Disability, Insurance, Health, Insurance, And Long-Term Care Disability, insurance, health, insurance, and long-term care

Question 1

Disability insurance

What is the distinction between short-term and long-term disability coverage?

Answer 1

Short term, provides coverage for up to two years

Long-term, provides benefits for two or more years or until the insured reaches a certain age typically 65

Question 2

Disability insurance

What policy elements are in a disability contract?

Answer 2

Definition of disability

Elimination Period

Benefit amount or percentage

Benefit term

Coverage perils insured against

Question 3

Disability insurance

Definition of disability, used by most insurance companies is one or a combination of the following

Answer 3

Own occupation

Modified own occupation

Any occupation

Social Security, definition of disability

Hybrid, forms of disability

Question 4

Disability insurance

What is own occupation disability (own occ)?

Answer 4

Inability to perform any or all the duties in one’s own occupation, it’s the most expensive

Question 5

Disability insurance

What is modified own occupation?

Answer 5

Benefits are paid if a disabled person cannot perform their specific occupational duties would not continue to pay if that individual chose to be gainfully employed in another field

Question 6

Disability insurance

What is any occupation (any occ)?

Answer 6

Inability to perform the duties of any occupation, for which one is reasonably qualified by education, training or experience

Question 7

Disability insurance

What is Social Security definition of disability?

Answer 7

Mental or physical impairment that prevents worker from engaging in any substantial gainful employment must have lasted for five months, expected to last a total of at least 12 months or result in the death of the worker

Question 8

Disability insurance

What is Social Security definition of disability?

Answer 8

Mental or physical impairment that prevents worker from engaging in any substantial gainful employment must have lasted for five months, expected to last a total of at least 12 months or result in the death of the worker

Question 9

Disability insurance

What is the elimination period?

Answer 9

Acts as a deductible by making the insured cover part of the financial loss

Payments to the insured begin 30 days after the elimination. Period has ended. Example policy with a 30 day illumination. Would make the first payment to the insured after 60 days have elapsed.

Important to note if you have a 30 day elimination. Period you need 60 days worth of savings and if you had 60 day illumination. He would need 90 days of savings. Do you always need an extra 30 days because they are paid 30 days after the elimination period.

Question 10

Disability insurance

What is a residual writer and a partial disability writer

Answer 10

Residual rider - disabled worker returns to work at lesser pay policy will pay the difference to the extent of available benefits

Partial disability rider - unable to perform one or more important duties of his own occupation, but is still able to perform some duties

Question 11

Disability insurance

If disability benefits are received from an employer provided disability policy, and the employer paid all disability premiums what are the taxes?

Answer 11

Included in taxable income of the employee

Question 12

Disability insurance

Disability benefits, I received from a personally paid disability policy. What are the taxes?

Answer 12

Excluded from taxable income

Question 13

Disability insurance

Group disability policy premium is partially paid by the employer and partially paid by the employee. What are the taxes?

Answer 13

Benefits from the policy will be included in income to the extent of the employer pro rata share of premiums

Question 14

Disability insurance

Group disability policy premium is partially paid by the employer and partially paid by the employee. What are the taxes?

Answer 14

Benefits from the policy will be included in income to the extent of the employer pro rata share of premiums

Question 15

And what is the appropriateness of long-term disability coverage?

Answer 15

Income replacement amount of benefit must be appropriate

Benefits should match the term of work life expectancy

Should include coverage for both sickness and accidents

Client should have emergency funds sufficient to cover the elimination Period +30 days.

Benefits are taxable, after-tax cash flows should be sufficient to replace a lost income

Definition of disability should be appropriate to the worker

Policy should be noncancelable or guaranteed renewable

Premium should be competitive

A policy has a Social Security disability benefits, offset provision that should be considered in the selection process

Question 16

Business overhead expense insurance

What is it and how does it work?

Answer 16

Design to cover the expenses that are usual and necessary in the operation of a business should the owner insured become disabled?

Premiums tax deductible as a business expense

Benefits are taxable income to the entity

Benefit is for one to two years

Covers employees compensation, but does not cover business owner salary

Question 17

What is a disability buyout policy?

Answer 17

Used to cover the value of the individuals interest in the business should that individual become disabled?

Question 18

What is key person disability insurance?

Answer 18

Provides continued income to a key employee executive, if disability occurs

Question 19

How is taxation of key person disability insurance premium payments treated?

Answer 19

Employer contributions, not taxable to the employee

Employee is the beneficiary. Premium payments are deductible by the employer.

Employer is the beneficiary premiums are not deductible

Question 20

Key person disability insurance

What are the taxation of benefits?

Answer 20

If employer is the beneficiary, beneficiary receive our tax free to the employer

If employee is the beneficiary, benefits received, are taxable to the employee

Question 21

What are the rights of renewability an individual health and disability insurance policy provisions?

