CFP Class 1, Module 7 - Health, Disability, and Long-Term Care Insurance

Any Occupation Disability Definition - Strictest in Private Industry

"Any occ" means insured considered totally disabled if "unable to perform duties pertaining to any gainful occupation." Generally limited to blue-collar workers. Electrician not able to do regular job, but can work at fast-food restaurant would not receive any benefits.

COBRA's Three Benefit Length Periods

1. 18 months for termination, or loss of benefits due to change to part-time status. 2. 29 months for disability; 3. 36 months for death/ divorced spouses of covered employee, insured spouse of employee qualified for Medicare, and loss of dependent status.

NCQA Accreditation Focus - 3 Sections

1. Access and service. Have access & health plan resolves grievances 2. Qualified providers. Plan checks credentials 3. Staying healthy. Plan helps maintain health & publicly reports clinical performance measures (HEDIS) and member experience (CAHPS).

Medicare Five Prescription Drug Tiers

2 generic, 2 name brand & 1 specialty drug tier that may require pre-authorization. Tiers 1 & 2 have $0 deductible, Tier 3-5 have $300 deductible. Copays range from $2 on Tier 1 to $95 on Tier 4, or 26% of costs in Tier 5. When enter coverage gap, drug costs can go up.

HIPAA Rules - Pre-Existing Condition Definition

A preexisting condition is defined as one for which medical advice, diagnosis, care, or treatment was recommended or received within the six-month period prior to enrollment, or, if the plan has a waiting period, prior to the first day of the waiting period.

Disability Definitions: "modified own occupation"

Any occupation definition is modified to include "any gainful occupation for which the insured is reasonably fitted by education, training, experience, and prior economic status."

Fix HIPPA Activities of Daily Living (ADL)

Bathing; continence; dressing; eating; toileting; transferring e.g., getting from bed to a chair.

Higher Out-of-Pocket Plans Good If

Client has emergency reserves or cash flow to cover worst case scenario, elect lower premium/higher out-of-pocket cost plan if health relatively good.

Long Term Care Insurance Trends - Hybrid Products

Combo products allow life insurance or annuities to be combined with long-term care riders with funds to cover LTC costs. Less stringent in underwriting, but offer limited inflation protections & commonly lack other benefits of traditional policies.

Disability Income Insurance Split Definition

Common in group coverage where little/no underwriting. Split definition uses liberal own occupation definition often for first 2-5 years after which stricter modified own occupation or the any occupation definition takes effect for duration of benefit period.

Long Term Care Insurance Underwriting - Pre-Existing Conditions

Companies that ask few or no questions on the application will likely do post-claim underwriting as in look into insured's medical history after claim submitted. If preexisting condition is related to reason for claim, may be denied. Comprehensive preexisting conditions exclusion clause.

Cash Value Life/ Long Term Care Insurance Hybrid Policies

Death benefit & pool of money for LTC. If never need care, entire amount is income tax-free death benefit. If need it, paid out in LTC benefits over specified time period. If death benefit exhausted, a continuation of benefits rider will pay benefits for another specified period of time.

Cash Value Life/ Long Term Care Insurance Hybrid Example

Example of one method is for rider to provide percentage of policy's face amount. $250,000 life policy with 2% LTC rider, a $5,000 monthly benefit. May be reasonable method to prepare for LTC needs without purchasing multiple policies.

Medicare Part B

Helps cover physician's and outpatient expenses. Those with incomes above certain threshold amounts pay higher premiums. For 2019, annual Part B deductible was $185.

Loss of income disability income insurance -progressive benefits

Loss of income only policy provides progressive benefits. Must have progressive disease such as multiple sclerosis. As income decreases, benefits start, usually after 20% income drop. Most other policies won't begin paying until insured can't work or has 80% income reduction.

Medicare Part A vs. Part B

Part A benefits originate from an inpatient hospital stay, while Part B benefits cover the client outside of an inpatient hospitalization, including procedures offered in a hospital as an outpatient service.

Disability Taxation Rule of Thumb

Pretax or employer paid premium payments = benefits taxable to insured. After-tax premium payments = benefits not taxable to insured

COBRA Costs

Recipients may have to pay up to 102% of the group insurance coverage. 2% addition covers admin costs. Premium likely includes any amounts the employer previously paid. Missing a payment likely means terminating coverage.

Disability Coordination of Benefits Clause

Reduces benefits below amount on declarations page by amount received under Social Security, workers' comp, or other indemnity sources related to employment. Rare for group disability income policy to reduce benefits based on benefits from individual disability income policy.

Disability: Social Insurance Rider

Reduces premium by requiring insured to apply for social security disability benefits & reduces benefits paid by amounts received. Similar to a coordination of benefits provision on group policies.

Coinsurance Meaning in Health Insurance Policies

Refers to a splitting medical care costs btween insurer and insured. Coinsurance percentage is covered expenses until the insured has reached the maximum out-of-pocket or MOOP expense limit.

Long Term Care Insurance Reimbursement vs Cash Plans

Reimbursement plans are most common, requiring claimant submit receipts for reimbursement up to daily or monthly max benefit at time of claim. Cash plans most flexible/costly. Once qualified, the daily or monthly benefit sent without any restrictions or receipts required.

Three Long Term Care Insurance Policy Types

Reimbursement, cash, or indemnity plans. Services must be provided by someone other than spouse/family member. Some allow care to be from unlicensed providers. Unused daily/monthly benefit remains in account for future use.

Long Term Care Insurance Indemnity Plans

Require proof of covered services from a qualified provider, but pay full daily benefit regardless of cost of care. So, if an individual has one hour of home health service that costs $30 but the daily benefit is $200, will receive the $200.

Disability: Social Insurance rider

Required to apply for Social Security Disability Income insurance. If received, disability benefits are reduced or entirely eliminated. If denied social security, disability income insurance benefits paid. Policies may require denial to be appealed, and pay legal costs. Can reduce cost of disability insurance.

PPACA - Changes to Coverage

Requires essential health benefits from all plans like emergency, hospitalization, maternity/newborn, mental /substance, prescription drugs, rehab & devices, lab, preventive/wellness, chronic disease management, pediatrics. No co-pays for preventive care.

Long Term Care Insurance Premiums and Benefits Taxation - Nonqualified - Return of Premium Benefit

Results in higher premiums that may well offset potential benefits, and prohibited on qualified policies. Calculate potential benefits from investing excess premiums at a reasonable rate of return & compare to potential benefit.

Disability/ Long Term Care Insurance Hybrid Policies

Rider to a disability income policy. Allows conversion from disability income insurance to Long Term Care Insurance at reirement. Avoids problem of having LTCI coverage reduce other benefits that might also be needed.

Disability: Guaranteed Purchase Option

Right to increase benefit amount or purchase additional policies at future dates regardless of health, as long as the insured's income at that time meets underwriting requirements for increased benefit. Initial policy must be at least 80% of max insurer will sell before will allow purchase.

Annuity/ Long Term Care Insurance Hybrid Policies

Second form of hybrid policy. Annuity typically funded with a single premium or rollover through Section 1035 exchange from a life insurance policy or annuity. Value grows tax-deferred & used to pay for LTC over specified number of yrs.

Individual Disability Policy Max Monthly Payment

Set max monthly benefit during underwriting. Most won't issue policies for more than two-thirds of income & put amount on declarations page. Can't exceed amount unless policy modified/rider added. Provisions may reduce benefit from what is specified like relation to earnings provision.

Medicare Part A Deductible

Set per spell of illness which means can face this deductible more than once in a year if hospital stays separated by time. Deductible charged but no coinsurance for days 1-60 of each benefit period. Must remain out for 60 days to be considered a new hospital stay.

Medicare Initial Enrollment Period (IEP)

Seven-month period when newly eligible recipient can enroll. Permitted up to three months before or up to three months after the month the enrollee first becomes eligible for Medicare, which for most 65. Enroll before 65, coverage starts first day of birth month.

Reasons to Stay with Employer Health Insurance Past 65

Shouldn't opt out of employer plan at 65 and enroll in Medicare Parts B/C, as Medicare secondary for paying if have employer-based coverage. Also, signing up for Part B starts 8 month clock for guaranteed-issue Medicare supplement policy.

PPACA Tax Credits

Tax credits continue to be granted. Designed to ensure that insurance is affordable.

Own Occupation Disability Definition

The most liberal definition referred to as "own occ" means insured considered totally disabled if unable to engage in principal duties of own occupation. Usually for professional/technical, managerial personnel who meet certain income and duration of employment criteria.

Two Figures in Health Plan's Deductible

Usually two figures (e.g., $1,500/$3,000). First figure refers to deductible for one person and second figure total deductible for family, or more than one person on the plan, spouse, kids, etc. When more than one covered person, embedded vs non-embedded deductible come into play.

Disability Maximum Benefit Period

Varies depending on occupational class & underwriting guidelines. Short-term disability insurance up to two-year benefit period, long-term at least five years. Benefit period sometimes varies according to disability's cause.

Managed Care Plans - Cost Controls

Various mechanisms, including salaried providers, capitation, negotiated fees, limited benefits, limited access to specialists, and/or benefit payments based on the provider used.

