five
$50 additional co-pays per day up to $500 for failure to notify your plan of hospital admission.
In addition, worldwide emergency care is available with a $250 annual deductible, 80 percent coverage of charges, and an annual maximum of $25,000.
Beginning Jan. 1, 2007, clients can expect greater service at a reduced price in many cases:
Inpatient hospital mental health coverage co-pay is lowered from $150 to $100
There is no longer a penalty for non prior notification of being hospitalized
Skilled nursing costs are reduced from $35 to $30
Home health care now has a $10 co-pay
Specialists office visits are reduced from a $35 to $30 copay
Ambulance service co-pay is reduced from a $150 to $100 co-pay
Preventative dental health benefits go from $100 up to $300
Sterling is the only insurer in the country that sought federal government approval to offer the alternative Medicare plan.
"They've seen something that the others haven't," said Mervyn John, plan manager of the Health Plan Administration Group of the federal Health Care Financing Administration (HCFA), which runs the Medicare program. No other insurers have submitted applications to HCFA to offer such plans, he said.
According to Sterling documents, the company hopes to capitalize on the 1997 Balanced Budget Act, which allows private insurers to offer Medicare plans. "Sterling intends to become the dominant issuer of Medicare products nationwide," it said.
“The plan really allows our beneficiaries a lower cost,” added Schmidt. “Our plan has always been very proactive towards our customers.”
For information about the costs and services under a traditional Medicare plan, read Understanding Medicare.
For more information about benefits, costs, and availability, visit
You can call Sterling at (888) 858-8572. Sterling, based in Chicago, is a subsidiary of Aon Corp.
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