Chapter 11

Guaranteed Issue, Renewability and Cancellation

A Medicare Supplement policy must be offered on a guaranteed issue basis if applied for during the 6-month period following a beneficiary's first enrollment in Medicare Part B. An insurer offering a Medicare Supplement cannot: Deny or condition the issuance or effectiveness of a Medicare supplement policy that is offered and is available for issuance to new enrollees by the issuer. Discriminate in the pricing of that Medicare supplement policy because of health status, claims experience, receipt of health care, or medical condition. A probationary period for preexisting conditions for which a beneficiary has received advice, diagnosis, or treatment in the six months preceding application may still apply for the first 6 months after the policy is issued. Medicare supplement policies must be issued at least guaranteed renewable and cannot be terminated for a reason other than nonpayment of premium or material misrepresentation.

Medicare Supplement Minimum Benefit Standards Policy Requirements

A Medicare Supplement policy must contain a 30-day free look provision on the first page in bold print allowing the purchaser a full refund of premiums paid if returned during this period. The policy must also contain an Outline of Coverage containing information on benefits, deductibles, exclusions, and premiums. The insurer is required to explain the relationship of this coverage to the benefits of Medicare. Losses resulting from accident and sickness must be paid on the same basis. The insurer must also provide a Buyer's Guide and an Outline of Coverage at the time of application. A signed acknowledgment indicating receipt of these documents is required.

Notice of Medicare Benefit Changes

A policy that pays benefits according to the cost sharing percentages of Medicare must automatically change to coincide with any changes in the Medicare laws. The insurer must notify the insured of the changes in Medicare deductibles and copays as well as any adjustments to the policy.

Long-Term Care Exclusions

Acute care (hospitalization) Rest cures Nervous or mental disorders which have no demonstrable organic cause (Alzheimer's disease cannot be excluded) Injury or sickness caused by war or any act of war, declared or undeclared Intentionally self-inflicted injuries Chemical dependency unless it results from the administration of drugs under a physician's prescription and direction Conditions covered under Workers' Compensation Injury arising out of committing or attempting to commit a felony Services provided outside the United States

Continuation and Conversion

If a group policy is terminated by the group policyholder, the insurer must offer a certificate holder one of the following: An individual policy providing the same benefits as the group policy An individual policy that provides only benefits required to meet the minimum standards If the group policy is replaced with another group policy, the replacing insurer must offer the same coverage to all persons covered under the former policy without any new or additional waiting periods and exclusions. If a group policy is purchased during the open enrollment period, the policy must be issued regardless of the group's health status.

Premium Rates and Increases

Any premium rate adjustments and increases must be provided to the insured in writing by the insurer at least 30 days prior to the effective date of the change.

Long term care partnership policies

California was one of the original four states that instituted a Long- Term Care Partnership program. The term 'partnership' is used because the insurance coverage is a result of a cooperation or partnership between state Medicaid agencies and insurers. The goal is to encourage the purchase of long term care policies that subsequently will ease the financial burden on Medicaid. The purchase and use of a partnership policy does not guarantee future Medicaid enrollment. California has two types of partnership policies: Comprehensive - These policies provide benefits for both institutional care and home care. Facility Only - These policies cover only care provided in a facility, such as skilled nursing, intermediate nursing, assisted living, or other residential facilities. California LTC Partnership policies: Must be tax qualified as previously described Must include 5% compound inflation protection unless the applicant is 75 years of age or older Provide "asset disregard," which means whatever benefit amount a partnership policy paid will be disregarded from a person's assets if Medicaid is applied for in the future. Assets will not have to be 'spent down' and the policy's paid benefit amount will be deducted from a person's estate should Medicaid later attempt to recover its expenses after the recipient dies.

Suitability Standards and Requirements

Insurers who market and sell long term care policies must develop and maintain a copy of suitability standards for solicitation and sales. All producers must be trained in the company's suitability standards. A copy of the insurer's suitability standards must be made available for inspection by the Commissioner. Suitability standards determine: The applicant's ability to pay for the proposed coverage The applicant's goals or needs regarding long term care and the advantages/disadvantages of long term insurance in meeting those goals or needs Whether the applicant already has an existing long term care policy that will be supplemented or replaced, and the advantages/disadvantages of such a transaction Whether issuing long term care insurance coverage to an applicant is appropriate Applicants must complete and submit a Long-Term Care Personal Worksheet (as developed by the NAIC) that will be used to determine suitability. If the purchase of a long term care policy is determined to be unsuitable for the client, a Letter of Unsuitability will be provided to the applicant.

Cognitive Impairment

Involves the loss of memory and deductive or abstract reasoning due to an organic mental illness, including Alzheimer's disease and senile dementia. Also includes impairment due to traumatic brain injury, such as a stroke or blunt-force trauma. Impairment in any of the ADLs is not required under this classification.