Long Term Care Insurance Trends - Substantial Price Increases

Very few companies offer it. Most guaranteed renewable contracts. Prices can increase for groups not individuals. Insurers can't cancel coverage, only individual can. Price increases are reviewed by state insurance commissioners. Premiums average increase 4.8% per year.

Flexible Spending Accounts (FSAs)

Voluntary salary reduction. Employer may also contribute. Unlike HSAs or MSAs, no income tax reporting requirements. No federal, state, FICA taxes. In 25% federal bracket + 5% state bracket + 6.2% OASDI + 1.45% Medicare = 38% savings! If expect $2,500 medical costs save $941.

Fee for Service Billing

What separates the indemnity plan from others is bills submitted to the insurer for reimbursement. Doctor's office will submit bills, but ultimately client's responsibility to make sure correct and paid. Have deductibles, copays, & coinsurance amounts as well as policy limits.

Group Long-Term Disability (LTD) Taxation

When employer pays premium and employee doesn't contribute to payment or report paid premium as income, any disability benefits received will be fully taxable as current income.

HIPAA Health Information Privacy

Without specific approval, medical info can't be shared. Can be shared if you give provider permission in writing; you are present and don't object; health care provider determines it is in your best interest unless you instruct them to NOT do so.

Medicaid & Annuities

Annuities can shelter assets so community spouse can have income. If annuity structured properly, not an available or countable asset. But annuity payments considered for income test. Prior to annuitization i.e., the payout phase, annuity an available asset.

Utilization Review for Payment Determination - Case Management

Another form of utilization review used to control costs in treatment of expensive illnesses such as cancer. Health care plan's medical staff involved from the outset in setting up a long-term treatment plan. Once authorized then decided on what portion will be reimbursed.

Disability Defined by Income Loss

Another method of defining disability based on percentage of income lost due to disability. Some insurers offer definition of disability based on comparison of post-disability income with pre-disability income. Covers risk of lost income generally at a lower cost than own occupation definition.

Medicaid & Asset Transfers

Assets transferred during the five-year period preceding an application for Medicaid benefits subject to five year lookback. If transferred 100k to children four years ago & qualified for Medicaid, must pay first 100k out of pocket before Medicaid would pay.

Claiming COBRA Benefits

After qualifying event employer must notify employee (or spouse) whereupon recipient must make COBRA election within 60 days. Payments made directly to former employer or to third party selected by employer.

Medicare Eligibility

Age 65 or older or disabled qualifying for SSDI after 24 months, and anyone with end stage renal disease. Centers for Medicare & Medicaid Services (CMS) within HHS runs it. Hospital insurance benefits financed by income taxes.

PPACA - Acquiring & Maintaining Coverage Continued

Allows states to cover more people on Medicaid; increases rural health care provider payments; strengthens community health centers; large employers must provide health insurance; small employers encouraged to provide insurance through tax credits

PPACA Marketplace Coverage Five Levels

Bronze Plan pays 60% of actuarial costs; Silver Plan 70%; Gold Plan 80%; Platinum Plan 90%; Catastrophic under age 30 or low income: covers three annual primary care visits/preventive care services no cost & high deductibles for other covered charges.

Fee for Service (Indemnity) Plans

Client has choice of providers. Have many names, indemnity plans as company indemnifying client by reimbursing them. Also called fee for service because doctors charge fee for service & patient's must pay. Also called comprehensive major medical policies.

Cognitive Impairment & Long Term Care Insurance Benefits

Cognitive impairment, or dementia, one of required benefit triggers for policy to be HIPAA qualified. Alzheimer's & all other forms must be covered. Must have provision that if policy lapses due to cognitive impairment, insured or rep must have right to reinstate policy.

Catastrophic Long Term Care Insurance Policy

Combine an extended benefit period with very long waiting period e.g., 12 months. If have means to pay for an extended initial period of LTC, being able to increase benefit period would protect against eventuality of a much longer need for care or catastrophic need.

Disability: Cost-of-Living Riders - Additional Insurance Rider (AIR)

Combo of cost-of-living rider and guaranteed insurability. Increases benefits each year while insured not disabled. After 4 to 5 years insurer decides if still eligible for increase. If turn down or denied increase for inadequate income, no further increases. Premiums increase as benefits increase.

Medicare MSAs

Combo of high deductible plan with medical savings account. Pays for health care costs before meeting deductible. Funds grow tax-free if distributions used for health care costs. Can be used for expenses like hearing aids. Unused money remains for future. Not all states allow.

Sources of Long Term Care Insurance Info

Commerce Clearing House; American Association of Retired Persons, the Health Insurance Ass of America, the National Ass of Health Underwriters, and the United Seniors Health Cooperative; Annual survey of LTCI policies in Life Association News, books.

Long Term Care Insurance Trends - Simplified, Partial Coverage

Companies creating products that have a simplified structure and lower premiums as a way for middle class consumers to partially protect their portfolios. They are not trying to cover the entire need.

Qualified Sick Pay Plan (QSPP)

Company can choose to continue to pay salaries to disabled employees. Although a QSPP does not require insurance, it can be self-funded, it is probably a good idea to use the services of an insurer to avoid potentially large liabilities. Complex.

HIPAA Health Insurance Portability and Accountability Act Applies To:

Comprehensive health care plans, not to limited coverage policies/specialty policies like accident only plans, workers' comp, disability, long term care, or other supplemental plans.

Disability Definitions: "split definition"

Compromise. Defines disability in a liberal own occ definition for a specific time such as two to five years, with a modified own occ definition taking effect after that time for the duration of the maximum benefit period.

COBRA

Consolidated Omnibus Budget reconciliation Act of 1985 (COBRA) continuation of health care when employee leaves work voluntarily /involuntarily. Applies only to core health insurance coverage or major medical/HMO, not to ancillary benefits like disability insurance. Employers with 20 or more employees normally have to offer it.

Utilization Review for Payment Determination - Pre-Certification

Contract specifies when utilization review required. Pre-certification, a form of utilization review, usually required when hospitalization recommended & common for diagnostic tests/expensive medication. Need approval or treatment not covered/covered at reduced rate.

Three health-related financial exposures

Cost of medical, loss of income due to disability, and the expense of long-term care. A great financial plan can be destroyed if the right risk containment strategies are not in place for health problems

Long Term Care Insurance Trends - Spousal Coverage Sharing

Couple can buy a designated number of years of coverage that either one can use. Plan covers four years, which will most likely cover needs, or make the risk much smaller, since stats show need rarely exceeds 3 years.

Disability Business Overhead Expense Insurance (BOE)

Cover overhead expenses but not available to certain sole proprietors. Generally limited to white collar & professional individuals. Benefit periods usually limited to 12 or 24 months with assumption that business will be closed after that time if individual is unable to return.

Events Causing Health Coverage Changes - Birth

Coverage for first 30 days mandated by law, but if new child not enrolled within 30 days, coverage ends. If preexisting conditions, won't be covered. Can go to exchanges, but may have missed window. Employer subsidy may have been lost for the year.

Major Health Insurance Policy Provisions

Covered charges; internal limits; exclusions; preexisting conditions; utilization review; case management; deductible; coinsurance; maximum out-of-pocket limit; coordination of benefits.

Sharing Info Under HIPAA

Create a list of people with whom a client would want info shared and have the appropriate documentation, otherwise health care professionals won't share info. A third-party form can identify everyone who can receive information, but it must meet HHS rules.

Federal Long-Term Care Insurance Program

Created by Long-Term Care Security Act in 2000. Those eligible to apply are known as "federal family." Underwriting still required, but based on category, it is abbreviated. Explore for qualified individuals.

Non-embedded Deductible

Disregard first number listed under deductible section when policy covers more than one person. Prior to reaching the policy coinsurance provisions, family deductible has to be met by one member in family or any combo.

Preferred Provider Organizations (PPO) Coverage

Doesn't require a PCP or a referral to utilize a specialist. Insured not restricted to in-network providers, but encouraged to use them. Plan's coinsurance arrangement might cover 80% of in-network while only 50% of approved charges for out-of-network providers.

Length of COBRA Benefits Determined by Reason for Claim

Employee termination, 18 months. Disability up to 29 months. Medicare, death, divorce, employee's spouse eligible up to 36 months. PPACA requires plans with dependent coverage to allow children to remain on parent's plan up to 26, so can COBRA until 29.

Health Insurance Taxation

Employer contributions to qualified health insurance plans not taxable as income to employee. Benefits to providers not taxable as income either. Premiums paid by employee generally paid pretax. Unreimbursed qualified medical expenses in excess of 10% of AGI can be an itemized deduction.

PPACA Employer Mandate Coverage Requirements - Minimum Value and Affordability

Employer must pay at least 60% of benefits. Dependent costs don't apply to minimum value test. Must be affordable as in employee contribution can't exceed 9.5% of W-2 wages not household income. Affordability test applies to lowest-cost option employer offers.

PPACA - Changes for Employers

Employers encouraged to limit employee portion of premiums to 9.5% of income to avoid fines.

Disability Income Insurance Specialty Letter

Few companies willing not only to specify that the insured must be able to work in own occupation, but also in own specialty. Insurer issues letter modifying policy. Some companies may issue a policy rider.

