Insurance Ch - 7 Flashcards
LONG-TERM CARE SERVICES
LONG-TERM CARE SERVICES
- Long-term care is a range of personal care and supportive services
that a person might need if they were unable to care for themselves
because of:
illness,
disability, or
cognitive impairment. - Long-term care services meet the needs of frail, older people and
other adults who lack the capacity to care for themselves.
TRADITIONAL MEDICAL CARE
LONG TERM CARE
TRADITIONAL MEDICAL CARE
- TREATS or CURES the illnesses.
LONG TERM CARE
- Long-term care usually does NOT attempt to improve the medical
condition of the recipient but rather helps to MAINTAIN LIFESTYLE. - Long-term care services help the recipient to
MANAGE ROUTINE ACTIVITIES of daily living (ADLs) and instrumental activities of daily living (IADLs)
ADL’s vs IADL’s
ADL’s vs IADL’s
( Instrumental activities of daily living )
______________________________________________________________________
Eating Medicine Management
Bathing Shopping
Dressing Preparing Meals
Transferring Housekeeping
Toileting Doing Laundry
Continence Using transportation
Handling Finances
Communicating via telephone
LONG-TERM CARE SERVICES SETTINGS
- Long-term care services are provided in a variety of settings: ?
LONG-TERM CARE SERVICES SETTINGS
- Long-term care services are provided in a variety of settings:
Home
Community
Residential setting
Institutional setting (nursing home)
PAYING FOR LONG-TERM CARE SERVICES
What are 4 common methods for paying for long-term care
services.?
.
PAYING FOR LONG-TERM CARE SERVICES
There are 4 common methods for paying for long-term care
services.
- Medicare
- Medicaid
- Personal assets and savings - “ Self funding “
- Long-term care insurance
MEDICARE
MEDICARE
Federal program that pays for healthcare for persons age 65 and
over and for people under age 65 with disabilities.
NOT cover long-term care services.
Will help pay for a short stay in a skilled nursing facility, for hospice
care, or for home health care if the recipient meets the following
conditions:
- Prior hospital stay of MIN 3 days, and
- Admitted to Medicare-certified nursing facility w/in 30 days of the prior hospital stay, and ( RABHAB )
- Needs skilled care, such as skilled nursing services, physical
therapy, or other types of therapy, as a result of the medical
condition that caused the hospital stay
- If all of these conditions are met, Medicare will pay for SOME of the
costs up to 100 days.
MEDICAID
MEDICAID
- Federal/state entitlement program that pays for medical assistance
for certain individuals and families with low incomes and resources. - Each state:
Establishes its own eligibility standards
Determines the type, amount, duration, and scope of services
Sets rate of payment for services
Administers its own program - Medicaid policies for eligibility, services, and payment are complex
and vary considerably, even among states of similar size or
geographic proximity.
MEDICAID: MANDATORY BENEFITS
MEDICAID: MANDATORY BENEFITS:
Inpatient and outpatient hospital - Federal Qualified health center
Physician Services - family services and supplies
Nursing facility services - nurse Midwife services
Home health services - Pediatric and family nurse Practitioner
Early and periodic screening, diagnostic - Freestanding Birth centers
Labs and x-rays services - transportation to mescal care
Rural health clinics services - tobacco cessation counseling for pregnant woman
MEDICAID: OPTIONAL BENEFITS
MEDICAID: OPTIONAL BENEFITS
Prescription drugs
dental services
Hospice
Preventative and rehabilitative service
physical therapy
Chiropractic services
Personal care
Clinic services
Occupational therapy
etc.
MEDICAID: ELIGIBILITY (1 OF 4)
- Medicaid has both general requirements as well financial
requirements. General requirements:?
