Chapter 11

Preventive Care Part B

A one-time extensive "Welcome to Medicare" preventive office visit is covered along with yearly wellness check-ups. In addition, Part B will cover vaccinations and preventive screenings for cancer, as well as other conditions such as depression, diabetes, HIV, and obesity

Open Enrollment

A person 65 years of age or older may also purchase a Medicare Supplement by paying the necessary premium. The Medigap open enrollment period lasts for 6 months beginning the month an individual turns age 65 and enrolls in Medicare Part B. If enrolled during this period, the insurer cannot use medical underwriting, refuse coverage, charge a higher premium, or impose a waiting period for pre-existing conditions

Medicare Part B Exclusions

Prescription Drugs, unless administered at an outpatient medical facility Care received outside the United States Routine dental care, including dentures Routine foot care Long-term care, including private or custodial nursing care, in any setting Hearing and eye exams Acupuncture Cosmetic surgery

LTC Guaranteed Insurability Option (Future Increase Option)

Provides for future periodic increases without proof of insurability, even if the insured is on claim. Future purchase options will increase the premium each time an increase in daily benefit is accepted.

LTC Hospice Care

Provides pain control, comfort, and counseling for the terminally ill patient. Hospice care also includes a family counseling benefit.

Respite Care

Provides relief to a primary caregiver and can include a service, such as someone coming to the home while the original caregiver tends to other matters. Most policies will include benefits for temporary institutionalization of the insured during a period of respite.

Long-term care coverage may be written as any of the following

Riders/Endorsements for Life insurance policies. Hybrid long-term care policies combine the benefits of a life insurance policy with a traditional long-term care contract. This product guarantees long-term care benefits, but will provide a death benefit if no care is needed. Individual Policies (issue ages 18 to 84) are the most common form of LTC being sold today. These policies are regulated by the state and can be customized to meet the insured's needs

Special Enrollment Period

begins when a person past age 65, who was covered by an employer-sponsored group health plan, is no longer covered by the plan (whether the person elects COBRA continuation or not). This period lasts eight months and allows an individual the opportunity to enroll in Medicare Part B without incurring a penalty for failing to enroll at age 65

LTC Preexisting Conditions

A Long-Term Care policy cannot more restrictively define a preexisting condition than "a condition for which advice or treatment was recommended or received within 6 months of the effective date of coverage."

Medicare Supplement Minimum Benefit Standards

A Medicare Supplement policy must contain a 30-day free look provision on the first page in bold print. The policy must also contain an Outline of Coverage in bold print containing information on benefits, deductibles, exclusions, and premiums. The insurer is required to explain the relationship of this coverage to the benefits of Medicare. Insurance laws require that a question about replacement appear on the application form. The agent must retain a copy of the replacement form for a specified number of years. The insurer must also provide a Buyer's Guide and an Outline of Coverage at the time of application. A signed acknowledgment indicating receipt of these documents is required.

LTC assisted living

A system of housing and limited care that is designed for senior citizens who need some assistance with daily activities, but do not require care in a nursing home.

Long-Term Care Exclusions

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

LTC Inflation Protection (Cost of Living)

At the time of application, LTC policies must offer the insured the option of purchasing inflation protection which increases the daily benefit amount in the future, but is not required to be purchased. LTC plans typically offer simple and compound inflation protection.

A Long-Term Care policy may not place conditions on benefits:

Based on prior hospitalizations. For institutional care, if insured received a higher level of institutional care. For home health care after prior institutional care. For noninstitutional care eligibility, other than home health care, on a prior institutional stay of more than 30 days.

Laboratory Services Part B

Blood tests, biopsies, urinalysis, and other labs, on an outpatient basis.

A Long-Term Care policy may not contain a provision that:

Cancels, nonrenews, or terminates the policy on the grounds of age or deterioration of the mental or physical health of the insured. A Long-Term Care policy may only be cancelled by the insurer for nonpayment of premium. Establishes a new waiting period when existing coverage is converted or replaced by a new form, except when the insured voluntarily selects an increase in benefits. Provides coverage for only skilled nursing care instead of lower levels of care. Provides for payments of benefits based on standards described as "usual and customary" or "reasonable and customary" or words of similar importance (policies must pay actual expenses, up to the dollar limitations of the policy).