Preferred Provider Organizations (PPO)

Group of providers including generalists, specialists, hospitals, clinics, etc. with pre-negotiated charges/fees for services. Fees discounted with anticipation of increased patient volume.

Medicare Supplement Plans

Group of special policies A through N designed to cover the gaps between cost of medical care and amount Medicare pays.

Long Term Care Insurance Trends - Dropping Home Health Care Costs

Home health care business creating cost competitiveness and technological advances such as monitoring devices & pharmacy /grocery delivery, Uber use. Services burgeoning, allowing people to stay in homes longer.

Long Term Care & Single vs. Married Scenarios

Household expenses will not decrease much when only one person of a couple is admitted to a facility. However, when the insured is single, virtually all other living expenses cease when he or she moves to a Long Term Care facility. Inflation rider strongly recommended.

Long Term Care Insurance Policy Components - Benefit Amount

How much per day, week, or month policy will pay. Monthly benefit most flexible since therapy/nurse visits may be bunched on certain days and occur less frequently on others.

Point of Service (POS) Plans

Hybrid between HMO and Preferred Provider Organizations or PPO. Insured designates PCP for referrals to specialists. Unlike HMOs, may receive outside network care and still receive some benefit. More restrictions than PPOs but not as restrictive as HMOs.

Long Term Care Insurance Policy Components - Bed Reservation Guarantee

If a nursing home resident hospitalized or temporarily leaves for some reason, bed may be filled by someone else, and must again wait for a bed to become available. This guarantee pays for a certain number of days for the nursing home bed to be held for insured.

Claiming COBRA Benefits - Employer Bankruptcy

In order to have COBRA former employer must continue to offer health insurance benefits to current employees. This can be an issue when former employer files for bankruptcy or closes.

Disability Income Insurance Conversion

Normally, group disability income policies can't be converted to individual coverage. Leaving employer usually results in loss of coverage. Few carriers offer it. Generally limited to professional occupation category.

Disability Policy Durability or Renewal Provisions - Guaranteed Renewable

Insured has right to renew policy to age specified. Company can't change premium unless it makes the change for an entire policy class. With noncancelable insurer can't raise rates period. With guaranteed company can't discriminate against particular policy holder based on claims experience.

Insurer-Added Riders for Disability Policies

Insurer can add riders to make insurance available to someone who otherwise would be ineligible for coverage. Riders may be added excluding disabilities resulting from skydiving or bad knees. Without them insurer wouldn't issue, so not optional.

Disability: Insured's Optional Riders

Insurers also offer desirable riders, optional basis, generally extra cost, if meet underwriting requirements. These riders either add benefits or modify policy provisions in applicant's favor.

Copayments

Many plans have adopted cost sharing technique started by HMOs of fixed fee for each visit to doctor. Applied to deductibles or max-out-of-pocket limit. Separate co-payments for hospital stays and emergency room visits. Some refer to them as deductibles.

Medicaid Qualification for Long Term Care Insurance

Medically qualified; minimal assets & income; requirements differ state-to-state. Although home can generally be kept while in long-term care paid by Medicaid, at death, or when home sold, state recovers as much as it can from home sale.

Program of All-Inclusive Care for Elderly (PACE)

Medicare & Medicaid program as alternative to nursing home care. Authorized by Balanced Budget Act of 1997 with comprehensive service delivery system and integrated Medicare and Medicaid financing.

Medicare Part C - Five Medicare Advantage Plans

Medicare HMOs, Medicare PPOs, private fee-for-service & special needs plans. Medical Savings Account (MSA) option. Private insurers. Include dental, hearing, vision, & Medicare subsidizes premiums. Must have Parts A-B. B premium credited to Medicare Advantage plan premium.

Disability Policy Durability or Renewal Provisions - Noncancelable

Not only can insured renew policy for full term specified same as under guaranteed renewable, but the company can't change premium from what is stated in the contract. Obvious choice except costs more than guaranteed renewable policies.

Events Causing Health Coverage Changes - (11)

Most coverage does not allow you to change at any time, except for: marriage, divorce, death, disability, changing/losing a job, reduction in hours worked, dramatic change in income, moving, birth up to 30 days, age 26, age 65

Long Term Care Insurance Policy Components - Waiver of Premium

Most have it, but not guaranteed and it varies. Most waive premium whenever benefits payable. Some require benefits to be paid for specified number of months before waving. May/may not refund premiums paid from the date of confinement to date waiver begins.

Defining Disability

Most important feature as determines under what circumstances insured will qualify. With exception of Social Security definition and loss of income definition, most policies require loss of time or duties. Range from strict to liberal. More liberal, higher the premium.

Long Term Care Insurance Policy Components - Inflation Protection Rider

Most important rider & many states require it, also know as a CPI rider. Automatically increases benefit by percentage rider purchases each year or add percentage of initial amount every year, or benefits will increase only once they begin. Premiums usually level, unless raised for entire class.

Disability Definitions: "own occupation"

Most liberal definition from the insured's point of view. Under this definition total disability is the inability of the insured to engage in the principal duties of his or her own occupation.

2019 Medicare Part A Premiums

Most people do not pay a monthly premium for Part A. If you have to buy Part A, you will pay up to $437 each month.

Disability Policies Common Provisions - Grace Period

Most policies contain a provision to allow the insured to have specific number of days from the policy due date in which to pay premium without fear of policy lapse. This is generally 30 days but some policies have shorter grace periods.

Long Term Care Insurance Policy Restrictions

Most require state licensed facilities. Some require Medicare-certified facilities which substantially limits available facilities. Home care required to be provided by a home health care agency.

Group Policy Positives vs Individual Disability Insurance

Most significant group benefit is insurer will issue without asking any health-related questions. Only group insurance can provide short-term benefits and elimination periods of 0 to 7 days.

PACE Eligibility

Must be at least 55, live in a PACE service area. Not all states or all areas within a state provide PACE services, and be certified as eligible for nursing home care by appropriate state agency.

Medicare Covered Services

Must be medically necessary, and services must be provided in a Medicare-approved facility. Part time home health care, durable medical equipment & some hospice care may be covered.

Three Medicare 60-Day Rules

Must be out of a hospital or skilled nursing facility at least 60 days to qualify for new benefit period. Max length of time a patient will have zero coinsurance for care in a hospital after meeting their deductible is 60 days. Have 60 lifetime reserve days can use to extend coverage.

Principle of Equity in Insurance

Must categorize insureds otherwise law of large numbers doesn't work. Has brought insurers into conflict with society attempting to legislate end to distinctions based on age, sex, race, & geographic location. But valid statistical differences can't be eliminated by legislation.

Medicare Part A Long Term Care Coverage

Must first stay in a hospital for at least 3 days & must be expected to recover, otherwise will not be covered. Then, within 30 days, must enter Medicare-approved nursing home. If care is provided at skilled nursing level, benefits may be available up to 100 days. After that, no coverage.

Exclusive Provider Organization (EPO)

Must use providers in network or no payment unless an emergency. Funded through an insurer with care conducted by contracted providers. Unlike HMOs where HMO is both funding & service providing organization.

Medicare Benefits Four Basic Parts - C & D

Part C (Medicare Advantage Plan) provides four program alternatives: Medicare HMO, PPO, private fee-for-service, and Medicare special needs plans. Medicare MSAs may also be available to supplement the basic coverage. Part D provides prescription drug coverage.

Disability Waiver of Premium

Standard provision in disability income insurance policies, unlike with life insurance. Premiums generally waived whenever insured qualifies for them. Premiums may be waived during period in which insured receives benefits, or may be waived for entire period of disability.

Medicaid & CHIP - States

States set own programs, but required to cover certain mandatory benefits similar to those in health care plans. CHIP provides health insurance to children in families that don't qualify for Medicaid. Check client's state of domicile for specifics on state program.

Disability Definitions: "any occupation"

Strictest definition from the insured's point of view. Insured considered disabled if unable to perform duties pertaining to any gainful occupation. Limits payments to those who are unable to work in any occupation whatsoever.

Medicare Supplements

Ten standard Medicare supplement plans, also known as Medigap plans available. Plans A to G & K to N. Can't be turned down if apply within 6 months of enrolling in Medicare after 65 or when cease being employed after 65. Can't charge more due to preexisting conditions.

Two Ways to Qualify for Long Term Care Insurance Benefits

Two categories include inability to perform two or more activities of daily living (ADL) or impaired cognitive ability.

Two Long Term Care Insurance Hybrid Policies

Two different types of hybrid policies that are also sometimes referred to as "linked" or "asset-based" plans. Either life insurance or annuities are combined with long-term care to create hybrid policies.

Disability Income Insurance Maximum Benefits

Two key concepts are included in the category of maximum benefits: the maximum benefit period and the maximum monthly payment.

Disability for Business Owners/Key Employees

Two risk exposures for a business and its owners. First cost of overhead. When a sole proprietor is disabled, often no one else to work and bring in money to cover expenses. Second result of one of owners or key employees becoming disabled.

Activities of Daily Living (ADL) Triggering LTCI Benefits

Under HIPAA, a tax qualified policy may use five or six ADLs as benefit triggers. Insured needs substantial assistance with 2 for at least 90 days. Med proof must certify meets trigger & will continue to do so for 90 days. Elimination periods don't start until certification.

