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Q&A: Medigap, auto policies
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October 26, 2000: 5:52 a.m. ET
Tips on how to choose auto, liability, dental and medical insurance wisely
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NEW YORK (CNNfn) - Seniors losing their health maintenance organization (HMO) under Medicare have the right to apply for and receive one of four Medigap policies. Also, it's generally wise to drop collision coverage on your car when the annual premium exceeds one-tenth of the value of the car.
Navigating the ins and outs of your insurance policy can be tricky business. As such, consumers frequently fail to realize they're underinsured or overinsured, as the case may be, until it's too late. Here's your chance to find out the facts from a group of experts at the Consumer Federation of America (CFA).
Questions related to senior health insurance, including Medicare and long-term care policies, are fielded by Bonnie Burns, director of consumer education for California Health Advocates, the state's insurance counseling program. Check back each week to read the latest Q&A on our Insurance page.
QUESTION: I own a vacant lot in a suburb. There are several tall trees that could possibly fall on a neighbor's house. What kind of insurance do I need to get? - William
ANSWER: You need liability insurance. You probably are covered by your homeowner's policy for this (their home policies also probably cover it, unless you were negligent) but you should check with your insurer. - Bob Hunter, CFA
QUESTION: I am a software developer. I work for myself and have been covered by COBRA until now (it ends at the end of this month). My coverage is not convertible. Do you have any suggestions on how I can get or look for reasonable rates on medical/dental insurance? (Note: I'm not interested in an HMO.) - Ben
 ANSWER: We are surprised that you are not able to convert your insurance. Check that out again. Health insurance, if it is good, is expensive. Since you are not interested in an HMO, you need to shop among Blue Cross and the large life insurance companies in your state. Check with your state insurance department to see if they have a price guide to assist you in your shopping effort. - Bob Hunter, CFA
QUESTION: Hi. I just bought my son a 1995 Firebird for his upcoming 16th birthday. How should I insure the car? Should I title it in his name and insure him alone? Should I put it on my existing policy and add my son as the driver? Does it make sense to have collision coverage on a 5-year-old car with 55,000 miles on it? Also, should I increase my homeowner's liability coverage?
ANSWER: You should insure the Firebird as it will be driven. This can be done either as a separate policy for your son if you title it in his name or on your policy if you keep the car in your name. The latter will get you a multi-car discount in many insurer rating schemes. This will be expensive coverage. Young people have high rates. You should shop carefully to see if you can save money. Auto insurance prices vary widely. So shopping will be vital. Check with your state insurance department to determine if they issue a buyer's guide with auto rate comparisons in it. They usually have a young principal driver example that should help you find a low cost (relatively insurer.
Also, take a high deductible for collision. Maybe $1,000. A five-year-old car may not be worth insuring for collision, but that depends on your financial circumstance. If the car were destroyed, how would that impact you financially? Our rule of thumb is to drop collision when the premium for collision is one-tenth of the value of the car or more.
QUESTION: What's available to seniors who are losing their HMO? Medicare supplement insurance is expensive and doesn't do much. It seems the insured is just trading dollars with insurance companies with these Medicare supplements. Thanks a lot!!! - unnamed
ANSWER: When an HMO ends its contracts with the Medicare program beneficiaries have to right to apply for and get one of four Medigap policies, A, B, C, or F. Insurance companies that sell these policies cannot refuse to issue coverage, charge more than they do for someone else of the same age, or impose a waiting period for pre-existing conditions. Under federal law, people have 63 days to apply for one of these policies beginning either from Oct. 2, when HMOs notified beneficiaries that they were leaving, or from the day their HMO coverage ends on Dec. 31.
Some states provide additional protections. Medicare beneficiaries who are under 65 have the same rights, but only from companies that are already selling Medigap to these younger beneficiaries. Again, some states have stronger protections.
In general, a Medigap policy costs more than belonging to an HMO and most people who need prescription drug coverage cannot qualify for a Medigap with this benefit. Low income beneficiaries should check with their state health insurance counseling program to find out if they are eligible for one of several federal programs that will pay some or all of their premiums for Medicare, or their co-payments and deductibles under Medicare.
The name and phone number of the insurance counseling program in your state can be found in the back of the "Guide to Health Insurance for People with Medicare" published by the Health Care Financing Administration or HCFA. 
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