Medicare Overview

Medicare is a federal health insurance program that was originally designed to provide hospital and medical insurance primarily for citizens and legal residents age 65 or over. The program has been expanded to provide coverage to citizens and legal residents of any age who have been: Diagnosed with chronic or permanent kidney failure, or End Stage Renal Disease Received Social Security Disability Income for at least 24 consecutive months Medicare is administered by the Centers for Medicare & Medicaid Services (CMS), a separate division within the Department of Health and Human Services Administration, and is responsible for reviewing and approving Medicare claims. Note: Originally, eligibility for Medicare coincided with eligibility for Social Security retirement benefits. Medicare eligibility remains at age 65, even though the Full Retirement Age for retirement benefits has changed. Primary vs. Secondary Payor If an individual is age 65 or over and continues to work, coverage may be provided by Medicare and an employer group health plan the individual participates in. A Group Health plan with 20 or more employees is primary to Medicare and pays first. If the employer's plan does not pay all of one's expenses, Medicare will pay secondary benefits for Medicare covered services to supplement the group plan benefits. Employers who have 20 or more employees are required to offer the same health benefits and under the same conditions to employees and spouses age 65 or over, as offered to younger employees and spouses. Small group health plans covering less than 20 employees may be designated primary or secondary to Medicare by the Medicare-eligible employee. Insurers are permitted to charge a higher premium when their health plan is made primary to Medicare. Medicare Products The "Original" Medicare program consists of two parts, Part A and Part B. Both parts are provided by the government for basic hospital and medical expense coverage, including amounts that the recipient must pay out-of-pocket, such as deductibles and coinsurance. There are currently four parts of coverage available under Medicare: Part A - Hospital Insurance provided by the federal government Part B - Medical Insurance and outpatient expenses provided by the federal government Part C - Medicare Advantage plan substitutes Part A and Part B into a managed care plan offered by private insurance providers in place of Original Medicare Part D - Prescription drug coverage offered by private insurance providers Medicare Enrollment Periods At age 65, enrollment in Medicare Part A is mandatory for all citizens and legal residents. Enrollment is automatic and "premium-free" for those who are fully insured under Social Security. For those who are not fully insured at age 65, enrollment is still automatic but there is a premium required. Failure to enroll in Part A and pay premiums beginning at age 65 may result in a 10% premium penalty for twice the number of months a beneficiary should have been enrolled in Part A. A worker may continue to earn credits up to the 40 required for fully insured status, after which time the Part A premium will end. Individuals with less than 30 credits will pay a higher monthly premium than individuals with 30-39 credits. Medicare Part B is optional, and may be rejected penalty free at age 65 if a beneficiary is covered by an employer-sponsored plan as an employee or spouse. Enrollment can be delayed when employer coverage is primary due to active employment of the individual at age 65. Failure to enroll in Part B, when required, may result in a lifetime cumulative premium penalty of 10% for each 12 month period a beneficiary was not enrolled in Part B. Once eligible, individuals are required to enroll in Medicare Parts A and B for coverage to begin. The following enrollment periods apply: The Initial Enrollment Period lasts 7 months and begins 3 months before the month of an individual's 65th birthday and ends 3 months after the month following when the individual turned age 65. The actual month of eligibility is the month of the individual's birthday. The General Enrollment Period provides an open enrollment period from January 1 to March 31 each year for those who did not enroll in Medicare Part B when they first became eligible. For individuals enrolling during the general enrollment period, coverage begins on July 1. The Medicare Open Enrollment occurs every year from October 15 - December 7 and provides all individuals the chance to make changes to their Medicare coverage if needed. The Special Enrollment Period begins when a person past age 65 who was covered by an employer-sponsored group health plan is no longer covered by the plan (whether the person elects COBRA continuation or not). This period lasts 8 months and allows an individual the opportunity to enroll in Medicare Part B without incurring the lifetime premium penalty for failing to enroll at age 65.

The Long-Term Care Need

National studies indicate that at some point, 40% of people over age 65 will enter a nursing home. The older a person, the greater the possibility of a need for some kind of long-term care. Medicare provides very limited coverage (skilled nursing) for long-term care. Medi-Cal provides coverage but only when a specific monthly test of assets and income is satisfied. The need for coverage can arise at any age.

Plan A - Core Benefits

Plan A is the basic Medicare Supplement plan and must be offered by all insurers marketing Medicare Supplements. Plan A provides the core benefits that must also be included in all other Medigap plans. The core benefits include: Coverage of Part A Medicare eligible expenses for hospitalization to the extent not covered by Medicare from the 61st day through the 90th day in any Medicare benefit period Coverage of Part A Medicare eligible expenses incurred for hospitalization to the extent not covered by Medicare for each Medicare lifetime inpatient reserve day used Upon exhaustion of the Medicare hospital inpatient coverage including the lifetime reserve days, coverage of 100% of the Medicare Part A eligible expenses for hospitalization subject to a lifetime maximum benefit of an additional 365 days Coverage under Medicare Parts A and B for the reasonable cost of the first 3 pints of blood Coverage for the coinsurance amount (20%) of Medicare eligible expenses under Part B regardless of hospital confinement, subject to the Medicare Part B deductible Coverage of actual cost of an annual mammogram and cervical cancer screening to the extent not paid by Medicare. Hospice Care - Coverage of cost sharing for all Part A Medicare eligible hospice care and respite care expenses

Activities of Daily Living

The Activities of Daily Living (ADLs) include bathing, continence, dressing, eating, toileting, and transferring. Insurers may include the definition of ambulating within the definition of transferring, but ambulating by itself cannot be included as an ADL in a tax-qualified LTC policy. If the insured is incapable of performing or requires "stand-by assistance" with any two or more of these ADLs, the benefits will be triggered. The insured is considered to be functionally impaired. A Physician Certification stating the patient is chronically ill and in need of long-term care is required.

Long-Term Care Insurance Defined

The Long-Term Care (LTC) insurance regulation is intended to promote the availability of long-term care coverage. Long-Term Care insurance includes any individual policy, group policy or rider that is advertised, marketed, offered, solicited, or designed to provide coverage for no less than 12 consecutive months. It may cover diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services that are provided in a setting other than an acute care unit of a hospital.

Which of the following is not a core benefit in a Medicare Supplement policy?