Certificate of Credible Health Insurance Coverage

When an employee leaves a job, and health care plan coverage terminates, employer required to provide a certificate of credible coverage used to prove employee had been covered and for how long.

Social Security Disability Definition - Narrowest of all Definitions

Shouldn't rely on Social Security: "inability to engage in any substantial gainful activity by reason of any medically determinable physical /mental impairment expected to result in death or which has lasted/can be expected to last for continuous period not less than 12 months."

Long Term Care Insurance Policy Components - Elimination Period

Similar to disability, have period before benefits paid. Most common elimination period 90 days. Most require formal care from covered provider for day to count toward elimination period. Cumulative for life crediting method so never need to meet elimination period again if recover then relapse.

Three Levels of Long Term Care Insurance

Skilled nursing care, highest level, 24-hour registered nurse under doctor's supervision; intermediate care less-intensive nursing, or rehab care, doesn't require 24-hour registered nurse/doc & custodial care. Not medical but necessary for health. Most LTC is custodial level often in home.

Three Long-Term Care (LTC) Types

Skilled nursing care, intermediate care, and custodial care. Not all long-term care is nursing care. Most long-term care is actually custodial care.

Medicare Special Needs Plans

"Dual eligible" as may be receiving Medicare & Medicaid benefits. Must provide Parts A, B, & D benefits. For people receiving Medicare or low income subsidies. Must be both Medicare/Medicaid eligible and have chronic or disabling disease.

PPACA-compliant health policy with $1,000 deductible, 20% coinsurance provision with $5,000 MOOP. $6,200 of eligible medical expenses. Out of pocket payment?

$1,000 deductible then coinsurance 20% payment kicks in on remaining $5,200 = $1,040. Payment for deductible and coinsurance = $2,040.

2019 Medicare Part A Inpatient Deductible/Coinsurance - 0 to 90 days

$1,364 deductible for each benefit period. Days 1-60: $0 coinsurance for each benefit period; Days 61-90: $341 coinsurance per day of each benefit period.

2019 Medicare Part A Inpatient Deductible/Coinsurance - 91 Days and Up

$682 coinsurance per each "lifetime reserve day" after day 90 for each benefit period. Up to 60 reserve days over a lifetime. Beyond lifetime reserve days patient pays all costs.

Patient Protection and Affordable Care Act (PPACA)

2010, also called Affordable Care Act (ACA), aims to eliminate barriers on acquiring coverage, originally mandated all Americans must have coverage, "Individual Mandate," but Tax Cuts and Jobs Act (TCJA) eliminated this mandate through eliminating penalty for lack of coverage.

FSA Contributions

2019 max is 2,700. Election can be changed/revoked only if change in employment or family status. Grace period up to 2½ months after plan year end for additional expenses incurred in prior year, but not billed until present year. Up to $500 of unused amounts can be carried over.

Disability Income Insurance (DI) Need

35-year-old healthy female who mostly works in an office and spends some time outdoors has a 24% chance of becoming disabled for three months or longer during her working career. Male has 21% chance.

Events Causing Health Coverage Changes - Death

60 day time limit for acting. If a spouse was covered under a deceased individual's group coverage, have right to utilize COBRA for 36 months.

Events Causing Health Coverage Changes - Disability

60 days to act. After sick days over, typically moved to short or long-term policy benefits or terminated. In any case, employer provided health insurance ends along with employer subsidy. Can utilize COBRA & if due to disability, can keep coverage for 29 months.

Events Causing Health Coverage Changes - Divorce

60 days to make change. Can utilize COBRA provisions for 36 months but may want to explore other options. For children determining which parent's medical insurance plan will cover child is an important consideration.

Events Causing Health Coverage Changes - Marriage

60 days to make change. Under PPACA married child may still remain covered by his or her parents' health plan as long as under 26. But each newlywed would only be able to stay on their own parents' plan.

HIPAA Rules - No or Reduced Pre-existing Condition Exclusion if:

A new employee covered under a prior health plan for 12 months or 18 months for late enrollee, and less than 63 days elapsed since lost coverage under that plan. If employee had less than 12 months coverage under prior plan, preexisting conditions exclusion is reduced one day for each day under prior plan.

Factors for Choosing Health Insurance

Access to providers, medical care coverages, costs, financial ratings, consumer satisfaction ratings. www.healthreformbeyondthebasics.org has an excellent Marketplace Plan Comparison Worksheet. Is cost or choice of doctor/hospital more important?

What are ADLs?

Activities of Daily Living. Set out in policy and generally include 5-6. Any combo of bathing, continence, dressing, eating, toileting and transferring e.g., getting from bed to a chair. Inability to perform two of above ADLs used to determine eligibility for benefits.

Disability Income Insurance Modified Own Occupation

Adds phrase similar to "and not working in any gainful or reasonable employment." Strict. Don't get paid if working in a different occupation.

Internal Health Insurance Limits

All health care plans have them in form of excluded treatments or in form of controls that limit the extent to which certain benefits may be used and paid for by the plan. Internal limits contain costs and most often identified in section titled "What is not covered."

Long Term Care Insurance Policy Components - Nonforfeiture Benefit Rider.

All policies must now offer it. Right to shortened benefit period. If decide to surrender policy after owning for 3 years, premiums paid will be available to pay for future care. May be built into policy rather than a rider. If built-in contingent nonforfeiture benefit policy is converted to paid-up status.

Life Insurance - New Riders for Long Term Care Insurance

Allow access to portion of death benefit allowing between 1-4% per month for LTC. Others allow access to discounted amount of death benefit for chronic illness. Most pay for care even by family members.

Fee for Service Plans

Alternative to capitation plan. Increasing number of doctors unhappy with capitation paid by managed care plans are expanding fee-for-service practices. Some drop out of capitation-based managed care plans and move entirely to fee-for-service plans.

$1,500 /$4,500 embedded deductible, 80/20 coinsurance provision, & $7,000 MOOP. $10,000 covered medical expenses. What will insurer pay?

Amount applied to coinsurance $8,500. 80/20 split = $1,700 for insured, insurer $6,800. Insured pays $3,200 deductible plus coinsurance. Insurer pays $6,800

Benefits of Long Term Care Insurance Qualified State Partnerships

Amount of benefit purchased added to the required state spend down amount to qualify for Medicaid, thus leaving individual and spouse additional resources. These plans protect client assets dollar-for-dollar.

If Health Care Choice More Important than Cost

Analyze 3 scenarios for out of pocket costs. Avoid HMOs. PPO may work if doctors/specialists in-network. For someone where relationships with providers who aren't part of HMO/PPO matter, indemnity plan may be only option.

Preexisting Conditions - 3 Definitions

Any condition for which saw doctor or reasonably should have seen one. Condition that manifested itself before application signature, meaning any symptom would cause it to be preexisting. Any condition before policy issuance preexisting, even if insured unaware of it.

PPACA Employer Shared Responsibility "Employer Mandate"

Applicable Large Employer or ALE with 50 or more full-time equivalent employees, averaging 30 hours per week and their dependents if coverage offered, must provide essential coverage of a minimum value or pay a "shared responsibility payment" or penalty.

Disability Policies Common Provisions - Misstatement of Age

As with life insurance if insured files a claim and birth date different from the one in the application, benefits adjusted to amount that would have been purchased for the same premium at the correct age.

Long Term Care Insurance Policy Components - Return of Premium Rider

Available only on non-qualified policies. For an extra premium, can guarantee that if no benefits paid, entire premium paid eventually will be returned. Timing varies & premiums usually reduced by benefit amount paid out

Long Term Care Insurance Premium Control - Benefit Period

Average time someone over age 65 might need LTC about 3 years. Women slightly longer, men slightly shorter. Longer the higher, but some want benefit period of 5 years to coordinate with lookback period if need to qualify for Medicaid.

Disability: Cost-of-Living Riders

Avoids loss of purchasing power during long-term disability. Most common is to have benefits increase, after a disability begins, by CPI or specified percentage, whichever is less. Has a cap and is one of the most expensive riders.

Cash Value Life/ Long Term Care Insurance Hybrid Policies Benefit Payments

Benefits paid on monthly basis during insured's life if requires LTC. Note that these payments reduce remaining policy death benefit and cash value by the amount of payments.

Group Policy Negatives vs Individual Disability Insurance

Benefits usually percentage of income with upper limit with & no riders. Can be canceled/changed by insurer or employer. "Own occupation" definition lasts no more than 2-5 years. Disability definition more stringent. Preexisting condition clauses less inclusive. Some convertible to individual policies.

Disability: Cost-of-living rider

Benefits will increase each year by lesser of the cost-of-living percentage or a specified percentage. Total benefits following years of disability are generally limited to double or quintuple the original benefit, depending on the contract.

Loss of Income Policies & Residual Disability Benefits Definition of Earnings

Both must define average earnings to determine base income used to identify income percentage reduction. Calculations vary using average of last two years, two highest income years among last five years, etc. Better policies automatically increase average earnings by CPI.

Events Causing Health Coverage Changes - Losing or changing jobs

COBRA rules allow extension of coverage for 18 months if sign up within 60 days. Affordable Care Act says can also find coverage through an exchange with no preexisting conditions restrictions. If miss 60-day window, may have to wait until open enrollment.

