Insurance for Senior Citizens

Benefit Periods and Benefit Amounts

1. benefit amount, the dollar amount that will be paid for qualifying care, typically expressed as a daily amount 2. benefit period, the length of time for which benefits will be paid An elimination period is defined in terms of service days or calendar days. With calendar days, a specific number of days must pass before benefits are payable. With service days, only the days on which the insured received care are counted. Common benefit periods are two to five years, though some policies offer lifetime benefits. Benefit amounts are normally flat daily amounts, such as $50, $100, or $200 a day.

Children's Health Insurance Program (CHIP)

A program that provides medical insurance for minimal premiums to children from low-income families.

inflation protection

A rider in some insurance policies that automatically raises the benefit amount or the maximum daily or annual payments, based on the rate of inflation, in order to ensure that the amount of coverage remains adequate over time. Insureds have two options for inflation protection: Simple inflation protection increases the original benefit on a simple interest basis, usually by 5 percent per year. This option is recommended for insureds in their 60s or older. Compound inflation protection increases the original benefit on a compound interest basis, usually by 5 percent per year. This option is recommended for insureds younger than age 60.

Important

All insurance companies selling Medigap policies must sell Plan A and either Plan C or Plan F.

Guarantee of Insurability

Also called the guarantee purchase option (GPO), this option lets the policyowner increase the daily benefit without additional underwriting, regardless of the policyowner's health. This option is available every two or three years, depending on the contract.

Eligibility for LTC Benefits

Benefits are triggered by: the insured's inability to perform two or more activities of daily living (ADLs) the insured's loss of cognitive ability, such that it limits the ability to care for oneself without help or supervision (cognitive abilities being include the ability to think, reason, perceive, or remember) medical necessity

Medicare Eligibility

Coverage under Parts A, B, C, and D is available to U.S. citizens and certain permanent residents who meet at least one of the following: are at least 65 years old have received Social Security disability checks for at least two years have end-stage renal disease (ESRD, a kidney disease requiring a transplant or dialysis) have amyotrophic lateral sclerosis (ALS, or Lou Gehrig's disease) Permanent legal residents must live in the United States for at least five years to qualify for Medicare. Coverage begins the first day of the month in which they turn 65 years old. If their birthday is on the first day of the month, coverage begins on the first day of the prior month. Those with 30-39 quarters of coverage pay $252 every month (in 2020). Those with 0-29 quarters of coverage pay $458 every month (in 2020).

Part B: Medical Insurance

Doc bills Part B covers: doctors' services inpatient and outpatient medical and surgical services and supplies physical and speech therapy occupational therapy outpatient diagnostic tests and X-rays medical supplies home health care and hospice care not covered under Part A. Part B excludes coverage for: prescription drugs vaccinations routine eye care and eyeglasses hearing aids and hearing exams dental care health care received outside the United States skilled nursing facility care cosmetic surgery personal comfort items Part B requires a monthly premium based on the insured's annual income. The insured must also pay an annual deductible ($198 in 2020). Then Part B pays 80 percent of Medicare-approved health care charges

Standard Plans (Medicare Supplement)

Every Medicare supplement policy must conform to one of these 10 forms, labeled "A" through "N." Each standard plan offers a different set of benefits, with benefits generally increasing as plans advance from A to N. All companies selling Medicare supplement policies must sell Plan A and either Plan C or Plan F. They may sell any or all of the other plans as well.

Part D: Prescription Drug Insurance

In 2006, Medicare was expanded to include prescription drug coverage (Plan D). Part D is optional and available to anyone covered under Part A or B. Part D requires a monthly premium that varies from plan to plan. These plans may involve an annual deductible and usually require a coinsurance payment. Most Medicare drug plans have a coverage gap (the Medicare "donut hole") that requires the beneficiary to pay all drug costs after the beneficiary and the plan have spent a certain amount for covered drugs during the year. Once the beneficiary reaches the plan's out-of-pocket limit during the coverage gap, coverage resumes. For the rest of the calendar year, the beneficiary pays a small coinsurance amount for prescription drugs.