MEDICAID: ELIGIBILITY (1 OF 4)
- Medicaid has both general requirements as well financial
requirements. General requirements:Be age 65 or older
Permanent disability as defined by Social Security Administration
Blind
Pregnant woman
Child, or the parent or caretaker of a child
MEDICAID: ELIGIBILITY (2 OF 4)
- To meet the financial requirements for Medicaid, a person must
have limited income and limited assets. A person’s income
includes:
MEDICAID: ELIGIBILITY (2 OF 4)
- To meet the financial requirements for Medicaid, a person must
have limited income and limited assets. A person’s income
includes:
Regular benefit payments such as Social Security retirement
or disability payments
Veterans benefits
Pensions
Salaries
Wages
Interest from bank accounts and certificates of deposit
Dividends from stocks and bonds - Medicaid generally does not count:
Nutritional assistance (food stamps)
Housing assistance provided by the federal government
Home energy assistance
MEDICAID: ELIGIBILITY (3 OF 4)
- Many assets are not counted when determining Medicaid eligibility.
Assets that are counted include:
MEDICAID: ELIGIBILITY (3 OF 4)
- Many assets are not counted when determining Medicaid eligibility.
Assets that are counted include:
Checking and savings accounts
Stocks and bonds
Certificates of deposit
Real property other than your primary residence
Additional motor vehicles if you have more than one
Retirement plan assets that can be withdrawn in a lump sum
(such as IRAs and 401(k)s)
MEDICAID: ELIGIBILITY (4 OF 4)
- Medicaid generally does not count the following assets (exempt assets):
MEDICAID: ELIGIBILITY (4 OF 4)
- Medicaid generally does not count the following assets (exempt assets):
- Primary residence
-Personal property and household belongings
-One Car
-Life insurance with a face value under $1,500
-Up to $1,500 in funds set aside for burial
-Certain burial arrangements such as pre-need burial agreements
-Assets held in specific kinds of trusts
-Retirement plan assets that cannot be withdrawn in a lump sum
(such as defined benefit pension plans in which a lump sum is
not available)
MEDICAID: COMMUNITY SPOUSE RESOURCE
ALLOWANCE ?
MEDICAID: COMMUNITY SPOUSE RESOURCE ALLOWANCE
- Spouse not in a nursing home can retain a “community spouse
resource allowance.”-The community spouse can retain one half of the couple’s
countable assets up to a maximum of $137,400 (in 2022). - Spend down is permitted for:
-Paying off debts (e.g., mortgage, credit cards, car loan)- Purchase of a new exempt asset such as a car or home
- Payments for home improvements and repairs to a home or car
- Pre-payment of funeral and burial expenses
- Payments for services under caregiver agreements
- Purchase of Medicaid-compliant annuities
QUALIFIED STATE LONG-TERM CARE PARTNERSHIP PROGRAM
- Partnership-qualified long-term care policies:
QUALIFIED STATE LONG-TERM CARE PARTNERSHIP PROGRAM
- Partnership-qualified long-term care policies:-Help people purchase shorter term, more complete long-term care
insurance-Inflation protection - Allow people to apply for Medicaid under modified eligibility
rules if there is continued need to long-term care after the
policy maximum is reached - Include special “asset disregard” feature
PARTNERSHIP: QUALIFIED POLICY EXAMPLE
- Axel, a single man, purchases a Partnership policy with a value of
$100,000. Some years later he receives benefits under that policy
up to the policy’s lifetime maximum coverage (adjusted for inflation)
equaling $150,000. - Axel eventually requires more long-term care services and applies
for Medicaid.
PARTNERSHIP: QUALIFIED POLICY EXAMPLE
- Axel, a single man, purchases a Partnership policy with a value of
$100,000. Some years later he receives benefits under that policy
up to the policy’s lifetime maximum coverage (adjusted for inflation)
equaling $150,000. - Axel eventually requires more long-term care services and applies
for Medicaid.
Medicaid Only_____________________
- Axel entitled to keep only $2,000
-He would have to spend down any assets over and above this amount
Partnership Program_____________
-Axal can keep $152,000 in assets and the state will NOT recover those funds
- Would only have to spend down over and above $152,000 in order to be eligible for Medicaid.