Medicare Handbook

Called Medicare & You. Lists all limits, dollar amounts, and other numbers. Established each year in the official U.S. government handbook at www.medicare.gov

Determining Which of Two or More Healthcare Plans is Primary - Spouses

Can be complicated. Assume both husband & wife have family coverage through their employers. The respective employer-sponsored plan is primary coverage for each employee. To determine which coverage is primary for dependent children is more complex.

Medicare Part D & Medicare Supplement Plans

Can buy a Medicare supplement plan & add a Part D stand-alone prescription drug coverage component.

Medicare Part C Open Enrollment

Can make changes during Medicare Open Enrollment Period Oct 15-Dec 7. If move out of current Medicare Advantage Plan's service area during the year, may switch plans outside of the enrollment period.

Opting Out of Medicare Part B

Can opt out, but for every 12 month delay in enrolling, 10% permanent premium penalty. Five year delay 50% increase. Exception to general penalty rule if still working & covered under group plan. Have 8 months after group health insurance ends to enroll.

Events Causing Health Coverage Changes - Age 26

Children can be covered under parent's health insurance until 26, but does not extend to any children of the child. Marriage does not disqualify coverage.

Example: Embedded Deductible is $2,500/$5,000, 20% coinsurance & MOOP of $10,000 including deductible. Example shows only insured's payments.

Claim, Applied to Deductible, Applied to Coinsurance, Coinsurance Amount, total paid by insured Jason $20,000 $2,500 $17,500 $3,500 $6,000 Sue $400 $400 $0 $0 $400 Millie $200 $200 $0 $0 $200 Kaitlyn $100 $100 $0 $0 $100 Total Paid by Insured $6,700

Example: Non-Embedded Deductible is $2,500/$5,000, 20% coinsurance & MOOP of $10,000 including deductible. Example shows only insured's payments.

Claim, Applied to Deductible, Applied to Coinsurance, Coinsurance Amount, total paid by insured Jason $20,000 $5,000 $15,000 $3,000 $8,000 Sue $400 $0 $400 $80 $80 Millie $200 $0 $200 $40 $40 Kaitlyn $100 $0 $100 $20 $20 Total paid by insured: $8,140

Coinsurance 80%. MOOP $5,000 per person/$10,000 per family. Deductible non-embedded 1k/2k. Covered expenses $4,675. How much will insured pay?

Deductible $2,000, non-imbedded so ignore first number. Coinsurance amount $535 so $2,535 total for insured $2,140 for insurer. This claim covered deductible for entire family for the year as deductible non-embedded.

Disability Income Insurance Five Major Features

Definition of disability, elimination period or waiting period, available monthly benefit or, with group disability insurance, max benefit & way it's determined, max benefit period & renewal provisions, and premium structure.

Long Term Care Insurance Policy Components - Spousal Shared Benefit

Each person may have own, but allowed to use spouse's/partner's benefits when exhausted. Some allow spouse to purchase additional coverage at an attained age or replenish a percentage. Unused benefits may transfer upon death.

Events Causing Health Coverage Changes - Age 65

Eligible for Medicare at 65. If retired must enroll in Part A during initial enrollment period or face permanent penalty. If have group coverage beyond age 65, do not need to enroll in Medicare until that coverage terminated, but must have proof of coverage.

PPACA - Changes for Consumers

Eliminates lifetime limits on insurance coverage. Requires public justification of rate hikes over a certain percentage. Guarantees right to appeal payment denials. Eliminates prescription costs gap in Medicare Part D

Emergency Fund and the MOOP

Emergency fund should have enough money to cover the maximum out-of-pocket amount.

Medicare Special Enrollment Period (SEP)

Employed past 65 may still enroll in Part A. Free. Should enroll in Part B upon retirement. Have 8 months beginning with first full month employment or health coverage through the employer ends to enroll without penalty. Need employer letter of credible coverage.

PPACA - SHOP Small Business Health Care Tax Credit

Employers with fewer than 25 employees may qualify for tax credit of up to 50% of premium costs. Greatest benefits are for employers with fewer than 10 employees making under 25k. Sole proprietors or those covering just themselves and family members as employees can't use SHOP.

Purpose of Disability Insurance Split Definition

Encourages disabled employees to return to productivity. Receive benefits for 2-5 years when can learn new skills from which they will be able to earn a living when the own occupation definition ends. If capable of working, but choose not to, benefits generally cease.

Provider Service Networks (PSNs)

Essentially same as a physician hospital organization (PHO). Small plans typically cooperative effort between physicians and hospitals.

Coordination of Benefits Clause - Primary vs. Secondary Policy

Establishes which policy is "primary" meaning the other policy does not have to pay until the primary policy pays up to its limit. Secondary policy must pay any remaining balance up to its limits, but not so much that the insured receives more than 100% reimbursement of expenses.

Events Causing Health Coverage Changes - Moving

Even within same state. Clients signed up for Medicare plans or HMOs may find that coverage they currently have will not work.

Disability: FICA & Social Security Taxes

FICA taxes complex. Some policies are subject to employment taxes under certain circumstances. Most of the time disability payments made to an employee are subject to Social Security tax for the first six months following the last month the employee worked.

Disability Policy Durability or Renewal Provisions - Conditionally Renewable

First and least common type gives insurer right to disallow renewal under certain conditions. Second most common type provides benefits to 65. If reach 65 & continue to have earned income, can renew to provide protection against a disability interrupting those earnings.

Two basic approaches to delineate benefits under health care contract

First approach is to list benefits provided. Second is state what contract provides for medically necessary products/services & then list products/services not covered in list of specific exclusions. Latter approach typical of major medical contracts usually better for client.

Three Areas to Study for Long Term Care Insurance

First know unique needs, concerns, and issues facing seniors. Second, learn about government programs that impact planning. Finally, be familiar with wide array of financial products designed to serve LTC marketplace.

Managed Care Plans - Copays

Fixed fee for each visit to provider. Ranges from $5-$250 and paid regardless of services rendered. Applied to out-of-pocket max found in some managed care plans.

Other Pretax Health Insurance Options

Flexible spending accounts, medical savings accounts, Medicare Advantage MSAs, and health savings accounts are tax-exempt trusts or custodial accounts designed to allow people to accumulate and pay medical expenses on a pretax basis.

PPACA - Small Business Health Options Program (SHOP)

For employers with fewer than 50 full-time equivalent employees. Employer can decide to offer dependent coverage/dental insurance, chooses the open enrollment period/waiting period for new employees. Employees can enroll online and employer pays one bill.

Parts B & D Penalty

For every 12 months' delay in enrolling, there is up to a 10% permanent premium penalty prorated monthly. Penalty begins to apply if sign up just one month late.

Health Insurance Coinsurance Example

For example, policy may state coinsurance as 80/20, or simply 20%. This means insured pays 20% of the approved medical expenses above deductible, until MOOP limit is met.

Medicare & Long Term Care

For nursing home benefits, must first be admitted to hospital for minimum of 3 days & enter Medicare approved skilled nursing facility within 30 days of discharge. Pay full cost first 20 days and balance of expenses over large daily deductible for next 80 days. After that, all costs borne by patient.

Financial Planners Need to Know Medicaid Eligibility

For pro bono work or when a client is taking responsibility or wishes to assist a family member who may qualify and as part of the discussion on special needs trusts.

Medicaid & LTC

Form of welfare with different rules than Medicare. Need medical qualifications & must "spend down" assets to about $2,000 per person, $3,000 per couple to be eligible. Certain assets exempt from spend-down if patient intends to return home or spouse remains in the home.

Disability Policy Durability or Renewal Provisions -Presumptive Disability

Full disability if lose sight, hearing, speech, both hands/feet, or one hand/one foot. Insured then presumed to be disabled, hence the term. But some don't cover all these losses requiring loss to be total and permanent, while others cover even temp loss.

Medicare & Home Health Care

Full-time home care not covered, only part-time or intermittent care. Patient must be certified as needing home health care, must be housebound, and must be under doctor's care. Home health care agency must be Medicare-certified.

PACE Home Care

Generally allows participants to live in and receive care at their own home rather than moving into a nursing home. Providers paid on a capitation basis, which may allow for more extensive or diverse treatment possibilities than traditionally available.

Amount of Disability Insurance Available

Generally, an insured can purchase coverage that is sufficient to replace about two-thirds of his or her income and no more.

Managed Care Plans - Primary Care Physician (PCP)

HMO "gatekeeper." Must choose a participating doctor as PCP. Specialists must be referred through PCP who may be given incentives for keeping care within preset limits. HMO may discourage PCPs from making referrals/ prescribing certain treatment plans.

Health Insurance Plan Cost Differences

HMOs, or possibly POS plans, are usually the lowest-cost plans. PPO plans are next and the indemnity plan, generally, has the highest cost.

HSA Funds Useage

HSA funds can be used for most medical expenses & to pay long-term care insurance, COBRA health care continuation, health care coverage while receiving unemployment benefits, Medicare and other health insurance if age 65 or older not including Medicare supplemental insurance.