Up to 365 days of long-term care expenses after three days of hospitalization

Policy Provisions

Waiver of Premium - Most Long-Term Care policies include a waiver of premium benefit that provides for premiums to be waived after the stated elimination period has elapsed and for as long as disability continues. The elimination period in a long term care policy is a one-time requirement. Inflation Protection (Cost of Living) - At the time of application, LTC policies must offer the insured the option of purchasing inflation protection that provides for the daily benefit amount and benefit maximums to increase based on reasonably expected increases in the cost of services provided in the policy. LTC insurers in California must offer this feature that is not less favorable than one or more of the following: Annual increase at a rate of not less than 5% of the original daily benefit either at a fixed or compounding rate Guarantees the insured the right to periodically increase benefit levels without evidence of insurability or claims history as long as the option for the previous period has not been declined Covers a specified percentage of actual or reasonable charges When an applicant does not accept the offer of inflation protection, the producer must obtain a signed statement that the applicant has been made aware of and rejects the inflation protection benefit. Guaranteed Insurability Option (Future Increase Option) - Provides for future periodic increases without proof of insurability, even if the insured is on claim. Future purchase options will increase the premium each time an increase in daily benefit is accepted. Return of Premium - This optional benefit provides for a refund of a portion of the premium to a named beneficiary if the insured dies before all benefits pay out. The refund is offset by the amount of any claims paid prior to the insured's death. Nonforfeiture Options - This rider will provide paid-up coverage if the insured cancels or lapses the policy due to nonpayment of premium. The nonforfeiture amount will be used to provide future benefits based on the premiums that were paid into the policy. Nonforfeiture options include: Cash Surrender Value - Provides a lump sum payment of surrender values accumulated in the policy Reduced Paid-Up - Reduces the daily benefit for the duration of the benefit period once premiums have been discontinued Extended Term - Provides for the current daily benefit limit to be paid for a reduced number of years based on the discontinuance of premium payments Preexisting Conditions A Long-Term Care policy cannot more restrictively define a preexisting condition than "a condition for which advice or treatment was recommended or received within 6 months of the effective date of coverage." Prohibited Provisions A Long-Term Care policy may not contain a provision that: Cancels, nonrenews, or terminates the policy on the grounds of age or deterioration of the mental or physical health of the insured; a Long-Term Care policy may only be cancelled by the insurer for nonpayment of premium Establishes a new waiting period when existing coverage is converted or replaced by a new form, except when the insured voluntarily selects an increase in benefits Provides coverage for only skilled nursing care instead of lower levels of care Limits or denies benefits to a policyholder who is diagnosed with any destructive brain tissue disease that will result in loss of brain function Provides for payments of benefits based on standards described as "usual and customary" or "reasonable and customary" or words of similar importance (policies must pay actual expenses, up to the dollar limitations of the policy)

Applicant Questions

All application forms must include questions to determine if at the date of application: The applicant currently has a Medicare supplement, Medicare Advantage, Medi-Cal coverage, or another health insurance policy or certificate in force. A Medicare supplement policy or certificate is intended to replace any other disability policy or certificate presently in force.

Ca consumer protection

All insurers, brokers, agents and others engaged in the business of insurance owe a consumer a duty of honesty, good faith, and fair dealing. The conduct of an insurer, broker, or agent during the offer and sale of a policy must not breach the duty of honesty, good faith, and fair dealing. A copy of any long term care insurance advertisement intended for use in this state must be provided to the Commissioner for review at least 30 days before dissemination. Advertisements must be retained by the insurer for at least 3 years. An advertisement designed to produce leads must prominently disclose that "an insurance agent will contact you", if that is the case. The following acts and practices are prohibited: Twisting - Intentionally making any false or materially inaccurate representation or comparison of two or more policies which induces any person to lapse, forfeit, surrender, or not take, a policy of insurance. High-Pressure Tactics - Using any marketing method that induces or even tends to induce the purchase of insurance through force, fright, threat or undue pressure. Such unlawful pressure may be either implicit or simply implied. Cold Lead Advertising - Using any method of marketing that fails to conspicuously disclose that a purpose of the advertising is the solicitation of insurance and that contact will be made by an insurance agent or insurance company. An agent, broker, or other person who contacts a consumer as a result of receiving information generated by a cold lead device must immediately disclose that fact to the consumer. Every insurer providing Long-Term Care Insurance in California must: Establish marketing procedures to assure that any comparisons of policies will be fair and accurate and that excessive insurance is not sold or issued. Submit a list updated semiannually of all agents or representatives authorized to solicit consumers for the sale of Long-Term Care insurance. Display prominently on the first page of the policy and the outline of coverage: "Notice to buyer: This policy may not cover all of the costs associated with long-term care incurred by the buyer during the period of coverage. The buyer is advised to review carefully all policy limitations." Provide to a prospective applicant, at the time of solicitation, written notice that the Health Insurance Counseling and Advocacy Program (HICAP) provides health insurance counseling to senior California residents free of charge. Provide a copy of the long-term care insurance shoppers guide developed by the California Department of Aging to each prospective applicant prior to the presentation of an application or enrollment form for insurance.

Duplication

An agent cannot sell a policy that duplicates the coverage benefits already provided by medicare or sell more than one medigap policy to a medicare beneficiary.