LTC Skilled Nursing Care

Continuous 24-hour care provided or supervised by a registered nurse Includes specialized services such as feeding tubes, IV therapy and wound care Provided in a licensed facility, such as a nursing home, that operates according to the laws of the state and requires a licensed physician to be responsible for all patient care

LTC Intermediate Care

Daily, but not 24-hour, care provided or supervised by a licensed medical professional Includes care designed to assist with daily medical needs, such as dispensing medication Considered "in-between" care to help patients requiring less than skilled care remain independent and to prevent unnecessary hospitalization Usually provided in a nursing home, intermediate-care unit, or assisted living facility that is licensed by the state and requires a licensed physician to be responsible for all patient care

Employer Group Health Plans

Disabled employees must be provided coverage under a large group health plan (100 or more employees) if the employee is under age 65 and not retired at the time of disability. Employer group health plans will be the primary payor for 30 months of coverage for individuals who are eligible for Medicare because of End Stage Renal Disease, or kidney failure. After 30 months, Medicare will become the primary payor. Individuals age 65 or older who are still working may continue to be covered under an employer group health plan (employers with 20 or more employees) as the primary coverage and Medicare will provide secondary coverage. If the employer has less than 20 employees, Medicare will be the primary payor.

Primary vs. Secondary Payor

If an individual is age 65 or over and continues to work, Medicare is usually the secondary insurer to any employer group health plan the individual participates in. A Group Health plan with 20 or more employees is primary to Medicare and pays first. If the employer's plan does not pay all of one's expenses, Medicare will pay secondary benefits for Medicare covered services to supplement the group plan benefits. Employers who have 20 or more employees are required to offer the same health benefits and under the same conditions to employees and spouses age 65 or over, as they offer to younger employees and spouses

Cognitive Impairment

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

Group (Voluntary) Policies:

Must be guaranteed renewable Must be convertible in the event the group policy is terminated for any reason More economical than individual due to risk pooling and reduced administrative expenses Voluntary plans do not require mandatory enrollment

Long-Term Care Insurance Defined

Long-Term Care insurance includes any individual policy, group policy, or rider that is advertised, marketed, offered, solicited, or designed to provide coverage for no less than 12 consecutive months. It may also be referred to as Extended Care. It may cover diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services that are provided in a setting other than an acute care unit of a hospital.

benefits for medicaid

Medicaid pays for hospital care, outpatient care, certain nursing facilities, doctors, laboratory and x-ray services, prescriptions, Long-Term Care, and some home health care after current assets are exhausted. Medicaid is a federal program that is administered by the state. The federal government provides most of the money to provide benefits, the state provides the administrative services necessary to run the program. Any state-mandated benefits under Medicaid not required by the federal government must be paid for with state funding.

Medicaid

Medicaid provides increased assistance to those with a financial and medical need. Depending on the state, Medicaid eligibility is based on income of 133% to 138% of the federal poverty level (FPL), and is adjusted for household size

Home Health Care Part B

Medically necessary skilled care, home health aide services, and medical supplies for those who are home bound and have not had a qualifying hospitalization to be eligible for coverage under Part A.

Part A - Hospital Insurance (Inpatient)

Medicare Part A is financed by payroll and FICA contributions and is premium free to eligible individuals who qualify through Social Security, Railroad Retirement, or government employment. Individuals over age 65 who do not qualify may receive benefits for Part A coverage by paying a monthly premium. Part A provides coverage for medically necessary inpatient hospital related charges, skilled nursing, home healthcare, and hospice. Part A claim payments are made directly to the provider for covered services

Skilled Nursing Care

Medicare Part A provides only limited benefits for skilled nursing care following 3 days of hospitalization. The first 20 days are covered 100%. Days 21 - 100 are covered except for a daily copayment. After 100 days of skilled nursing care, there is no additional benefit from Medicare and the insured pays 100%. Once there is a break from skilled care of 60 consecutive days, the skilled nursing care benefit is renewed.

Part A Benefits and Out-of- Pocket Expense

Medicare Part A requires a deductible before benefits are payable. Once the deductible is met, benefits are payable as specified based on the benefit period. Benefit Period - A benefit period begins the first day the insured enters the hospital after being enrolled in Medicare and ends once the insured has been out of the hospital for 60 consecutive days. Inpatient Hospitalization - Part A provides coverage for up to 90 days per benefit period. Medicare will pay 100% of covered charges for days 1 - 60. The insured will be responsible for a specified daily copayment for days 61 - 90 and Medicare will pay the balance. If the insured is hospitalized beyond 90 days in a benefit period, 60 nonrenewable lifetime reserve days are available for coverage with a higher daily copayment

Medical Expense for part B

Medicare Part B covers Physician's and Surgeon's services, inpatient and outpatient, and medically necessary outpatient medical and surgical services and supplies. Additional coverages include physical, occupational, and/or speech therapy, diagnostic tests, certain durable medical equipment, and medically necessary ambulance or other transportation services. Medicare Part B will also cover kidney dialysis treatments.

Mental Health Care Part B

Medicare Part B will cover mental health services on an outpatient basis when provided by a health care provider who accepts Medicare payment. An additional copayment or coinsurance may be required if services are provided in a hospital outpatient clinic or department.

