2 Health, Disability, & LTC Insurance Flashcards
Copay vs Coinsurance
- Copay: Fixed amount you pay for a cetain service
- Coinsurance: Percentage of the cost you pay after meeting your deductible
HDHP
What is it? Requirements?
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High-Deductible Health Plan: A health insurance plan with lower premiums and higher deductibles, which allow you to have an HSA.
Requirements:
- Deductible minimums (TTs)
- Out-of-pocket maximums (TTs)
Benefits:
- HSA
Most frequently via employers, but can also buy them on the market.
HSAs
Contribution requirements
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- Annual max (TTs)
- Catch-up if ≥ age 55 (age is in TTs)
- Last-month-rule: If eligible on Dec 1, can fund as if eligible the entire year (i.e., your limit isn’t prorated)
- Transfer IRA -> HSA only once in your lifetime (up to same limits)
- Can’t contribute once enrolled in medicare (but can still maintain it & withdraw)
HSAs
Withdrawal requirements
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- Can use for OTC, drugs, dental, & vision
- Taxed + 20% penalty if not for qual. expenses
- Taxed (but no penalty) if ≥ 65
At what size are companies required to do COBRA?
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20+ in the prior year.
Part-time employees count as half.
“Qualifying Events” for COBRA, who they cover, and “Maximum” periods of coverage required
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Who pays?
- Termination (except for gross misconduct) or hours reduction… 18M (for EE, SP, & DC)
- Meet Social Security disability definition… 29M (for EE, SP, & DC)
- Divorce or legal sep… 36M (for SP & DC)
- Enroll in Medicare… 36M (for SP & DC)
- Death… 36M (for SP & DC)
- Loss of Dependent Child Status… 36M (for DC)
Employee, Spouse, Dependent Child
Costs may be passed to the qual. bene. up to 102% of the total costs (EE + ER costs) paid before.
Adult Day Health Care
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- Non-residential
- May include medical help
- Full-time
Assisted Living Facility (ALF)
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- Cheaper than a nursing home
- Residential, personal care, health support
Nursing Home Care
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- Most expensive LTC option
- Private / semi-private
- Health support, rehabilitation, medication, 24-hour support
Home Health Aide Services
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Personal care, non-medical, “hands-on”
Homemaker Services
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Household tasks & errands, hands-off
Medicare coverage for LTC?
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Medicare doesn’t pay for a long-term custodial care.
But Medeicare Part A does provide skilled nursing care for a limited time following hospitalization:
- Days 1-20: zero copay (for each benefit pd)
- Days 21-100: you pay $204 daily coinsurance (2024)
- 101+: You pay everything yourself
Elimination Period
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Waiting period before benefits start.
How long is elimination period for LTC?
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Range from 0 to 365 days
Waiver of premium for LTC Insurance?
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Recip. doesn’t have to pay premiums while receiving benefits
Most LTC policies have thisª
What triggers benefits for qualified long-term care insurance?
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“Certification of conditions” from a doctor required for:
(A) Substantial cognitive impairment
(B) Inability to perform any 2 of the 6 ADLs (Activities of Daily Living) for ≥ 90 days:
1. Bathing
2. Eating
3. Dressing
4. Continence
5. Toiletting (On/Off Toilet)
6. Transferring (eg, moving from bed to chair)
NOT blindness or “inability to walk”
Required features of qualified long-term care insurance
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Must have:
1. Guaranteed renewable feature
2. 2-year incontestable clause: can’t contest or rescind policy due to misrepresentation or omissions after 2 years (except for fraud)
Can’t…:
1. Can’t cover non-qualified LTC services
2. Medicare: Can’t cover expenses reimbursable under Medicare
3. Can’t have a cash surrender value
4. Cash dividends must go to future premium reduction or increased future benefits
5. Can’t have limitations & exclusions except pre-existing conditions within 6 months of application
6. Can’t provide skilled nursing care
7. Can’t require prior hospitalization
Tax benefits of qualified LTC insurance?
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Benefits…
1. received tax-free
Premiums…
1. qualify for itemized deduction
2. can be paid from HSA
3. aren’t taxable to employee if paid by employer (and benefits are still tax-free)
Partnership Long-Term Care Insurance
- Partnership of some states & insurance companies for qualified LTC.
- Has a “Medicaid asset disregard” feature where the costs of your LTC are added to your asset (net worth) limits to qualify for Medicaid
Not every state has it
Four Main Types of Disability Insurance
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- Own Occ: you can’t do your own job
- Any Occ: when you can’t do any job
- Modified Own Occ: “own occ” for a stated claim period and then “any occ” after that
Social Security Disability (SSDI)
- When do you get benefits?
- Elimination period?
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- You can’t do any occ. and medical condition is expected to last ≥ 12 mos or in death
- 5-month elimination period
Pool of Money
Option for LTC Insurance
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Policy will have:
- Max daily limit
- Max benefit period
Pool = daily limit x benefit period
If the cost is < pool, benefit may last longer (until pool is dry)
How are Disability Income Insurance benefits taxed?
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Whether benefits are taxable depends on the taxability and source of the premiums
If employer paid premiums: taxable
Employee paid premiums:
- If included as comp / post-tax: tax-free
- If pre-tax (eg, payroll deduction)p: taxable
Social Security Disability insurance is also taxable