MEDICAID PLANNING - LOOK BACK PERIOD
MEDICAID PLANNING - LOOK BACK PERIOD
- States conduct a review, or “look-back,” to determine whether the
individual (or their spouse) transferred assets to another person or
party for less than fair market value (FMV). - The “look-back period” is 60 months (5 years).
- Transfer of assets can delay the Medicaid eligibility for LTC.
- The penalty period is calculated by dividing the value of the
property transferred by the average monthly cost of a nursing home
in the state
MEDICAID PLANNING AND THE LOOK BACK PERIOD:
EXAMPLE
- Chenglei gave his two sons gifts of $15,000 each 12 months ago.
This year, Chenglei will enter a nursing home that costs $6,000 per
month and will apply for Medicaid benefits. He is a widower and has
countable assets of $122,000. - The average monthly cost of nursing home care in his state is
$6,000.
MEDICAID PLANNING AND THE LOOK BACK PERIOD:
EXAMPLE
- Chenglei gave his two sons gifts of $15,000 each 12 months ago.
This year, Chenglei will enter a nursing home that costs $6,000 per
month and will apply for Medicaid benefits. He is a widower and has
countable assets of $122,000. - The average monthly cost of nursing home care in his state is
$6,000.
________________________________________________________ - The look back period is 60 months, so Chenglei will have a penalty
period of five months. - Medicaid eligibility will not begin until countable assets have been
depleted down to $2,000. This would take 20 months. - The penalty period will apply after his assets are spent down,
resulting in a total of 25 months before Medicaid will begin paying
for his care.
- Look Back 60 months time:
gifted $30,000 total$30,0000
———————————– = 5 mns look back penalty time
$6,000/mn cost for care - Spend down time:
assets = $122.,0000
keep = < $2,000 >
—————————–
$120,0000 / $6,000 /mn care = 20 mns penalty time
So the total is 5 msn + 20 mns = 25 mns before medicaid can begin.
MEDICAID PLANNING
- In Helvering v. Gregory, Judge Learned Hand famously wrote about
tax planning:
MEDICAID PLANNING
- In Helvering v. Gregory, Judge Learned Hand famously wrote about
tax planning:“Anyone may so arrange his affairs that his taxes shall be as
low as possible; he is not bound to choose that pattern which
will best pay the Treasury; there is not even a patriotic duty
to increase one’s taxes.”
SPECIAL NEEDS TRUST
SPECIAL NEEDS TRUST
- Specific type of trust that is used to provide benefits to persons or
beneficiaries with special needs. - Trusts are established to ensure that benefits
available from federal and state agencies are preserved and
maintained. - Common Special Needs Trusts:
- Third Party Special Needs Trust
- The self settled type trust that is established and exempt
under 42 U.S.C. Sec.1396p(d)(4)(A) - A pooled trust which is exempt under 42 U.S.C.
Sec.1396p(d)(4)(C)
THIRD PARTY SPECIAL NEEDS TRUST
THIRD PARTY SPECIAL NEEDS TRUST
- The assets of these trusts, if properly structured, are not counted or
considered for purposes of available federal or state benefits for the
beneficiary. - The trust must be established to not provide food, shelter or any
asset that could be converted into food or shelter, such as cash. - It may provide for other benefits, such as medical treatment,
therapy, education, travel, computer equipment, etc. These types of
benefits can improve the lifestyle of the beneficiary and not
interfere with governmental benefits.
EXEMPT TRUST
EXEMPT TRUST
- The assets of the other two trusts are also ignored for Medicaid
purposes. However, these two trusts require that assets remaining
in the trust be available for state recovery to the extent that state
funds were used to care for the beneficiary.
MEDICAID- COMPLIANT ANNUITIES
MEDICAID- COMPLIANT ANNUITIES
- Medicaid-compliant annuities are used as part of a spend-down
strategy.
Converts a countable asset into an income stream for the
community spouse which is not considered in the
determination of Medicaid eligibility.