Commissioner's Annual Rate Guide

Each year, the Commissioner will prepare a rate guide for Medicare supplement insurance contracts, which must be available on or before the date of the fall Medicare annual open enrollment. The rate guide must include: A listing of policies and plans (A-D, F, G, K-N) for each company that sells Medigap policies in California, which are available for Medicare beneficiaries under age 65. The toll-free telephone number of the company that consumers can use to obtain information from the company. Sample rates for each policy listed using ages 0-65, 65, 70, 75, and 80. The premium rate methodology for each policy listed. "Premium Rate Methodology" means attained age, issue age, or community rated. The waiting period for preexisting conditions for each policy listed. This consumer rate guide must be distributed using all of the following methods: Through Health Insurance Counseling and Advocacy Program (HICAP) offices. By telephone, using the department's consumer toll-free telephone number. On the department's Internet website.

LTC Minimum Benefit Standards and Exclusions

Every Long-Term Care policy must provide a 30-day free look period from the date the policy is delivered. If the applicant is not satisfied, the policy may be returned for a full refund and the policy is void. LTC policies also must contain a renewal provision that is not less favorable to the insured than Guaranteed Renewable. A guaranteed renewable policy requires the insurer to continue to renew, but may increase rates based on the "class" of insureds, such as age. The renewal provision must be stated on the first page of the policy. A Long-Term Care policy may be cancelled for nonpayment of premium. Every group policy must provide for continuation or conversion if the group coverage is terminated for any reason other than the insured's failure to make a required payment when due. An Outline of Coverage must be delivered to an applicant on the initial solicitation and prior to the presentation of the application form. The outline must include: A description of benefits and coverages Exclusions, reductions and limitations Explanation of the renewability provision and possible increase in premiums A description of the free look provision Continuation, conversion, and replacement rights of the insured The relationship of cost of care and benefits Every insurer issuing LTC policies must include the benefits for care of individuals who have Alzheimer's disease. Every LTC policy must include basic policy requirements in the policy provisions. An Extension of Benefits must be provided if institutionalization began while the policy was in force and continues without interruption after termination of the policy if due to nonpayment of premiums. The extension of benefits may be limited to the duration of the benefit period or to the payment of maximum benefits.

Qualified Long-Term Care Insurance

Favorable tax treatment is given to the benefits from Long-Term Care contracts that meet the following requirements for "tax qualified" status: The only protection in the contract is for Long-Term Care. The contract does not pay any Medicare reimbursable expenses. The policy must be a guaranteed renewable contract. The policy has no cash value accumulation that may be assigned as collateral, borrowed or surrendered for value. A policy may include a nonforfeiture option that allows conversion of an LTC policy to paid-up status, or refunds the balance of premiums paid which are in excess of claims paid. All refunds or dividends must be applied to either reduce premiums or increase benefits. The policy must comply with the NAIC Model Act which has been adopted by most states. The Act defines qualified long-term care services as: Required diagnostic, preventive, therapeutic, curing, treating and rehabilitative required for a chronically ill or injured person and the services are provided by a licensed care giver, OR The person is expected to be functionally unable to care for themselves for a period of 90 days due to the loss of 2 functions of Activities of Daily Living (ADLs), and needing substantial assistance from another person. A qualified policy must contain at least 5 of the 6 ADLs to be considered a qualified Long-Term Care plan receiving the tax benefits set forth by the IRS. (California law requires all six ADL's) The Health Insurance Portability and Accountability Act established new requirements and qualifications under federal law. California requires all tax-qualified plans to qualify based on federal legislation. Non-tax qualified plans must meet the eligibility requirements of the California Insurance Code. All agents selling LTC must be aware and able to explain the differences between eligibility of a qualified and non-qualified LTC policy.

Permitted Compensation

First year commissions for the sale of Medicare Supplement insurance cannot exceed 200% of the second and subsequent years' compensation. Commissions for the sale of a replacement policy cannot be more than the difference between the renewal commission for the existing policy and the renewal commission for the replacement policy.

Eligibility(for medi-cal)

For individuals age 19 through 64 and not confined to an institutional setting, Medi-Cal eligibility is conditioned only on a household's annual income, or Modified Adjusted Gross Income (MAGI). Household income below 138% of the Federal Poverty Line (FPL) qualifies an individual or family for enrollment in Medi-Cal, regardless of home ownership, assets, or savings. Children under age 19 are eligible for Medi-Cal if household income is less than 266% of FPL. Persons receiving care in an institutional setting remain subject to a test of income and assets before eligibility for Medi-Cal is established. Medi-Cal expenditures on behalf of persons in institutional settings and all expenditures on behalf of persons age 55 and older are subject to "asset recovery" under federal Medicaid rules following the death of the individual. In some instances, other family members may be responsible for repayment of Medi-Cal expenditures.

Premium and Costs

For most Medi-Cal beneficiaries, there is no out-of-pocket "premium" and minimal out-of-pocket expenses for health care and related services and supplies. There may be a "Share of Cost" requirement, which requires the beneficiary to spend a certain amount of monthly income toward health care expenses before Medi-Cal begins to cover those expenses.

Additional Benefits

In addition to the basic benefits, a number of other benefits are included in Plans B through N in different combinations and with some limitations. The key benefits include: Plans C and F pay the Part B deductible. All plans, except A and B, pay for skilled nursing facility care: Covers the coinsurance amount from the 21st day through the 100th day in a benefit period for post-hospital skilled nursing facility care eligible under Medicare Part A. Plans F and G pay Medicare Part B excess doctor charges: Pays 100% of a doctor's excess fees. Plan F High Deductible Plan: This Plan offers all the regular Plan F benefits, but in return for a lower premium, the policyholder accepts an annual deductible to be met out-of-pocket before benefits apply. The deductible amount is set by Medicare and is subject to an annual adjustment. Plans K and L: Plans K and L cover the same basic services as other Plans, but at different levels. In exchange for lower premiums, Plan K has a 50% coinsurance and Plan L 75%. Both Plans have annual out-of-pocket limits, which are adjusted for inflation annually. Once the annual limits are reached, the supplement pays 100% for the remainder of the year.

