330), and it introduced the concept of geography as an important factor in determining the correct health care plan. Much research has been done in the area of choice of the appropriate plans, as they illustrate the difficulty of choosing and the tendency to focus on easily available, invariant components of prices (Kling et al.). There are several examples, such as the research made by Choi et al, when fund fees weren't minimized in an experiment using mutual funds prospectuses. A research performed by Kling et al. showed that the majority of seniors are not particularly well informed about drug plans or particularly diligent users of information sources but was content with their costly choices. In their comparison group, more than 70 percent underestimated their potential savings. This clearly shows the necessity of clearly presenting information and rationally choosing the appropriate program to fit the needs of the customer.
It is difficult to decide the most appropriate program that will balance the Medicare copayments with the person's own financial state. However, there are certain principles that can be followed to assure that an appropriate aspect of Medicare to be chosen. A person, first and foremost, should purchase a policy that covers all the deductibles and copayments for hospital and doctor bills, which means that the person will have to pay only what Medicare does not reimburse the provider for, and it limits the expense to relatively minor items (with the exception of nursing home care). The policy should also cover the skilled nursing facility co-payment for days 21 through 100 (Inlander, p. 104). A person should also look for policies that cover physician charges in excess of the Medicare-approved charge. Policies that cover these expenses should pay at least 80 percent of the excess fee up to the full balance billing limits for nonparticipating doctors. This offers further protection from large out-of-pocket expenses, which already cost Medicare beneficiaries billions of dollars each year.
One should also remember to always use a participating physician in the Medicare program although this is not always possible. However, a directory of doctors who accept assignments from Medicare can always be found at the social security offices. Negotiations with the nonparticipating physician and ask him to accept the Medicare-approved payment.
The basic features of the policy that a person desires to choose should have guaranteed renewability, no more than a six-month exclusion for preexisting conditions, no limitations to single diseases such as cancer, payment for services in full, rather than a fixed amount. Many benefit policies pay limited benefits and would not cover the Medicare deductibles or copayments. They may also provide no additional protection on the outpatient side, which is where patients need it more. Therefore Medigap plans, employee or retiree health plans, specific illness policies and long-term-care policies should be considered. Of these options, according to Inlander, the patients should keep any employer plan that they have. It may require a small contribution, but these plans were modeled after employee plans in more