Medicaid Benefits

Medicaid is the secondary insurer. Medicare is the primary insurer. Depending on the state, Medicaid may cover the following: doctor and surgeon fees emergency care hospital care vaccinations dental care podiatry prescription drugs vision and hearing care mental health services medical supplies and equipment prostheses X-ray and lab services hospice care transportation to services long-term care

Part A: Hospital Insurance

Medicare Part A is hospital coverage that covers: inpatient hospital costs skilled nursing facility costs home health care costs hospice costs Medicare Part A covers eligible hospital costs for up to 90 days in any single benefit period. A benefit period ends 60 days after release from the hospital Before Medicare Part A pays benefits, the Medicare beneficiary must pay a deductible at the beginning of each benefit period. That deductible increases each year. The Part A hospitalization benefit period, deductible, and coinsurance look like this: Days 1-60: All eligible hospital costs are covered after the beneficiary pays a deductible ($1,408 in 2020). Days 61-90: Beneficiary pays a daily coinsurance ($352 in 2020); Medicare pays the daily balance. 60-day lifetime reserve: Beneficiary pays a daily coinsurance ($704 in 2020); Medicare pays the daily balance. Medicare Part A also covers home health care services, including: part-time or intermittent skilled care home health aide services durable medical equipment and supplies certain other services Part A covers hospice care for terminally ill Medicare beneficiaries who: are eligible for benefits under Part A have been certified by a doctor as terminally ill (with a life expectancy of six months or less) waive other Medicare-covered treatment for terminal illness decline other treatment for terminal illness Covered hospice services include: nursing care medical social services counseling short-term inpatient care and respite care (temporary relief for those caring for family members at home) medical appliances and supplies drugs therapy

Special Needs Plan (SNP)

Medicare Part C plan intended for individuals who are insured under Medicare and Medicaid. SNPs are available only to individuals who: are institutionalized are dually eligible for both Medicare and Medicaid have severe or disabling chronic medical conditions

The Need for LTC Insurance

Medicare provides limited long-term care coverage. It covers the first 100 days of care in a skilled nursing home facility and requires that a person first be hospitalized A Medicare supplement policy covers the daily copayments for nursing home expenses, but not beyond Medicare's 100-day benefit period. Medicaid also covers extended nursing home costs. However, to qualify for these benefits, a person must spend down personal assets to almost poverty levels. Therefore, LTC insurance helps seniors by giving them: the freedom to choose where they receive their long-term care assurance that they will not have to spend down their assets to qualify for benefits

Annual Election Period (AEP)

Medicare recipients who enroll into Part D beyond their initial enrollment period can do so annually from October 15th through December 7th, with coverage beginning on January 1st.

No Prescription Drug Coverage

Medicare supplement plans sold today cannot include prescription drug coverage, which is available through Part D.

tax-qualified LTC policy vs. nonqualified

Meets HIPAA requirements for benefits; a nonqualified plan does not meet these requirements. A tax-qualified LTC policy has tax advantages not available to nonqualified policies. However, tax-qualified policies must adhere to requirements not imposed on nonqualified policies.

Part B C and D eligibility

Part B Eligibility Medicare Part B is voluntary and available to anyone who qualifies for Part A. No one may enroll in Medicare Part B if not enrolled in Part A. Unlike Part A, Part B requires a monthly premium. Part B is not available to those covered under Part C (Medicare Advantage), since Part C includes the coverage of both Parts A and B. Part C Eligibility Those eligible for Medicare Parts A and B qualify for Part C, Medicare Advantage plan. They must live in the service area of the managed care plan they select when enrolling in Part C. Part D Eligibility Medicare Part D (prescription drug plan) is available to those covered by Medicare Parts A, B, and C. It is available as a stand-alone plan. It can also be added to Original Medicare (Parts A and B) or included with Medicare Advantage (Part C).

Coverage for Active Workers

Persons over age 65 who continue working and are covered under an employer's medical plan can also be covered under Medicare

Optional Benefits

Popular LTC benefit options and riders are: inflation protection guarantee of insurability Return of premium nonforfeiture benefit

Medicaid

Provides health care coverage to people whose income, health, or age qualifies them for it. Medicaid is funded by the federal and state governments, but the states administer it. The federal government pays a percentage of Medicaid expenditures, which varies by state.

Medicare Parts C and D

Recent additions to Medicare. They offer a managed care plan option (Part C) and a prescription drug program (Part D).

LTC Insurance Suitability

The consumer should not buy more insurance than is needed. Evaluate income and assets to determine if the consumer can pay some costs of care. Determine if family members can help care for the consumer. The consumer should buy enough insurance. The consumer should not be forced to spend down assets to get complete coverage. Remind the consumer that while it may be possible to reduce coverage in the future, the opposite may not be true, especially if the consumer becomes uninsurable. Examine each policy carefully. No single policy will suit everyone's needs. If the consumer is interested in a policy that only pays for room and board in a care facility, consider other expenses (such as supplies, medications, linens, and other items and services) that the policy may not cover. The consumer must be able to afford the LTC policy.

initial enrollment period (IEP)

The first opportunity for a qualified individual to enroll into Medicare Parts A and B. Three months before an individual reaches age 65, he or she enters into this 'initial' period, and as long as the individual is eligible for Social Security benefits or Railroad Retirement benefits, he or she may sign up for Medicare Parts A and B. More specifically, this initial enrollment period provides an eligible individual with a 7 month window in which to enroll into Medicare, beginning 3 months before turning age 65, and lasting up to the 7th month limit, which includes the 3 months after turning age 65 (in addition to the individual's actual birth month).