Replacement of long term care policies

In recommending the purchase or replacement of any Long-Term Care insurance, an agent must make a reasonable effort to determine its appropriateness. No insurer or agent may unnecessarily replace a policyholder's Long-Term Care insurance policy or replace it with a policy that will result in decreased benefits and an increased premium. Any third or greater policy sold to a policyholder in any 12-month period is deemed unnecessary unless the replacement is for consolidation purposes with a single insurer. All LTC applications must contain questions which request information from the applicant concerning whether the new policy is intended to replace any other Accident, Sickness or Long-Term Care contract. When it is determined that the sale of the policy involves replacement, the agent must provide the purchaser with a "Notice Regarding Replacement of Accident and Sickness or Long-Term Care Coverage" prior to the delivery of a policy. A copy of the notice is given to the applicant and a signed copy is retained by the insurer. If a policy replaces another Long-Term Care Policy, the replacing insurer must waive any time periods applicable to preexisting conditions that have been satisfied under the existing policy. Any time that Long-Term Care Coverage is replaced, the sales commission that is paid by the insurer must be calculated on the difference between the annual premium of the replacement coverage and that of the original coverage and the first year commission cannot be greater than 200% of the second or subsequent years' commission. If the premium on the replacement product is less than or equal to the premium for the product being replaced, the sales commission must be limited to the percentage of sale normally paid for renewal of Long-Term Care policies. "Commission or other compensation" includes monetary or non-monetary rewards of any kind for the sale or renewal of a policy. Such rewards include, but are not limited to, bonuses, gifts, prizes, awards, and finder's fees.

Medicare Supplement Replacement Requirements

Issuers of Medigap policies must: Establish marketing procedures that ensure that policy comparisons will be fair and accurate Establish marketing procedures that prevent excessive insurance from being sold or issued Display prominently on the policy's first page, the statement: "Notice to buyer: This policy may not cover all of your medical expenses" Make every reasonable effort to determine if a Medigap policy applicant already has health insurance and the types and amounts of that insurance The following acts and practices are prohibited: Twisting - Intentionally making any false or materially inaccurate representation or comparison of two or more policies which induces any person to lapse, forfeit, surrender, or not take, a policy of insurance. High-Pressure Tactics - Using any marketing method that induces or even tends to induce the purchase of insurance through force, fright, threat or undue pressure. Such unlawful pressure may be either implicit or simply implied. Cold Lead Advertising - Using any method of marketing that fails to conspicuously disclose that a purpose of the advertising is the solicitation of insurance and that contact will be made by an insurance agent or insurance company. When replacing a Medicare Supplement policy, the agent must: Be sure that the replacement does not result in decreased benefits at an increase in premium. Use an application containing questions that elicit information to determine if the applicant has or has had a Medicare Supplement in effect or if the application is for replacement of an existing Medicare Supplement. Provide a notice of replacement to the applicant at the time of application for a new Medicare Supplement policy. (A copy of the notice, signed by the applicant and the agent, must be provided to the applicant and a signed copy must also be retained by the insurer.) When recommending the purchase or replacement of a Medicare Supplement policy, an agent must make reasonable efforts to determine the appropriateness of the purchase or replacement. Any sale of a duplicate Medicare Supplement policy is prohibited, unless the transaction would not insure more than 100% of the individual's actual medical expenses covered under the combined policies. Every insurer providing Medicare Supplement insurance must report annually the policy and certificate numbers along with issue dates for individuals who have more than one Medicare Supplement. If a Medicare Supplement policy replaces another Medicare Supplement policy that has been in force for 6 months or more, the replacing insurer cannot impose an exclusion or limitation based on a preexisting condition. If the original policy has been in force for less than 6 months, the replacing insurer must waive any time periods applicable to preexisting conditions to the extent that they have already been satisfied under the original policy.