- Requirements:
Irrevocable and non-assignable.Actuarially sound so the payments over the
community spouse’s life expectancy will at least equal what
was paid for the annuity.Payments must be in equal amounts with no deferral or
balloon payments.State must be named the remainder beneficiary up to the
amount of Medicaid payments made for the resident spouse.
PERSONAL ASSETS AND SAVINGS
PERSONAL ASSETS AND SAVINGS
- Paying long-term care expenses out of personal savings can be an
option for some. - Depends on how long the services are needed
- May only be needed for a short period of time
- In other cases, paying for services can be financially devastating –
also devastating to a person’s spouse
LONG-TERM CARE INSURANCE
LONG-TERM CARE INSURANCE
- Designed to cover long-term services and supports, including
personal and custodial care in a variety of settings - Pays for home health care, nursing home stays, and hospice care
- Policies have many choices, limitations, and costs that need to be
considered
FACTORS THAT INFLUENCE THE NEED FOR
LONG-TERM CARE INSURANCE
- To decide whether long-term care insurance is appropriate, one
should consider:
FACTORS THAT INFLUENCE THE NEED FOR
LONG-TERM CARE INSURANCE
- To decide whether long-term care insurance is appropriate, one
should consider:Personal risk factors
Life expectancy
Gender
Family situation
Family health history
Financial considerations
Other available alternatives
WHO SHOULD BUY LONG-TERM CARE INSURANCE ?
WHO SHOULD BUY LONG-TERM CARE INSURANCE
- Low Net Worth
Long-term care insurance premiums may be unaffordable; likely
to qualify for Medicaid. However, children with higher income or
net worth may desire to pay long-term care insurance premiums
to provide protection for the parents. - Moderate Net Worth
Good candidates for long-term care insurance, especially if they
have wealth transfer goals or want to ensure the ability to choose
the care or provider. - High Net Worth
Likely able to self-insure but may desire to purchase long-term
care insurance to protect assets for wealth transfer goals.
LONG-TERM CARE INSURANCE:
ELIGIBILITY AND UNDERWRITING
LONG-TERM CARE INSURANCE:
ELIGIBILITY AND UNDERWRITING
- Some insurers have a minimum age of 40 for writing LTC policies;
most companies have a maximum age of approximately 84 – 89
years for issuing a policy. - Underwriting considerations include:
Age
Gender
Health
Cognitive assessments
Physiological age
LONG-TERM CARE INSURANCE: PREMIUM FACTORS
- LTCI premiums are impacted by:
LONG-TERM CARE INSURANCE: PREMIUM FACTORS
- LTCI premiums are impacted by:
Age
Gender
Health
Geographical location - Cost for care in your area.
Elimination period
Benefit amount
Benefit period
Inflation protection
Additional riders
LONG-TERM CARE INSURANCE: COMMON FEATURES
- Common features of long-term care insurance policies:
LONG-TERM CARE INSURANCE: COMMON FEATURES
-Guaranteed renewability - “they can increase premiums “
-Nonforfeiture Benefits: return of premium or shortened benefit period
-Waiver of premium while receiving benefits
TYPES OF CARE (1 OF 3)
Skilled Nursing Care
Custodial Care
TYPES OF CARE (1 OF 3)
Skilled Nursing Care
* Level of care that includes services that can only be
performed safely and correctly by a licensed nurse (either a
registered nurse or a licensed practical nurse), doctor or therapist.
Custodial Care _ ( MEDICARE DOES NOT COVER )
* Non-skilled, personal care, such as help with activities of
daily living (eating, bathing, transferring, dressing, toileting, and
continence
TYPES OF CARE (2 OF 3)
Home Health Care
Hospice Care
Adult Day Care Services
TYPES OF CARE (2 OF 3)
Home Health Care
* Care provided at home
Hospice Care
* Typically utilizes a team-oriented approach to address medical,
physical, social, emotional, and spiritual needs of the terminally ill.
Adult Day Care Services
* Provide supervision during the day at a community-based center
while caretaker family members are at work. Programs address the
individual needs of functionally or cognitively impaired adults.