Covered Drugs

The list of drugs covered by a plan is called the plan's "formulary." Most plans have three tiers, though some have four: Tier 1: Generic drugs, which are usually the least inexpensive to the consumer Tier 2: Preferred brand name drugs Tier 3: Non-preferred brand name drugs Tier 4: Specialty drugs, which are usually the most expensive brand name drugs A formulary must include at least two drugs in each category, though they are not required to include all drugs.

Qualified LTC Plans

The tax implications of owning LTC insurance are defined by the Health Insurance Portability and Accountability Act of 1996 (HIPAA), which created two categories: tax-qualified LTC policies non-tax-qualified LTC policies

Core benefits

These core benefits include Medicare Parts A and B coinsurance amounts, blood, and additional hospital benefits not covered by Original Medicare. The core benefits are: Part A hospital coinsurance additional Part A hospital benefits 365 additional days of inpatient hospital care after depletion of the Original Medicare hospital benefits Part B coinsurance after the annual deductible is met Parts A and B blood coverage for the first three pints of blood per calendar year Medicare supplement plans sold today cannot include prescription drug coverage, which is available through Part D.

Custodial Care

This care helps a person with daily living activities like bathing, dressing, or eating. While custodial care must be directed and monitored by a licensed physician, it does not need to be administered by skilled professionals and is often given by nurse's aides. It can be given in nursing homes, assisted living facilities, adult day-care centers, respite centers, or a person's home.

Skilled Nursing Care

This is continuous, 24-hour care delivered by licensed medical professionals, under the direct supervision of a doctor. This care is usually delivered in a nursing home.

Intermediate Care

This is ongoing care for a person's condition but is not needed all day. It is delivered by registered nurses, licensed practical nurses, and nurses' aides who are supervised by a doctor. Typically provided to patients who are recovering from acute medical conditions, it is usually delivered in a nursing home. It may also be given in one's home, an assisted living facility, or a community-based center.

Medicare Enrollment

Those who apply for Social Security retirement benefits at age 65 are automatically enrolled in Medicare Parts A and B Part B requires a monthly premium. Those who do not want Part B coverage must contact the Social Security Administration to opt out. When they become eligible for Original Medicare (Parts A and B), enrollees may instead choose Part C (Medicare Advantage) coverage.

Spending down

Ultimately become eligible once they have depleted most of their financial resources and assets

Medicaid Eligibility

While federal regulations impose minimum eligibility standards for Medicaid benefits, each state sets its own requirements for eligibility and administers the program. Each state determines the services that Medicaid covers in the state. States determine Medicaid eligibility based on an applicant's: disability or age (at least 65 years) income limitations asset limitations While each state sets its own rules for Medicaid eligibility, all provide coverage for: children in families earning less than the federal poverty level (eligible for CHIP) pregnant women with family incomes below a certain federal level people who are blind or disabled with income below a certain federal level people who are at least age 65 and whose income and financial resources are below their state's qualifying limit

Medicare

a federal health insurance program, administered by the Centers for Medicare & Medicaid Services (CMS), for people age 65 and older and for certain disabled individuals. Medicare is a Social Security program that covers medical expenses for qualified individuals. Like Social Security, Medicare is funded primarily by payroll taxes. 4 parts: ABCD

Guaranteed Renewable

a policy that is written on a noncancellable basis with the right to renew guaranteed

Medicare Savings Program

a state-run program offered in each state that reduces Medicare costs for eligible persons. The program helps persons with limited income and financial resources pay for Medicare Part B premiums. Four Medicare Savings Programs are available: Qualified Medicare Beneficiary (QMB) Specified Low-Income Medicare Beneficiary (SLMB) Qualifying Individual (QI) Qualified Disabled & Working Individual (QDWI) Persons who qualify for QMB, SLMB, or QI also qualify for assistance in paying for Medicare prescription drug coverage (Part D).