Answer 21

Noncancelable policy’s

Guaranteed renewable policy’s

Conditionally renewable policy’s

Policies that are renewable only at the insurance companies option

Policy where the insurance company may terminate the policy that is a cancelable policy

Question 22

What is a non-cancelable policy

Answer 22

Continuous guarantee the insure, the right to renew until a specific age or state a number of years no increase in premium

Question 23

What is a guaranteed renewable policy

Answer 23

Right to renew is guaranteed insurance company is allowed to adjust the premium by policyholder class

Question 24

What is a conditionally renewable policy?

Answer 24

Continuous term policies that the insurance company may terminate, if certain condition stated in the contract are met

Question 25

What are policies that are renewable

Answer 25

Renewed only at the insurance companies options no guarantee

Question 26

A policy that does not contain a renewable provision is a what?

Answer 26

Single term policy

Question 27

What are the 12 required provisions of an insurance contract?

Answer 27

Entire contract - policy, endorsements, and attach papers

Time limit on certain defenses - policy is uncontestable after two years, except for fraud

Grace Period. - . Where the insured may be pay past due premiums and continued coverage.

Reinstatement - policy that his lapsed may be reinstated

Notice of claim - must notify the insurance company of a claim within 20 days

Claim forms - insurance company will furnish

Proof of loss - written proof of loss within 90 days from date of loss

Time of payment claims - benefits are payable by the insurance company immediately upon proof of loss

Payment of claims - payable to the insured

Physical examination and autopsy - insurance company can require physical examination and autopsies

Legal action - no legal action can be brought to recover on a contract for 60 days following the submission of proof of loss

Change of beneficiary - may be changed, unless designated as irrevocable

Question 28

What are additional provisions that can be put in an insurance contract?

Answer 28

Change of occupation

Misstatement of age

Insurance with other insurers - coverage will not your payment of benefits in excess of maximum

Relation of earnings to insurance - benefits under two or more policies will not exceed average earned income for a two year.

Unpaid premiums - I deduct and pay premiums from a claim

Cancellation clause

Conformity, estate statues

Illegal occupation

Intoxicants in narcotics

Question 29

What is the guaranteed insurability option?

Answer 29

Income of the insured increases. Insured may increase the amount of coverage.

Question 30

What is a cost of living adjustment benefit?

Answer 30

Increases the benefit amount received by the insured each year

Question 31

Health insurance

What are copayments?

Answer 31

Amounts and insured must pay to receive certain covered services typically nominal in amount

Question 32

Health insurance

What is coinsurance?

Answer 32

Percentage paid by the insurer, and the insured for claims, after the deductible is satisfied

80/20 coinsurance: insured must pay 20% of covered expenses after satisfying the deductible. The insurance company pays the 80%.

Question 33

What is a health maintenance organization HMO?

Answer 33

Organization that provides a broad range of health services to a group of subscribers for a fixed periodic payment

Consist of comprehensive health care provided by contracted physicians and medical facilities for pre-negotiated payment

Question 34

Health insurance

What is a preferred provider organization (PPO)?

Answer 34

Similar to an HMO, except allows members to receive care outside of the net work of PPO providers

Insured will generally face higher deductible’s, and or higher coinsurance

Question 35

Health insurance

Payments of premiums by an employer? Taxes

Answer 35

Deductible, business expense

Not included in taxable income of an employee

Question 36

Health insurance

Health insurance premiums are paid by an individual. What is the tax treatment?

Answer 36

Receive beneficial tax treatment only if all medical expenditures exceed 10% of adjusted gross income (itemized deductions)

Question 37

Health insurance

What are the tax for an individual and self-employed who pays premiums for health insurance?

Answer 37

Can deduct 100% of the cost of health insurance from the gross income

Can also deduct 100% of their health insurance premiums in calculating their self-employment tax

Question 38

Cobra

Terms of coverage for employees independence for reduction in hours

Answer 38

18 months

Question 39

Cobra

Terms of coverage for employees and dependence for normal termination

Answer 39

18 months

Question 40

Cobra

Terms of coverage of employee, a qualified beneficiary that meets Social Security definition of being disabled?

Answer 40

29 months

Question 41

Cobra

Term of coverage for the spouse after a divorce

Answer 41

36 months

Question 42

Cobra

Spouses and dependent children of a covered employee, becoming eligible for Medicare

Answer 42

36 months

Question 43

Cobra

Beneficiaries of an employee, who lose their coverage because of death of the employee

Answer 43

36 months

Question 44

Cobra

What must you do for continuation of coverage under cobra?

Answer 44

Must elect coverage within 60 days of the qualifying event

Have 45 days to pay the premium before the cobra election was made

Question 45

Cobra

What is the cost of coverage under cobra?

Answer 45

Paid by the eligible beneficiary employer may charge up to 102% of normal group rates

Question 46

Health insurance

Plans cover dependence must allow coverage for adult children what age and must they be living at home?

Answer 46

Until age 26

Child not live at home, or be claimed as a dependent

Child may be married coverage does not extend to child spouse or children

Question 47

Archer medical savings account

What is it?

Answer 47

Attacks favored savings account for medical expenses.