Medicare Supplement Plan N

Has 100% coverage for Part A inpatient deductible. No Part B deductible. N's coverage for Part B coinsurance charge subject to copays up to $20 for office visits & $50 for emergency room.

Long Term Care Insurance Premiums and Benefits Taxation - Qualified

Health Insurance Portability & Accountability Act of 1996 (HIPAA) says those with qualified policies can deduct all or a portion of premiums from income for tax purposes. Also payments from policies for qualified expenses are not taxable. Must disclose whether qualified or nonqualified.

PPACA - Medicaid & CHIP Children's Health Insurance Program

Health care for children, pregnant women, parents, and disabled with low incomes. PPACA expanded Medicaid eligibility/combined some Medicaid & CHIP rules. Medicaid minimum eligibility 133% of federal poverty level. Income, residency, & citizenship qualifications.

HIPAA Rules - Exclusion Period With Waiting Period

If a plan has a waiting period for new hires, the preexisting conditions exclusion must be reduced by the number of days equal to the waiting period

Annuity/ Long Term Care Insurance Hybrid Continuation of Benefit Rider & Underwriting

If all of the funds are used to pay for LTC, a continuation of benefits rider is activated extending benefit. If funds not used, annuity value transfers to beneficiaries. Because it is self-funding, insurance carriers can be somewhat more lenient in underwriting health.

HSA Elgibility

If become eligible to contribute at any point during a given year, can make entire year's contribution rather than just a percentage of the annual contribution amount. But must remain eligible for following 12 months.

Long Term Care Insurance & Residual Benefits

If claims do not use entire original benefit amount many policies will continue to provide benefits until the entire amount is utilized. Example $1,000 weekly benefit for max 2 years = $104,000. If claims only $500 per week only half used. Benefits continue until total paid out.

HSA Contributions

If contributions made by the employer, not taxable to the employee. If contributions made by individual, pretax, payroll deduction basis or as an "above-the-line" deduction. Max contribution $3,500 for individuals, $7,000 for family. For 2019, individuals age 55 to 64 may make catch-up contributions of $1,000.

Disability Policy Durability or Renewal Provisions - No Stated Provision

If disability policy has no stated provision on renewal, policy generally written to provide coverage only for time period specified in policy. At end of period, policy expires.

Medicare General Enrollment Period (GEP)

If fail to sign up during initial or special enrollment periods, there is an annual general enrollment period for Parts A & B between Jan 1 and March 31, with coverage taking effect July 1. Penalty for signing up late is 10% per year of delay and is permanent.

Annuities as Not Available Assets for Medicaid

If from insurer, no private annuities & immediate, not deferred. Must disburse complete payout during life expectancy. Payments must be substantially equal amounts & state must be first death beneficiary up to Medicaid benefits paid unless have spouse/minor child, then contingent ok.

Disability Income Insurance Preexisting Conditions

If insured discloses preexisting conditions on application and company doesn't eliminate or discount them in the policy, they are fully covered. Undisclosed preexisting conditions are not covered during probation period, which can range from 30 days to 2 years.

Disability Definitions: "loss of income"

If loss 20% or more as defined in the policy, will receive portion of policy's benefits equal to the portion of income lost.

Medicare Part D & Medicare Advantage Plans

If purchased a Medicare Advantage Plan, D prescription coverage part of it. If enroll in a stand-alone Part D plan when enrolled in Medicare Advantage Plan will be un-enrolled from Advantage Plan & put back on original Medicare Parts A & B.

Disability Policies Common Provisions - Relation of Earnings Clause

If purchased when insured was making more money than does now, benefits may be higher than current earnings. Clause allows underwriting at time of claim so lower benefits in line with insured's current earning. Excess premiums returned to insured.

Medicare Part A Hospital Stays Longer than 150 Days

If remain in the hospital for more than 150 days within a benefit period, the total hospital costs beyond the 150 days are borne by the patient. There is no limit to the number of benefit periods a person can have during their lifetime.

PPACA Controlled Group

If several entities affiliated under same organization, a controlled group, number of full-time employees combined to determine if employer is an applicable large employer with 50 or more full-time employees. Important if client owns more than one business.

Disability Policies Common Provisions - Reinstatement

If the policy owner allows policy to lapse, can generally apply to reinstate it. Proof of insurability & repayment of all back premiums normally required.

Long Term Care Insurance May Not Make Sense for 2 Types

If very wealthy i.e., assets in the multi-millions. Able to pay any expenses out-of pocket. If a client on other end of financial spectrum & without sufficient assets. Cost of coverage likely to be too high and will quickly spend down assets to qualify for Medicaid anyway.

Disability: Purchase of Both Additional Insurance Rider & Cost of Living Riders

If want greatest protection would purchase both cost of living & AIR riders. Benefit prior to disability is increasing and will continue to increase after a disability begins. Mimics income, but expensive.

HIPAA (Health Insurance Portability and Accountability Act)

Improved portability/continuity of health insurance coverage in group/individual markets. Also created consistent federal rules for dealing with preexisting conditions.

Medicare Part B - "Held Harmless"

In a year when there is no increase in social security benefits, individuals who are already on Medicare and have incomes below Medicare threshold are "held harmless" from premium increases.

Long Term Care Insurance Premium Control - Elimination Period

In addition to benefit amount e.g., $150 per day, the premium can be controlled by adjusting waiting or elimination period. Longer the cheaper. Many have a max of 180 days, a few up to 12 months, but most LTC stays under 3 years, so cutting value by a third if choose a year.

Annuity/ Long Term Care Insurance Hybrid Taxation

In addition to growing tax-free/having some creditor protection, distros tax-free if used for LTC. Different from taxation of regular annuities in which distributions after appropriate basis adjustment are taxed as ordinary income.

Disability Occupational Classifications

In addition to stricter medical requirements than life insurance, disability income insurance has extra underwriting, like occupational categories which traditionally are blue & white collar & professional who tend to be exposed to less workplace hazards.

Medicare Private Fee for Service (PFFS)

In sparsely populated areas, may not have coverage so insurers create plans with Medicare-approved doctor/hospital that accepts plan's terms. Insurer, not Medicare, decides what participant will pay. Coverage varies by plan, but always covers Part A-B services.

Managed Care Plans

Include health maintenance organizations (HMOs), preferred provider organizations (PPOs), physician hospital organizations (PHOs), point of service (POS) plans, provider service networks (PSNs), & exclusive provider organizations (EPOs).

Disability: Additional Insurance Rider

Increase in amount of monthly benefit each year by specified percentage. Typically, after five years, financial underwriting is performed. If insured eligible for increased coverage, the increases continue. The rider itself has no premium, but additional coverage does.

Daily Benefit Plans

Indemnity plan typically offered by specialty providers that pays a daily benefit or fixed dollar amount when insured sick. Supplemental plan that only pays when trigger event happens such as insured enters hospital. Premiums based on benefit amount chosen.

HSA Qualification Criteria

Individual must be covered by a high deductible health plan (HDHP), they must not be covered by another non-HDHP health insurance plan including Medicare, and they cannot be claimed as a dependent for income tax purposes.

Long Term Care Insurance Factors for Determining Coverage Amount

Individuals impacted; income stream available; gap between needed income stream if receiving care and what will be available; personal assets; impact on family members who may provide care; impact on portfolio longevity and retirement

PPACA - Marketplace

Individuals/small businesses can buy qualified health benefit plans in this new insurance marketplace. Open enrollment for individuals

Deductible Types

Initial amount client must pay before coverage begins. Embedded deductible applies to each family member separately until family deductible limit reached. Non-embedded deductible has no individual limits.

Health Insurance Deductible

Initial amount of covered expenses insured must pay before health care plan pays. Lessens cost of insurance. Higher deductible, lower premiums. Deductible also acts as deterrent, paying a deductible makes calling a doctor less likely.

Coordination of Benefits Clause

Intended to enforce indemnity by guaranteeing that the insured does not collect from more than one insurance policy and recover more than 100% of the cost of services covered under the contracts.

Medicare Advantage Plan & Supplemental Plans

It is illegal to sell a supplemental policy to someone in a Medicare Advantage plan.

Annuity/ Long Term Care Insurance Hybrid Example

LTC benefit usually expressed as multiple of single premium deposited into annuity. Example: if multiple is two and single premium is $100,000 there would be $200,000 available for LTC benefits.

Long Term Care Insurance Non-Qualified Plan Taxation

LTC costs are now treated as a medical expense for income tax purposes. Even if the benefits from a nonqualified policy and are fully taxable when received, there may be an offsetting deduction.

Continuing Care Retirement Communities (CCRCs)

LTC coverage also may be obtained through CCRCs. Offer care and housing for elderly. Generally, a substantial one-time payment is required upon entry, followed by monthly maintenance payments thereafter based on the level of care being received.

PPACA Individual Shared Responsibility "Individual Mandate"

Law required individuals of all ages to carry health insurance, repealed for 2019 and beyond by Tax Cuts & Jobs Act. Prior to 2019, those without qualified policy fined. Individual mandate inactive and not required going forward.

Life Insurance Accelerated Benefits vs. Long Term Care Insurance

Life insurance policies may include a provision/rider allowing accelerated benefits, but may not be triggered by same conditions that trigger LTC. Example: a person can need a lot of LTC without having a terminal illness triggering accelerated benefits.