Medicare SELECT

a type of Medigap insurance that requires enrollees to use a network of providers (doctors and hospitals) in order to receive full benefits. Because of this requirement, Medicare SELECT policies may have lower premi- ums. However, if an out-of-network provider is used, Medicare SELECT gener- ally will not pay benefits for nonemergency services. Medicare, however, will still pay its share of approved charges. Currently, Medicare SELECT is available only in limited geographic areas of the country. Medicare SELECT plans are sold through either: a managed care provider an insurance company that offers the policy's benefits through a network of doctors, hospitals, and health care service providers

Common LTC Policy Exclusions

alcohol and drug dependency self-inflicted injuries, including attempted suicide conditions resulting from war (declared or undeclared) conditions arising from criminal activity injury or illness for which workers' compensation pays benefits

special enrollment period (SEP)

allows them to sign up for Part B after their IEP without penalty. The SEP is available during the eight-month period that begins the month after employment or group coverage ends, whichever happens first. Those who enroll during an SEP do not pay a late enrollment penalty.

Types of LTC Insurance Benefits

assisted living care nursing home services home health care services hospice care adult day-care services residential community living services respite care services (temporary respite for a family member who is the caregiver)

Medicare Parts A and B

called "Original Medicare," together provide complete medical coverage. They require deductibles and coinsurance, just like a reimbursement insurance policy. Medicare part A = hospital; Medicare part B = doctor bills

Hospice Care

care provided for the dying in institutions devoted to those who are terminally ill

Long-term care insurance recognizes six activities of daily living:

dressing eating transferring (such as moving from a bed to a chair) bathing toileting (personal hygiene) continence (the ability to control urinary and bowel functions)

General Enrollment Period (GEP)

enrollment period for Medicare Part B held January 1 through March 31 of each year. Coverage will begin July 1. It may be necessary to pay a higher premium for late enrollment.

Long Term Care (LTC)

includes many different types of care given in a variety of places. As the U.S. population ages and life expectancies increase, the need for this form of medical care continues to grow. Long-term care insurance protects against the cost of medical services associated with long-term care, including: diagnostic services preventive services therapeutic services curative services treatment and rehabilitative services personal care annual median cost in the United States ranges from about $20,000 to over $100,000. Long-term care insurance contracts are available as: indemnity contracts reimbursement contracts

Reimbursement Contract

limits the daily benefit to the actual expense and does not exceed the maximum daily benefit amount that the policy specifies

Part C: Medicare Advantage

offers Medicare Parts A and B services through managed care plans, such as HMOs, PPOs, and private fee-for-service plans. Originally called Medicare+Choice, Part C is now called Medicare Advantage. Advantage plans include PFFS and SNP

Indemnity Contracts

pays the full daily benefit even if the cost of the care is less. In this respect it is like a valued contract.

Medicare Supplement Plans

plans offered by private insurance companies to help fill the "gaps" in Medicare coverage. supplement Original Medicare (Parts A and B). They do not supplement Medicare Advantage (Plan C) plans because those plans already cover many of the gaps that a Medigap policy covers. Persons who qualify for Medicare can buy a Medicare supplement policy regardless of their health condition if they: are age 65 and older and apply for a Medicare supplement policy within six months of enrolling in Medicare Part B

Skilled Nursing Facility (SNF)

provides health care and nursing care for residents who have many or severe health problems or who need rehabilitation; may be part of a nursing center or a hospital It pays the full cost for care in a skilled nursing facility for the first 20 days. Coverage continues beyond the first 20 days, but the patient then pays a coinsurance amount ($176 per day in 2020). Medicare benefits are not available for skilled nursing facility care that extends beyond 100 days.

Return of Premium

returns part of the premium paid for the LTC coverage to the insured's estate or to a named beneficiary when the insured dies. The amount of the premium returned is based on whether the insured used the policy's benefits and if so, to what extent.

Levels of long term care

skilled, intermediate, and custodial

Nonforfeiture Benefit

states that if the policyowner cancels the LTC policy, a minimal amount of paid-up LTC benefits will remain in force.

Medicare assignment

the agreement between a health care provider and Medicare. Participating Medicare providers agree to charge no more than Medicare-approved amounts for specific treatments and services.

Creditable Coverage

the employer's drug coverage is at least comparable to Medicare Part D coverage). If the employer's health plan does not provide creditable coverage, individuals must enroll in Part D when they become eligible to avoid the late enrollment penalties. Failure to maintain creditable coverage for prescription drugs after age 65 may result in a lifetime penalty of 1 percent per month on the premium for each month that such coverage was delayed.

Private Fee-for-Service Plan (PFFS)

the private company, rather than Medicare, decides how much it will pay and the amounts members must pay for the services provided

Waiver of Premium Provision

waives the premiums if the insured becomes eligible for benefits. If it is a standard provision, there is no additional premium. Some policies waive the premium when benefits become payable. Others require that benefits be paid for a specified period (such as 90 days) before premiums are waived.