Medicare Select

Medicare Select insurance is the managed health care version of the traditional Medicare Supplement policy that has been offered through indemnity insurers. Medicare SELECT plans must cover the same benefits as any non-SELECT Medigap plan if the plan's network for care is used. Services are provided to the insured through network providers who have contracted with the insurer to provide medical care. By using hospitals, physicians, and surgeons on the approved provider list, the insured receives benefits. If the insured seeks services from a non-network provider, higher deductibles and coinsurance will be required, unless it is an emergency. In the event the Medicare Select program is discontinued, the insured will have the right to convert coverage to a traditional Medicare Supplement policy without having to prove insurability.

Medicare Overview

Medicare is a federal health insurance program that was originally designed to provide hospital and medical insurance primarily for people age 65 or over. The program has been expanded to provide coverage to persons of any age who have been: Diagnosed with chronic or permanent kidney failure, or End Stage Renal Disease Received Social Security Disability Income for at least 24 consecutive months Medicare is run by the Centers for Medicare & Medicaid Services (CMS), a separate department within the Department of Health and Human Services Administration, and is responsible for reviewing and approving Medicare claims.

Medicare Supplement Insurance (Medigap) Overview

Medicare supplement plans, often referred to as Medigap, are private insurance plans that are designed to supplement Medicare coverage and fill in the gaps in Original Medicare. These plans pay all or some of the Medicare deductibles, copayments and coinsurance. In order to purchase a Medicare Supplement, an eligible individual usually must have Medicare Parts A and B. A separate premium payment is required for the purchase of a Medigap policy. As long as the premium is paid, the Medigap policy is guaranteed renewable, or automatically renewed each year. Medigap policies are "standardized" and must follow federal and state laws. The front of a policy must clearly indicate that it is 'Medicare Supplement Insurance'. The standardized policies that insurers offer must provide the same benefits, but the premiums may vary.

LTC Waiver of Premium

Most Long-Term Care policies include a waiver of premium benefit that provides for premiums to be waived after the stated elimination period has elapsed and for as long as disability continues. The elimination period in a long term care policy is a one-time requirement.

The Long-Term Care Need

National studies indicate that at some point 40% of people over age 65 will enter a nursing home. The older a person, the greater the possibility they will need some kind of long-term care. Medicare provides very limited coverage (skilled nursing) for long-term care. Only certain low income individuals will qualify for assistance through Medicaid. The need for coverage can arise at any age.

LTC Custodial (Non-skilled) Care

Nonmedical care to provide assistance with activities of daily living such as bathing, toileting, eating, dressing, transferring, and continence Does not require the caregiver to be a licensed medical professional May be provided in a licensed facility or in one's own home

Medicare Parts

Part A - Hospital Insurance provided by the federal government Part B - Medical Insurance and outpatient expenses provided by the federal government Part C - Medicare Advantage plan, combines Part A and Part B into a managed care plan offered by private insurance providers Part D - Prescription drug coverage offered by private insurance providers

Part B - Medical Insurance (Physicians, Surgeons, and Outpatient)

Part B is optional and offered to all applicants when they become entitled to Part A either by qualification or by paying a premium. All Part B recipients are required to pay a monthly premium. Medicare Part B pays 80% of covered expenses after an annual deductible has been met. The insured pays 20% coinsurance with no maximum out-of-pocket.

Medicare Supplement Coverage Plan A - Core Benefits

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

Activities of Daily Living

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

Eligibility for medicaid

The Medicaid program also assists individuals receiving public assistance and who are: 65 years of age or older Blind or disabled Receiving payments under the Temporary Assistance to Needy Families program Medically needy or medically indigent refugees in this country (for 18 months or less) Pregnant women Persons in skilled nursing or intermediate care facilities Children under age 21, including those who may be in foster care Individuals needing kidney dialysis due to ESRD (End-Stage Renal Disease)

Part D - Prescription Drug Benefit

The Medicare Prescription Drug, Improvement, and Modernization Act, also known as the Medicare Modernization Act (MMA), established a voluntary prescription drug program known as Medicare - Part D. These plans are offered by private insurers. Under the provisions of Part D offered by insurance companies, anyone entitled to or enrolled in Part A and/or Part B of Medicare may enroll in a voluntary prescription drug program. Beneficiaries must enroll in a standalone plan with a participating approved Medicare Part D Prescription Drug Provider (PDP) or a Medicare Advantage plan that offers prescription drug coverage integrated with medical coverage

Service Days

The elimination period is based on the number of days in which the insured actually received care. For example, if the insured was receiving home care for 4 days a week, only 4 days would count toward the elimination period.

Calendar Days

The elimination period is based the number of calendar days starting with the first day of the claim.