New plans cannot be established, but existing ones can be maintained

Question 48

Archer medical savings account

Contributions can be made by the employee or the employer what are the tax consequences?

Answer 48

Contributions made by the employee deductible from income

Contributions made by the employer are deductible by employer, not subject to Social Security taxes, and other payroll taxes, not income to the employee

Question 49

Archer medical savings account

How are earnings on the account treated

Answer 49

Tax deferred until distribution

Distributions for qualified medical expenses are not taxable

Distributions made before age 65 or 72 an additional 20% excise penalty, if not used for qualified medical expenses

Question 50

Archer medical savings account

What are the estate implications?

Answer 50

Account balance is included in the gross estate of the owner at death

Property will qualify for the marital deduction. The surviving spouse is the name to beneficiary.

Beneficiary other than surviving spouse plan ceases to be an archer on the date of death balance is taxable to the beneficiary at the date of death. Beneficiary has an itemized deduction equal to the estate, tax attributable to the archer.

Question 51

Health savings accounts

Can an individual have both an archer savings account and a health savings account?

Answer 51

Yes, but contributions to the archer will reduce contribution limits to the health savings account

Question 52

Health savings account

Can you roll an existing archer account over to a health savings account?

Answer 52

Yes

Question 53

Health savings account (HSA)

What is it?

Answer 53

Qualifying individuals with high deductible, insurance plans can make tax deductible cash contributions that may be used to reimburse the individual tax free for qualifying medical expenses

It’s an above the line deduction

Question 54

Health savings account

What happens if you make a qualified medical expense withdraws before age 65?

Answer 54

Subject to the 20% penalty penalty does not apply to withdraws made after the individual reaches age 65, dies or becomes disabled

Question 55

Health savings account

Are catch-up contributions allowed at age 55 or older and how much is that?

Answer 55

Yes $1000

Question 56

Health savings account

Can you make contributions after age 65?

Answer 56

No

Question 57

Health savings account

What is the last month rule?

Answer 57

A person who is eligible for an HSA on December 1 is considered an eligible individual for the entire year and can make a full contribution for the full year

Question 58

Health savings accounts

What happens if you exceed contribution limits?

Answer 58

6% excise tax is imposed on all the excess

Question 59

Health savings account

Can you rollover funds from an IRA to an HSA?

Answer 59

Yes, one time direct rollover

Excludable from gross income, not subject to early withdrawal penalties

No deduction may be taken for this amount

Amount is limited to the annual maximum contribution that can be made to an HSA

Question 60

Health savings accounts

Are they subject to RMD rules?

Answer 60

No

Question 61

Long-term care

What is the defined benefit approach to long-term care?

Answer 61

Defined. Following elimination. Maximum benefit. usually ranges from 2 to 5 years but many policies have a feature that provides benefits for life.

Question 62

Long-term care insurance

What is the pool of money concept benefits approach?

Answer 62

Individual is entitled to coverage equal to a specific amount of dollars payments will last as long as the maximum amount of coverage has been expended

Question 63

Long-term care

What is the benefit that can be attached to some life insurance policies that provides needs for long-term care?

Answer 63

Accelerated benefits

Question 64

Long-term care

What are the two criteria for determining eligibility insured must usually meet one of the following

Answer 64

Must be chronically ill: defined as being unable to perform two of six activities of daily living for at least 90 days. Good way to remember is BED To Chair

B - Bathing
E - Eating
D - Dressing
T - Toileting
C - Continence
BED To Chair - Transferring from Bed to Chair

Substantial services are required to protect the individual because of substantial cognitive impairment example Alzheimer’s

Question 65

Long-term care

Premiums paid by the individual are treated how for federal tax purposes

Answer 65

Deductible as medical expenses for itemized, deduction purposes, limited on the basis of the individuals age

Question 66

Long-term care

Premiums paid by self-employed individual are treated how for tax purposes

Answer 66

Deduction for AGI (above the line) are still limited based on age

Question 67

Long-term care insurance

How are employer payments for group premiums taxed to both the employer and employee?

Answer 67

Deductible to the employer

Not taxable income to employee

Question 68

Long-term care

Can long-term care benefits be included in a cafeteria plan or flexible spending account on a tax advantage basis?

Answer 68

No

Question 69

Long-term care insurance

Benefits paid from the plan are generally excludable from gross income up to a maximum of what dollar amount per day in 2024

Answer 69

$415

Question 70

Long-term care insurance

Benefits paid from the plan are generally excludable from gross income up to a maximum of what dollar amount per day in 2024

Answer 70

$415

Question 71

Long-term care insurance

What is a partnership long-term care insurance?

Answer 71

Aligns, unique, long-term care insurance policies with Medicaid for clients that continue to need coverage beyond the policy limits

Question 72

Long-term care

What is the key reasons why a partnership, long-term care insurance may be used for a client

Answer 72

Typically client is only allowed to have $2000 in assets to qualify for Medicaid

Typically client would be forced to spend down assets before qualifying for Medicaid

Partnership, long-term care program, gives the client credit for the amount of money, either partnership, long-term care insurance policy provided