Under what circumstances are hybrid policies good?

Life insurance-long-term care hybrid policy good if concerned about LTC cost & have life insurance need. Annuity-long-term care hybrid policy good with enough money and if cost of life insurance too high. Solves concern of paying LTCI premiums & never collecting.

Maximum Out-of-Pocket (MOOP) Expense

Limit insured will pay out-of-pocket. Most plans include the deductible, copayments, and coinsurance under the MOOP, but always check. Applies to approved charges only. If plan allows out of network expenses they may not be credited to MOOP.

PPACA - Changes for Consumers Continued

Links payment to quality outcomes. Reduces paperwork / admin costs. Purchases with individual or family incomes within a published range are eligible for subsidies that defray part of the cost of premiums; premiums can no longer be linked to gender/health issues

Long Term Care Insurance Benefit Amounts

Long-term care policies provide benefit amounts ranging from $50-$400 per day, or define a pool of money. Life insurance policy riders tend to have benefit amounts stated as percentage of policy's face amount.

Medicare Supplement Plan M

M& N have lower premiums than other plans. M covers 50% of Part A inpatient hospital deductible, no Part B deductible. Fully covers core benefit & skilled nursing facility daily coinsurance charges. Has foreign travel emergency benefit.

PPACA - Changes for Insurers

Mandates percentage of premiums that must be spent on care versus admin expenses/profits. Establishes consumer assistance programs. Mandates certain preventive care coverage.

Events Causing Health Coverage Changes - Reducing hours worked

Many group plans require employees to work certain number of hours for coverage. If a client falls below this may have insurance voided even if company has been sending in premiums. Clients cutting back hours should be a triggering event.

HSA Rollovers

May be able to do a one-time rollover from FSA to an HSA. A limited one-time, tax-free rollover from an IRA into an HSA is also permitted up to the annual contribution limit if IRA rollover in the form of direct trustee-to-trustee transfer.

Underwriting Considerations

Meaning twofold. First, requirements the insurer sets that insured must meet in order to be offered insurance. Second limitations on types/amounts of coverage insurer will issue to each class of insured.

Events Causing Health Coverage Changes - Dramatic income Changes

Medicare premiums/tax penalties for not having coverage are impacted by income. A dramatic reduction in income could trigger subsidies for health care coverage on the exchanges, Medicaid, or child health insurance subsidies.

NCQA Performance Measurement - HEDIS

Method of comparing health care plans through performance measurement tool called the Health Plan Employer Data and Information Set or HEDIS. Info available at www.ncqa.org.

Long Term Care Insurance Policy Components - Benefit Period

Minimum amount of time benefits will last in years before policy exhausted. Choices range from 1 to 10 years. Unlimited/lifetime benefit periods rare. Take daily or monthly amount times number of years to find max money to offset expenses. Pool could last longer than number of years.

High Deductible Health Plan (HDHP)

Minimum deductible $1,350 for an individual or $2,700 for a family for 2019. Annual out-of-pocket expenses cannot exceed $6,750 for an individual or $13,500 for a family.

Supplemental Health Coverage Riders

Modify or expand coverage, available at an extra premium. Typical options include dental, vision, and accident insurance.

Disability Defined by Income Loss Starting Point

No actual definition of disability is used, thus the starting point of period during which income is lost must be identified. It may be the date on which insured no longer earning an income due to illness or injury accrual method or date on which received income drops cash method.

Disability Policy Durability Renewal Provisions - Nonguaranteed Continuation

No guarantee of coverage continuity. One type renewable at option of company provision. Insurer may choose to renew or not on policy anniversary. The other provision relates to when a policy is cancelable. Insurer may give required notice & cancel at any time.

HIPAA Rules - Pregnancy, Newborns & Genetic Info

No preexisting conditions exclusion may be applied to a newborn or adopted child who is enrolled within 30 days of birth or adoption. Pregnancy cannot be considered a preexisting condition. Genetic info not preexisting condition.

National Committee for Quality Assurance (NCQA)

Non-profit that accredits health care plans & various doctor certification programs. Provides health plan report cards for employers to better understand plans. Many plans involved in the voluntary accreditation process.

Disability Differences Due to Occupation

Occupational classification affects everything about the policy. Definition of disability becomes progressively more liberal as a professional classification is approached & duration of benefits becomes progressively longer.

Group Health Care Plans' Summary

Often give employees a summary of the benefits rather than a copy of the comprehensive contract. If there is a conflict between the two, the contract will govern.

Long Term Care Insurance Premiums and Benefits Taxation - Nonqualified - Medical Necessity

One benefit trigger, medical necessity, can't be included if policy is HIPAA qualified, but it is included in a number of nonqualified policies. Medical necessity is the requirement that a physician state that LTC benefits are necessary for overall health and well-being.

Determining Which of Two or More Healthcare Plans is Primary - Dependent Children

One determination method holds primary coverage comes from parent whose birth date (month/day) comes first in the year. Other method uses gender. With gender method, father's plan is primary.

Medicare Part A

Or Hospital Insurance (HI) for in-hospital expenses. If individual or spouse has worked in covered employment for at least 40 quarters 10 years it's free. Otherwise premium varies based on contributions. Verify status prior to enrollment. Deductibles & copayments apply.

Medicare Part D "donut hole"

Or coverage gap, which closed in 2019. While in the coverage gap, pay 25% of the cost for name brand drugs and 37% of the cost for generic drugs until spend a total out-of-pocket of $5,100 or $8,140 in total drug costs. After that, enter Part D catastrophic coverage.

Medicare Options

Original Medicare program Parts A,B; Medicare Part D prescription drug plan; with or without medicare supplement policy; coordinated care plans; medicare HMOs; PPOs & MSAs; special needs plans; religious fraternal benefit societies; private fee-for-service plans.

Medicare Part A Hospital Stays Longer than 60 Days

Over 60 under 91 days, including readmission within 60 days of being released, has set copayment that changes annually. That copayment increases after the 91st day through the 150th day. After 91 days have to use "lifetime reserve days." Have 60 days over a lifetime of these.

Four Main parts of Medicare

Part A: hospital coverage; Part B: physician's and out-of-hospital coverage; Part C: Medicare Advantage—alternatives to traditional Medicare coverage; Part D: prescription drug coverage

Medicare Benefits Four Basic Parts - A & B

Part A: inpatient hospital care, post-hospital extended care in a skilled nursing facility (SNF), post-hospital home health services, and hospice care. Part B pays doctors & other outpatient treatment, certain preventive services, screening tests, home dialysis, other services.

Disability Participation Limits

Participation limit defines the max amount of coverage allowed given all other disability benefits. If have group benefits equal to 70% of salary and no other earned income, most companies wouldn't allow more coverage.

Health Savings Accounts (HSAs)

Pay for current health expenses/save for future expenses on tax-free basis. Created under Medicare Modernization Act of 2003 to replace Archer medical savings accounts (MSAs), not to be confused with Medicare MSAs. If over 65, can't make additional HSA contributions.

HSA Withdrawal of Funds for Noneligible Expenses

Penalty for withdrawing funds for noneligible expenses prior to 65 is 20%. After 65, withdrawals for noneligible expenses not penalized but considered taxable. Must complete tax forms annually. More specific guidance in IRS Pub 501.

Events Allowing for COBRA Coverage

Per DOL several events may allow for COBRA coverage, including voluntary /involuntary termination for reasons other than gross misconduct; reduced work hours; eligibility for Medicare; divorce/legal separation; death; loss of dependent child status.

Average Long Term Care Length of Care

Per HHS average stay for men is 2.2 years while the average stay for women is 3.7 years.

Group Long-Term Disability (LTD) Income Replacement

Percentage of income replaced almost always applies to base salary only. Seldom will group LTD benefits be based on supplements to salary such as bonuses, overtime, etc.

Disability Income Insurance Elimination Period

Period after disability occurs and before benefit payments begin. Essentially the deductible for a disability policy, but a time deductible, as it defines time insured must wait before benefit period begins. Longer elimination periods reduce policy premiums.

Excluded treatments impact on deductible/out of pocket limit

Plan benefits apply only to covered treatments. The costs of excluded treatments do not apply to the deductible or maximum out-of-pocket limit. If an expense is not excluded, it is eligible for reimbursement.

HIPAA Rules - Exclusion Period

Plan's preexisting conditions exclusion period may not exceed 12 months unless employee a late enrollee, then exclusion period limit 18 months.

2019 Medicare Supplement Plan Changes

Plans E, H, I, and J no longer available existing plans maintained. Preventive care & at-home recovery benefits eliminated. Plan G benefit that paid 80% of excess charge eliminated by increasing it to 100% when providers do not accept assignment in Part B. Two new Medicare Supplement plans, M & N created. New Part A hospice cost-sharing benefit added to core benefit of all plans. Covers 5% charge for drugs/respite care.

Long Term Care Insurance Trends - HMO-LTC

Policies emerging that offer long-term care coverage but require individuals to use services within a network.

Today's Long Term Care Insurance

Pool of money for home care, adult day care, assisted living, nursing home & hospice care, & respite care or vacations for caregivers. Covers care coordinators or advisory services. Older policies have separate pools for expenses with dollar per day limit or other restrictions.