Long-Term Care Coverages and Conditions

LTC Facilities and Levels of Care: Skilled Nursing Provided in a licensed facility, operated according to the laws of the state, providing skilled nursing care under the direction of a licensed physician responsible for all patient care Continuous 24-hour nursing services by or under the supervision of an R.N. Provides specialized services such as feeding tubes, IV therapy and wound care Maintains a daily medical record for each patient Intermediate Care Provided in a licensed facility, operated according to the laws of the state, providing daily but not 24 hour care under the supervision of a licensed medical professional Designed to help patients remain independent while assisting with daily needs; it is less than skilled care but more than room and board Maintains a daily medical record of each patient Assisted Living facilities generally provide intermediate care that is designed for persons who need daily assistance but do not require care in a nursing home Custodial (Non-skilled) Care Nonmedical care to provide assistance with activities of daily living such as bathing, toileting, eating, dressing, transferring, and continence May be provided in a nursing home facility or in one's own home Providers are not required to undergo medical training LTC Coverages Long term care insurance may provide coverage for institutional care, home care and community based care. Policies that only provide institutional care must prominently display in the outline of coverage the words "Nursing Facility and Residential Care Facility Only". Policies that only provide home care and community care must prominently display the words "Home Care Only" in the outline of coverage. Only policies that provide coverage for institutional, home, and community care can be called "Comprehensive Long-Term Care" insurance. The following are standard coverages that must be provided by policies providing home and community care: Home Health Care - Noninstitutional care received in one's own home or the home of another under a planned program by an attending physician. Homemaker Services - Assistance with activities necessary to the insured's ability to remain in his or her residence provided by a skilled or unskilled person under a plan of care developed by a physician or a multidisciplinary team under medical direction. Hospice Care - Provides pain control, comfort, and counseling for the terminally ill patient. Hospice care also includes a family counseling benefit. Adult Day Health Care - Designed to provide custodial care and supervision on a day care basis outside the home for individuals not requiring 24-hour confinement in a nursing home but who continue to live at home. Respite Care - Provides relief to a primary caregiver and can include a service, such as someone coming to the home while the original caregiver tends to other matters. Most policies will include benefits for temporary institutionalization of the insured during a period of respite. Personal Care - Personal care services are provided for people who need assistance with daily living, but do not require nursing. In California, such caregivers do not require separate licensing. Personal care may be categorized in more than one level, such as: Level I - Assistance with general household activities, and Level II - Assistance with bathing, dressing, meal preparation, housekeeping, and self-administered medication Home care benefits cannot be limited or excluded by any of the following: Requiring a need for care in a nursing home if home care services are not provided Requiring that skilled nursing or therapeutic services be used before or with unskilled services Requiring the existence of an acute condition Limiting benefits to services provided by Medicare-certified providers or agencies Limiting benefits to those provided by licensed or skilled personnel when other providers could provide the service, except where prior certification or licensure is required by state law Defining an eligible provider in a manner that is more restrictive than that used to license that provider by the state where the service is provided Requiring "medical necessity" or similar standard as a criteria for benefits Every comprehensive long-term care policy that provides for both institutional care and home care and that sets a daily, weekly, or monthly benefit payment maximum, must pay a maximum benefit payment for home care that is at least 50 percent of the maximum benefit payment for institutional care, and home care benefits cannot be paid at a rate less than fifty dollars ($50) per day.

Types of Contracts that Provide Coverage

Long-term care coverage may be written as any of the following: Riders for Life insurance policies and Annuities Individual Policies (issue ages 18 to 84) - The most common form of LTC being sold today. These policies are regulated by the state and can be customized to meet the insured's needs. Group Policies - Are subject to the same standards and regulations as individual policies, but may be less costly than individual coverage.

Medi-Cal or Medicaid program in california

Medi-Cal is the name of the Medicaid program in California that provides health coverage to people with low-income and asset levels who meet eligibility requirements.

Benefits

Medi-Cal pays for "medically necessary" health care including: physician visits, hospital and nursing home care, home health care, laboratory and x-ray services, prescriptions, medical equipment, ambulance services, eyeglasses, prenatal care, preventive care, and hospice. Medi-Cal is a federal program that is administered by the state. The federal government provides most of the money to provide benefits; the state provides the administrative services necessary to run the program.

Medicare Advantage

Medicare Advantage These plans are offered by private insurance companies that contract with Medicare to provide both Part A and Part B benefits and typically prescription drugs. Medicare Advantage plans include Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Private Fee-for-Service Plans, and Special Needs Plans. Enrollment in both Medicare Parts A and B is required and premium payments for Part B must be continued. Enrollment in Medicare Advantage is a substitute for Original Medicare. Medicare pays the Medicare Advantage plan provider a monthly capitation fee (roughly equivalent to the combined Part A and Part B premiums) to oversee the health care services of the enrolled participants. The services provided by these plans may differ by degree of choice of providers, out-of-pocket expenses, additional health care benefits and may include optional "value- added" benefits and services, but all must provide basic Medicare covered services. Some plans also offer prescription drug coverage and are called MA-PD plans. Managed Care Organizations, including HMOs and some PPOs, that offer a Medicare Advantage Plan are responsible for coordinating health care services and reducing costs. These plans require the subscriber to select a Primary Care Physician to manage health care needs. The use of network providers, referrals to specialists, and pre-authorization of scheduled procedures are methods used to manage care. Plans offered through PPOs do not require a Primary Care Physician or referrals and allow the subscriber to choose out-of-network providers with significantly higher out-of-pocket expenses or reduced coverage limits. Private Fee for Service Plans are offered by private insurance companies under contract with Medicare. They differ from managed care plans because they allow you to go to any doctor, hospital or other provider that agrees to accept the plan's terms of payment. The plan and fees are determined partially by demographics so the member must live in the plan's service area to be eligible, but treatment can be received anywhere in the United States, as long as the provider agrees in advance to accept the plan's terms. The plan cannot be significantly different than Original Medicare but may provide coverage for additional services. As with Medicare HMOs and PPOs, the person must be enrolled in Medicare Parts A and B. Special Needs Plans (SNPs) limit membership to people who either live in certain institutions, such as a nursing home, are dual-eligible for Medicare and Medi-Cal (Medi-Medi) including those with Share of Cost, or have specific chronic or disabling conditions, such as End Stage Renal Disease, which may prevent enrollment in a Medicare Advantage HMO or PPO plan. These plans typically have specialists in the diseases that affect their members and they must provide Medicare prescription drug coverage. Enrollment in Medicare Advantage A Medicare beneficiary may enroll in a Medicare Advantage plan when they are first eligible for Medicare or during the Annual Election Period. During this period, a person may change to another Medicare Advantage plan or switch from Original Medicare to a Medicare Advantage Plan. A person may terminate their enrollment in a Medicare Advantage plan and return to Original Medicare at any time during the first year of coverage. After that, they must wait until the annual Medicare Advantage Disenrollment Period. A Medicare Supplement plan is unnecessary with Medicare Advantage. Sale of a new Medicare Supplement plan to a Medicare Advantage enrollee will result in automatic disenrollment from Medicare Advantage.

