Truth About Insurance & Supplemental Insurance

Truth About Insurance & Supplemental Insurance
by Rex Lee Reynolds
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Rex Lee Reynolds
To say anything other than it totally cracks me up when I see all the fancy ads from the insurance companies, would be a complete understatement. It's like seeing a bunch of vultures hovering over some old people.

They start running the ads in the fall, when it's coincidentally flu and cold season, tons of them from tons of companies, all trying to get in there and get money from senior citizens that are on Medicare, and who are worried about what Medicare does not pay. It all sounds well and good, but there's another side to the story.

The idea that getting your Medicare supplement policy is going to pay the rest of what Medicare does not pay is pure baloney. The insurance companies are not there for their health, or yours either for that matter. They're running all those repetitive and glamorous ads to make people thing they won't owe anything after than expensive hospital stay. The supplemental insurance doesn't pay all the difference, and you can take that to the bank. That's the way it works regardless of your age. There are of course supplemental policies for younger people also, but naturally the cost is higher for older people, with more likelihood that the older people will have a need to use the policy. Thus we see a ridiculous flood of ads just before the holidays, aimed at the fifty million older people who are on medicare.

Let's face it. Those insurance companies are selling insurance to people who are in their sixties and beyond, that are not in anyway a good bet. So something has to give, right? You bet it does, and what has to give is those older people buying the extra insurance and being told they are home free, when in fact they really are not. They will be shocked after they're operation to find they still owe a small fortune, even after their supplemental policy pays in addition to Medicare.

Trust me, the voice of experience, someone who has worked in the insurance industry for many years, and specifically in the supplemental insurance area. That supplemental policy is designed to protect the insurance company far more than it is designed to protect the policyholder. It has to be because the insurance company is not in business to lose money, which is exactly what they would do if they paid everything that Medicare does not.

Let's do the math on this for a moment, shall we? And while we do keep in mind the key paragraphs in your supplement policy, being namely Exclusions & Limitations and Reasonable & Customary.

Okay, so somebody has a hospital stay for a few days, and the total bill comes to $50,000, which is very realistic. We know Medicare is supposed to pay 80%, but if I'm not mistaken Medicare also uses the reasonable and customary thing, which could mean that they could say that only $30,000 of the $50,000 is reasonable & customary. So they pay 80% of the $30,000 which is $26,000 left for someone else to pay. Guess who?

So our person was wise enough to get a Medicare Supplement policy that is supposed to pick up that difference of $26,000. When our recovering policyholder looks closely at the fine print, he notices the Reasonable and Customary clause, which means that basically the supplement pays about whatever the insurance company deems as reasonable & customary, meaning they pay about whatever they want.

Now for the real kicker, which is a kick in the head and maybe other painful areas to our policyholder. This is the Exclusions & Limitations clause, which may say that the insurance company only pays for certain things, and may also say that they do not pay for any pre-existing conditions. And trust me here, if our policyholder didn't state at the time of signing about that heart or other pre-existing condition, the insurance company has ways of finding out about it, if they don't out and out fabricate it in order to save themselves some big bucks.

So the bottom line is that the policyholder can very easily get stuck for that remaining $26,000 that Medicare did not consider reasonable & customary, and which the insurance company did not either, along with the exclusions & limitations imposed by the insurance company. So, in short the policyholder is pretty much totally screwed! If you think this is an exaggeration, I will tell you for a fact, it happens every day.

So what is someone on Medicare to do other than hope and pray that they don't get sick or injured and have to endure a hospital stay? For one thing, read the find print very carefully before putting their name on the dotted line on that supplemental policy.

For another thing and even more importantly, older people should do as much as they can to protect their health with down-to-earth common sense methods, as described in my book Checklist For Staying Healthy.

Sure, insurance is a good thing, and they need to make money, they are not non-profit organizations, and it's fine with us if they make some money, but we are all too familiar with the unnecessary greed that so often happens at the expense of the rest of us.

With a little planning ahead and careful examination of the supplemental insurance many people can be much better off by making more intelligent decisions about their healthcare costs. And more important than anything, make sure they do their best to stay in good health as much as possible as described in Checklist For Staying Healthy

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