Long term care elimination period

The elimination period may be as short as 30 days and as long as one year, with 90 days being the most common. The elimination period is a waiting period after a loss occurs before the benefit period begins. The shorter the elimination period, the higher the premium. The elimination period qualification can be achieved one of two ways

Formulary

The grouping of prescription drugs under Medicare - Part D. A formulary is a listing of prescription drugs that are covered under Part D, the insurance plan.

Benefit Triggers

There are conditions that initiate or trigger the benefits to be paid under a Long-Term Care policy. A Physician Certification stating the patient is chronically ill and in need of long-term care is required. Prior hospitalization is not a requirement to trigger benefits. There are two classifications of benefit triggers

Part C - Medicare Advantage

These plans are offered by private insurance companies that contract with Medicare to provide both Part A and Part B benefits and, typically, prescription drugs. Medicare Advantage plans include Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Private Fee-for-Service Plans, and Special Needs Plans. Enrollment in both Medicare Parts A and B is required, and premium payments for Part B must be continued. Enrollment in Part C is a substitute for Original Medicare. Medicare pays the Medicare Advantage provider a monthly capitation fee to oversee the health care services of the enrolled participants. The services provided by these plans may differ by degree of choice of providers, out-of-pocket expenses, and extra benefits, but all must provide basic Medicare-covered services. Some plans also offer prescription drug coverage.

LTC Return of Premium

This optional benefit provides for a refund of a portion of the premium to a named beneficiary if the insured dies before all benefits pay out. The refund is offset by the amount of any claims paid prior to the insured's death.

Medicare Supplement Replacement Requirements

When replacing a Medicare Supplement policy the agent must: Be sure that the replacement does not result in decreased benefits at an increase in premium Use an application containing questions that elicit information to determine if the applicant has or has had a Medicare Supplement in effect or if the application is for replacement of an existing Medicare Supplement Provide a notice of replacement to the applicant prior to issuance or delivery of the new Medicare Supplement policy. 1 copy of the notice, signed by the applicant and the agent, must be provided to the applicant. 1 signed copy must also be retained by the insurer. When recommending the purchase or replacement of a Medicare Supplement policy, an agent must make reasonable efforts to determine the appropriateness of the purchase or replacement. If a Medicare Supplement policy replaces another Medicare Supplement policy that has been in force for 6 months or more, the replacing insurer cannot impose an exclusion or limitation based on a preexisting condition. If the original policy has been in force for less than 6 months, the replacing insurer must waive any time periods applicable to preexisting conditions to the extent that they have already been satisfied under the original policy.

Managed Care Organizations

including HMOs and some PPOs, that offer a Medicare Advantage Plan are responsible for coordinating health care services and reducing costs. These plans require the subscriber to select a Primary Care Physician to manage health care needs. The use of network providers, referrals to specialists, and pre-authorization of scheduled procedures are methods used to manage care. Plans offered through PPOs that are not managed care plans do not require a Primary Care Physician or referrals and allow the subscriber to choose out-of-network providers at higher out-of-pocket expenses. A Medicare Supplement plan is unnecessary with Medicare Advantage. Sale of a new Medicare Supplement plan to a Medicare Advantage enrollee will result in automatic disenrollment from Medicare Advantage.

Long term care benefit period

is the amount of time the benefits will be paid upon a loss, which is not the same as how long the policy is in force. The benefit period begins at the end of the elimination period. The policy will pay benefits for a stated benefit period (such as 2, 5, or 10 years, to age 65, or a lifetime benefit may be selected). The longer the benefit period, the higher the premium

Initial Enrollment Period

lasts 7 months and begins 3 months before the month of an individual's 65th birthday and ends 3 months after the month following when the individual turned age 65. The actual month of eligibility is the month of the individual's birthday

Medicare Open Enrollment

occurs every year from October 15 - December 7 and provides all individuals the chance to make changes to their Medicare coverage if needed.

General Enrollment Period

provides a make-up period from January 1 to March 31 each year for those who did not enroll in Medicare Part B when they first became eligible. For individuals enrolling during the general enrollment period, coverage begins on July 1

Long-Term Care Minimum Benefit Standards and Exclusions

very Long-Term Care policy must provide a 30-day free look period from the date the policy is delivered. If the applicant is not satisfied, the policy may be returned for a full refund, and the policy is voided. LTC policies also must contain a renewal provision that is not less favorable to the insured than Guaranteed Renewable. A guaranteed renewable policy requires the insurer to continue to renew, but may increase rates based on the "class" of insureds, such as a geographic location. The renewal provision must be stated on the first page of the policy. A Long-Term Care policy may be cancelled for nonpayment of premium. An Outline of Coverage must be delivered to an applicant on the initial solicitation and prior to the presentation of the application form.