Part A - hospital insurance (inpatient)

Medicare Part A is financed by payroll and FICA contributions and is premium-free to eligible individuals who qualify through Social Security, Railroad Retirement, or government employment. Individuals over age 65 who do not qualify may receive benefits for Part A coverage by paying a monthly premium. Part A provides coverage for medically necessary inpatient hospital related charges, skilled nursing, home healthcare, and hospice. Part A claim payments are made directly to the provider for covered services. Part A Benefits and Out-of-Pocket Expenses Medicare Part A requires a deductible before benefits are payable. Once the deductible is met, benefits are payable as specified based on the benefit period. The deductible is not annual, but applies per benefit period. Benefit Period - A benefit period begins the first day the insured enters the hospital after being enrolled in Medicare and ends once the insured has been out of the hospital for 60 consecutive days. Inpatient Hospitalization - Part A provides coverage for up to 90 days per benefit period. Medicare will pay 100% of covered charges for days 1-60. The insured will be responsible for a daily copayment for days 61 - 90 and Medicare will pay the balance. If the insured is hospitalized beyond 90 days in a benefit period, 60 nonrenewable lifetime reserve days are available for coverage with a higher daily copayment. Once the insured is out of the hospital for 60 consecutive days, a new benefit period begins which renews the 90 days of coverage and requires a new deductible. The lifetime reserve days do not renew. If an insured uses the all 60 lifetime reserve days and is hospitalized longer than 90 days in a benefit period, the out-of-pocket expense is 100%. Medicare Part A includes the following coverage: Semiprivate room and board Operating room costs Prescription drugs including anesthesia Miscellaneous hospital services and supplies Blood transfusions after the first 3 pints of blood Skilled Nursing Care - Medicare Part A provides limited benefits for skilled nursing care following 3 days of hospitalization. The first 20 days are covered 100%. Days 21-100 are covered except for a daily copayment. After 100 days of skilled nursing care, there is no additional benefit from Medicare and the Medicare beneficiary (insured) pays 100%. Home Health Care - Medically necessary care following the release from the hospital, including home health aide services, nurses' visits, and medical supplies are covered. Hospice Care - Pain relief and support services provided to the terminally ill and their family members is covered. Blood - There is a "deductible" amounting to the first 3 pints of blood administered per calendar year. After the deductible is met, Part A will cover the cost of inpatient blood transfusions for the remainder of the year. Medicare Part A Exclusions â- Inpatient physician and surgeon services â- Long-term care (private or custodial nursing care) in any setting â- Personal convenience items (telephone and television) â- The first 3 pints of blood per calendar year

Part B- Medical Insurance (physicians, surgeons, and outpatient)

Medicare Part B is optional coverage and is offered to all applicants when they become eligible for Part A. All Part B recipients pay a monthly premium. High income beneficiaries are assessed higher monthly premiums. Medicare Part B pays 80% of covered expenses after an annual deductible has been met. The Medicare beneficiary pays 20% coinsurance with no maximum out-of-pocket.. Part B Benefits Medical Expense - Medicare Part B covers Physician's and Surgeon's services (inpatient and outpatient), and medically necessary outpatient medical and surgical services and supplies. Additional coverages include physical, occupational, and/or speech therapy, diagnostic tests, certain durable medical equipment, and medically necessary ambulance or other transportation services. Medicare Part B will also cover kidney dialysis treatments. Preventive Care - A one-time "Welcome to Medicare" preventive visit is covered along with yearly "wellness'' visits. In addition, Part B will cover preventive screenings for cancer, depression, diabetes, HIV, obesity, and sexually transmitted diseases. Laboratory Services - Blood tests, biopsies, urinalysis, and other labs on an outpatient basis. Home Health Care - Medically necessary skilled care, home health aide services, medical supplies, for those who are home bound in their personal residence, but who have not had a qualifying hospitalization. Mental Health Care - Medicare Part B will cover mental health services on an outpatient basis when provided by a health care provider who accepts Medicare payment. An additional copayment or coinsurance may be required if services are provided in a hospital outpatient clinic or department. Outpatient Hospital (Emergency Room/Urgent Care) Treatment - Reasonable and necessary services for the diagnosis or treatment of an illness or injury on an emergency basis. Medicare Part B Exclusions Prescription Drugs unless administered at an outpatient medical facility Care received outside the United States Routine dental care including dentures Routine foot care Long-term care (private or custodial nursing care) in any setting Routine hearing, hearing aids, eye exams,or eye glasses Acupuncture Cosmetic surgery (unless medically necessary) Medicare Part B Claim Terminology The Original Medicare Fee for Service program bases benefits on a fee schedule of reasonable charges. The amount a doctor or supplier that accepts assignment can charge a patient is the Medicare-approved amount. A Claim is the request for payment and is submitted by Medicare approved participating providers and suppliers to the Centers for Medicare and Medicaid Services (CMS). Assignment is the transfer of rights from the beneficiary to Medicare. Under an assignment,the claim is paid directly to the doctor or provider. Medicare "approved" providers, or participating providers, have agreed to accept Medicare assignment and must accept Medicare's payment as payment in full. A beneficiary will pay only 20% of Medicare's approved amount when using a participating (approved) provider. Non-Assignment refers to a nonparticipating provider that does NOT accept Medicare's assigned amount for services provided. Nonparticipating providers may charge up to 115% of the Medicare-approved amount. A Medicare Summary Notice (MSN) is a statement that lists the details of all the services and supplies that were billed to Medicare for the previous 90 days. The MSN also shows the Medicare-approved amount, how much Medicare paid, and what the patient must pay. If a provider does not accept a Medicare assignment, the beneficiary is responsible for filing the claim independently to the Medicare carrier. An Explanation of Medical Benefits that outlines the covered services and approved amounts will be sent to the beneficiary. Right to Appeal - If a claim is denied or the beneficiary disagrees with a decision on the amount Medicare will pay on a claim, the beneficiary has the right to appeal the decision if the amount in question exceeds $99.99. The request for appeal must be made in writing within 6 months of receiving the Explanation of Benefits.