Disability Benefit Taxation

Portion of group or individual premium not paid by insured leads to taxable disability benefits. To extent that insured pays premiums, benefits received income tax-free. Includes when employer pays premiums but then includes it as income on employee's W-2.

Individual Policies Under HIPAA

Possible to obtain individual health care coverage without having to prove insurability. Designed to reduce job lock. PPACA made some of these rules obsolete because of open enrollment available in marketplaces & elimination of preexisting conditions restrictions.

Long Term Care Insurance Qualified Plan Taxation

Premiums tax deductible up to certain amts. Benefit payments for qualified LTC expenses may be excludible from income. These expenses must be for personal injuries/illness & subject to per diem limitation. Deductible amount varies by age of insured and change annually.

Two Most Common Healthcare Plans - Pre & Post Payment

Prepayment plans such as HMOs pay providers before care delivered. Doctor receives a capitation fee to take a patient, so limited doctor pool. Post-payment plans pay for covered expenses once they are incurred.

Managed Care Plans - Capitation

Primary care physician paid fixed fee for every health care plan subscriber who names them as their primary care doc. If patient never visits, doctor profits. Managed care plans use capitation for primary care & negotiated fee reductions for specialists.

PPACA - Acquiring & Maintaining Coverage

Prohibits denial of coverage for children under 19 based on preexisting conditions; young adults covered until age 26 regardless of tax dependency status; can't rescind coverage except in cases of fraud; open marketplace enrollment despite preexisting conditions.

Disability Buyout Insurance

Provides a healthy partner the cash to buyout ill partner, either lump sum payment at the end of the elimination period or series of payments. Coverage amt usually is limited to 80%.

Long Term Care Insurance State Partnership Program Example

Purchase a policy with a $300,000 benefit pool. If policy exhausted, rather than being required to spend assets down to $2,000, required only to spend her personal assets down to $302,0000.

Disability: Additional Purchase Option

Purchase additional insurance in years following purchase of initial policy. New policy will have the same underwriting class without any health underwriting, but will be financial underwriting determining if insured eligible for additional coverage.

Dementia & Long Term Care Insurance Benefit Qualification

Qualifies for benefits without loss of a second ADL. HIPAA defines this as requiring "substantial supervision" to protect from threats to health/safety due to "severe" cognitive impairment. Must be re-certified annually.

Factors to Consider in Choosing Long Term Care Insurance

Quality and availability of LTC, maintaining personal choice/freedom, premium cost, & asset & income protection.

Medicaid Considerations

Quality of care; physical qualifications that must be met to receive benefits; elimination of inheritance to pass on to children; possible financial penalties for an improper transfer of assets; potential loss of a family home/other assets; availability of Medicaid patient beds.

Disability Insurance and Long-Term Care

Some companies have a rider permitting insured to convert a disability income policy to a long-term care policy at age 65 without evidence of insurability.

Long Term Care Insurance Policy Components - Preexisting Condition Clause

Some don't have preexisting condition limitation period, either for all conditions or for those disclosed on application. Those that do have waiting period, after 6 months of coverage most cover conditions for which the policyholder was treated within six months prior to policy date.

Medicaid vs. Private Pay Patients

Some facilities will not accept new Medicaid patients, but they will keep patients who later become eligible for Medicaid. May receive lower quality of care, nevertheless 62% of Long Term Care benefits paid by Medicaid

Taxation of Disability Benefits - Pre vs. Post Tax Premiums

Some have option of pretax or post tax payments. Get significant increase in coverage by paying premium on after-tax basis, making benefits tax free. Increases future benefits by 15 to 30%.

Long Term Care Insurance Policy Components - Restoration of Benefits

Some limit benefits to 3 to 5 years with provisions to restore full benefit period if ineligible to receive benefits for a specified period due to improved health. When this happens elimination period begins again, but full 3 to 5 year benefit restored, even if had previously received benefits for many months.

Cash Value Life/ Long Term Care Insurance Hybrid Policies Riders

Some offer restoration of benefits rider, restores death benefit to full face amount even if full amount of LTC benefits have been paid. Riders allow policyholder to access a percentage of the death benefit to pay for LTC, generally pay some portion of death benefit.

Long Term Care Insurance Policy Components - Survivorship Benefits

Some shared policies have survivorship benefits allowing surviving spouse /partner to stop paying premiums at death of first if policy meets requirements to be in force a number of years, like 10, and no claims made. Costs less than purchasing two individual policies.

Taxation of Disability Benefits

The higher one's income, the lower percentage of income replaced by disability insurance due to progressive nature of income tax system. Highest income may take home 50% or less of after-tax income. Lowest tax brackets may take home more than 75% of income.

Medicare Part B - Those Subject to Premium Increases

Those not "held harmless" subject to premium increases. Exceed income threshold & not collecting social security benefits, enrolled in Part B for the first time that year, having premiums paid by Medicaid. Max 2019 premium for highest income earners was $460.

Opting out of Medicare Part D

Those who delay enrollment in Part D beyond their initial eligibility period may be assessed a permanent penalty as with Medicare Part B based on national average premium, and may be as high as 1% per month of delay. Low-income earners not penalized.

Estimate Health Care Policy Out of Pocket Expenses

Three different scenarios help determine best plan. Estimate costs under contender plans for three scenarios: minimal usage with routine expenses; moderate expenses perhaps same as last year with extra visit or two; worst case scenario with major illness/accident

Long Term Care Insurance Policy Components -Limited Pay Policies Rider

To address issue of future rate increases, can choose to pay higher premiums, but have them guaranteed for 10 years, after which no rate increases can impact the policy and it remains paid up for life. Those under 56 may wish to purchase a paid-up at age 65 rider.

Long Term Care Insurance State Partnership Program

To encourage purchase of LTCI, have a joint federal and state Partnership Program. When purchase a qualified LTCI policy state agrees to disregard the amount purchased in considering required spend downs to qualify for Medicaid.

Preexisting Conditions

While the Patient Protection and Affordable Care Act (PPACA) has eliminated preexisting conditions in many situations, there are still plans that can limit preexisting conditions, so check this section of the contract.

Look for Health Insurance Contract Exclusions

Usually a section where all exclusions listed together. Nonetheless, the planner should read entire contract to find exclusions that may be identified in other areas of contract. Also, if not excluded, may be limited so look for that too.

Partial Disability Benefits

Usually must follow total disability of minimum length. Often 50% of total disability benefit without regard to actual income loss. 3 to 6 months then benefits stop. Usually requires insured to lose at least 20 to 25% of income to qualify.

Residual Disability Benefits

Usually paid following period of total disability. Generally paid based on percentage of income reduction. If have 40% reduction will receive 40% of policy benefits. Unlike partial disability, residual benefits may be paid for entire period of contract.

Disability Income Insurance Probation Period

Waiting or elimination period should not be confused with probation period. Probation length of time policy must be in force before insured is covered for specified perils/illnesses. Protects insurer from covering certain preexisting conditions and adverse selection.

Embedded Deductible

When individual meets individual deductible their medical expenses transition into coinsurance provisions of policy. Max family will pay for deductible is second number listed. Possible to meet family deductible without any one member reaching individual deductible.

Disability Partial and Residual Benefits

When return to work its often at reduced hours and income usually reduced. Usually benefits would stop, which discourages people from returning to work.Two provisions, partial & residual, developed to combat this.

Difference Between Non-Embedded & Embedded Decuctibles

With the non-embedded deductible, the insured is responsible for the early expenses of the plan as have to hit the bigger, family number first before coinsurance kicks in. With embedded deductible, insurer will pay sooner as an individual only has to hit smaller number.

Medicare HMOs & PPOs

Work just like regular HMOs/PPOs. Private insurers.

Long Term Care Insurance Policy Components - Waiver of Home Care Elimination Rider

Zero day elimination for home health care while retaining 90-day elimination for skilled nursing facilities. The days clients qualify for home health care count toward skilled nursing facility elimination period.

A. Copayment; b. Coinsurance; c. Max out-of-pocket limit (MOOP)

a. Amount individual pays at each visit; b. Participation percentage; defines what portion of covered medical expenses insured pays up to a max or breakpoint. Commonly 80/20.; c. Most insured pays in deductible & coinsurance, etc. Copayments & out-of-network fees in addition to MOOP.

a. Utilization review; b. Case management

a. Proposed medical procedure reviewed/ authorized by insurer before it occurs or, in the case of an emergency, within a specified period afterwards; b. Specialist assigned to work with insured and doctor to manage high expense cases.

a. Coordination of benefits clause; b. Supplemental coverages

a. Restricts insured from collecting more than 100% of medical costs under more than one policy; b. Modified or additional coverage available for extra premium, including dental, vision, accident, & cancer insurance.

a. Covered charges, b. Internal limits, c. Exclusions

a. Type of expenses policy will cover; b. Limits for specific illnesses/procedures that fall below policy overall benefits; c. Services for which policy will not pay.

Determining Long Term Care Funds Needed

if need 100k for lifestyle, assisted living would add 75k, have 175k need. If social security, pension, & annuity distros provide 125k, potential gap 50k. If portfolio can sustain a 50k cost, increasing with inflation every year, then may not need any LTC insurance to supplement need.