Part D

Prescription drug benefit The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, also known as the Medicare Modernization Act (MMA), established a "voluntary" prescription drug program known as Medicare - Part D. These plans are offered by private insurers. Under the provisions of Part D, anyone entitled to or enrolled in Part A or Part B of Medicare may enroll in a prescription drug program. Beneficiaries must enroll in a standalone plan with a participating approved Medicare Part D Prescription Drug Provider (PDP) or a Medicare Advantage plan that includes prescription drug coverage (MA-PD). If a person does not enroll in Part D when first eligible and goes more than 63 days before enrolling, a cumulative penalty resulting in a higher premium will be charged upon subsequent enrollment UNLESS the individual has creditable coverage, which is the same or better than the minimum requirements of Part D. An individual currently covered under an employer sponsored plan must be informed if the plan is creditable. Penalties only apply to "non-creditable" coverage. Individuals enrolled in the standalone plan from a PDP will have to pay a monthly premium, annual deductible and copays. Medicare prescription drug plans have unique "formularies" (lists of covered drugs), deductibles, copays, and premiums, which may vary significantly from one plan to another. Changing from one plan to another is only permitted during the Annual Enrollment Period. Once the insured has paid the deductible, a copay will apply until the out-of-pocket exceeds a certain amount. These limits change annually. Once the limit is reached, the Part D beneficiary enters the "donut hole" which is a gap in coverage. During this gap, the beneficiary will receive a discount on prescription drugs but must meet an additional out-of-pocket limit. Once the beneficiary reaches the limit, catastrophic drug coverage kicks in automatically and the plan will pay 95% of the remaining drug costs until the end of the year. This cycle repeats each year: Deductible → initial coverage with copays → coverage gap (donut hole) → catastrophic coverage Formulary is the grouping of prescription drugs under Medicare - Part D. A "formulary" is a listing of prescription drugs that are covered under Part D and varies by insurance carrier. If a particular drug is dropped from a carrier's formulary list, the insured must be notified within 60 days. The insured can switch plans during the next enrollment period. Plans can be switched annually. Only payments for formulary drugs will count toward the benefit limits.

Medicare Supplement Insurance (medigap) overview

Purpose Medicare supplement plans, often referred to as Medigap, are private insurance plans that are designed to supplement Medicare Part A and B and fill in some of the gaps in Original Medicare. These plans pay all or some of the Medicare deductibles and coinsurance. In order to purchase a Medicare Supplement, an eligible individual must be enrolled in Medicare Parts A and B. A separate premium payment is required for the purchase of a Medigap policy. All Medigap policies are guaranteed renewable and are automatically renewed each year. Medigap policies are "standardized" and must follow federal and state laws. The front of a policy must clearly indicate that it is 'Medicare Supplement Insurance'. The standardized policies that insurers offer must provide the same benefits, but the premiums may vary. Open Enrollment A person 65 years of age or older may also purchase a Medicare Supplement by paying the necessary premium. The Medigap open enrollment period lasts for 6 months beginning the month an individual turns age 65 and enrolls in Medicare Part B. If enrolled during this period, the insurer cannot use medical underwriting, refuse coverage, charge a higher premium, or impose a waiting period for pre-existing conditions.

Elimination Period, Benefit Period, and Benefit Amount

Rates are affected by the length of the elimination and benefit periods and the amount of the benefit. The elimination period may be as short as 30 days and as long as one year, with 90 days being the most common. The elimination period is a waiting period after a loss occurs before the benefit period begins. The shorter the elimination period, the higher the premium. The elimination period qualification can be achieved one of two ways: Service Days - The elimination period is based on the number of days in which the insured actually received care. For example, if the insured was receiving home care for 4 days a week, only 4 days would count toward the elimination period. Calendar Days - The elimination period is based the number of calendar days starting with the first day of the claim. The policy benefit period is the amount of time the benefits will be paid upon a loss, which is not the same as how long the policy is in force. The benefit period begins at the end of the elimination period. Upon triggering benefits, LTC policies in California convert the benefit period and daily benefit amount into a "bucket of money" which may be used according to the limitations of the contract. Benefits will not be exhausted until there is no money remaining to pay claims. The longer the benefit period, the higher the premium. Long-Term Care contracts are usually indemnity plans that are structured to pay a daily benefit amount as specified in the contract, such as $50-$200 per day. The contract will pay up to the policy maximum limits according to the daily limitations in the policy.

Standardized Medicare Supplement Coverage Requirements

The NAIC Model Law with respect to Medicare supplement policies was amended to revise the standardized Medicare Supplement plans delivered or issued for delivery in any state with an effective date for coverage on or after June 1, 2010. Plans A, B, C, D, F, F with High Deductible, G, K, L, M, and N are available. Every insurer must make available a policy including only the basic core benefits (Plan A) to all prospective insureds. If an insurer offers any Medicare Supplement plans other than Plan A, it must also offer a choice of either Plan C or Plan F.

Preexisting Conditions

The policy must not exclude coverage for any preexisting conditions that occurred more than 6 months prior to the effective date of coverage.

Benefit Triggers

There are conditions that initiate or trigger the benefits to be paid under a Long-Term Care policy. Prior hospitalization is not a requirement to trigger benefits. There are two classifications of benefit triggers: