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.
TYPES OF CARE (3 OF 3)
Assisted Living Facility
Long-Term Care Services
TYPES OF CARE (3 OF 3)
Assisted Living Facility
* Residential living arrangements that provide individualized personal care, assistance with activities of daily living, help with medications, and services such as laundry and housekeeping
Long-Term Care Services
* Include medical and non-medical care for people with chronic
illnesses or disabilities
COVERAGE
COVERAGE
- A long-term care policy may pay different dollar amounts
different types of long-term care services. Policies usually pay
benefits by the day, week, or month. - Most long-term care policies limit the total amount of benefits that
can be paid over the life of the policy.
– Some policies state the maximum benefit limit in terms of
years.
–Other policies state the maximum benefit limit in terms of
dollars
SERVICES NOT COVERED BY LONG-TERM CARE INSURANCE
SERVICES NOT COVERED BY LONG-TERM CARE INSURANCE
- Long-term care policies may exclude coverage for some conditions,
either completely or for a limited period. - Exclude:Pre-existing conditions
Mental and nervous disorders
Care provided by family members or loved ones
OPTIONAL FEATURES OF LONG-TERM CARE INSURANCE
(REQUIRED TO BE OFFERED)
OPTIONAL FEATURES OF LONG-TERM CARE INSURANCE
(REQUIRED TO BE OFFERED)
- Inflation protection
- Guaranteed Purchase Option
- Non-forfeiture Benefit
OPTIONAL BENEFITS OF LONG-TERM CARE INSURANCE
(MAY OR MAY NOT BE OFFERED)
OPTIONAL BENEFITS OF LONG-TERM CARE INSURANCE
(MAY OR MAY NOT BE OFFERED)
- Waiver of Premium
- Refund of Premium
- Restoration of Benefits
- Bed Reservation
- Shared Benefits
TAX QUALIFIED LONG-TERM CARE CONTRACTS (1 OF 2)
- Tax-qualified implies ?
TAX QUALIFIED LONG-TERM CARE CONTRACTS (1 OF 2)
- Tax-qualified implies that the long-term care insurance policy is
treated as health insurance for federal income tax purposes and is
therefore deductible on income tax returns. - Employer paid long-term care insurance premiums are as an
employee benefit. - The employees will not be required to report the value
received in their incomes for the year. - Long-term care contracts cannot be provided as a benefit under
cafeteria plans.
TAX QUALIFIED LONG-TERM CARE CONTRACTS
To meet the definition of a tax-qualified contract, the long-term care
insurance policy: ??
TAX QUALIFIED LONG-TERM CARE CONTRACTS
To meet the definition of a tax-qualified contract, the long-term care
insurance policy:
- Must provide benefits that are limited to long-term care services
- Does not provide a cash surrender value or access to funds that
can be paid, assigned, borrowed, or pledged as collateral for a loan - Provides that refunds may be used only to reduce future premium
payments or increase future policy benefits - Must meet consumer protection standards defined in the Health
Insurance Portability and Accountability Act of 1997 (HIPAA) - Must coordinate benefits with Medicare
- Must offer a nonforfeiture benefit
- Must be guaranteed renewable
CONDITIONS THAT TRIGGER LONG-TERM CARE BENEFITS
CONDITIONS THAT TRIGGER LONG-TERM CARE BENEFITS
- Chronic illness: Defined as having a physical or cognitive
impairment that:
-prevents the insured individual from performing at least two of
the six activities of daily living for at least a 90-day period, or
- requires substantial supervision to prevent the insured from
posing a danger to himself, herself, or others.
-To be considered chronically ill, the insured individual must be
certified as such by a qualified health professional within the
previous 12 months
ACTIVITIES OF DAILY LIVING
The six activities of daily living are: ?
ACTIVITIES OF DAILY LIVING “ B E T T D C “
The six activities of daily living are:
B athing
E ating
T oileting
T ransferring
D ressing
C ontinence
SELECTION OF LONG-TERM CARE POLICY
When deciding on a policy, one should consider the following: ??
SELECTION OF LONG-TERM CARE POLICY
When deciding on a policy, one should consider the following:
- the premium
- the period of coverage or total benefits
- any inflation adjustment
- the elimination (deductible) period
- services covered
- services excluded
- who is the gatekeeper to determine qualification for benefits
- how are benefits paid
- what triggers benefits
LONG-TERM CARE INSURANCE: BENEFIT PERIOD
ONG-TERM CARE INSURANCE: BENEFIT PERIOD
- Insured selects the term of coverage: 1, 2, 3, 5, 7, 10 years, or
lifetime. - Longer benefit period = higher premium
- Some insureds select a benefit period of 2 or 3 years based on
statistics regarding the average stay in a nursing home. - Some insureds select the benefit period based on family history of
longevity and personal health history.
-Family history of longevity + aversion to Medicaid = desire for
a longer benefit period - In 2019, 52.4% of new LTC insurance buyers purchased a benefit
period of 3 years or less.
LONG-TERM CARE INSURANCE: BENEFIT AMOUNT
LONG-TERM CARE INSURANCE: BENEFIT AMOUNT
- The daily maximum that will be paid from the policy
- Amount may range from as low as $150 to above $500 per day
- Higher daily benefit = higher premium
- Some policies allow selection of a home health benefit of 50%, 75% or
100% of the institutionalized daily benefit. - The appropriate amount will vary based on geographic location. For
example:*- The national median daily cost of care in a nursing home in 2021 was $260.
- The median daily cost of care in a nursing home in Oklahoma City,
OK was $183.
-The median daily cost of care in a nursing home in New York, NY was $410.
-The median daily cost of care in a nursing home in Anchorage , AK
was $798.
LONG-TERM CARE INSURANCE: INFLATION RIDER
- The recommended age to purchase a long-term care policy is in the
50’s and 60’s, but the need for care will likely arise 20 or 30 years later - Inflation options vary, but typically include: ?
LONG-TERM CARE INSURANCE: INFLATION RIDER
- The recommended age to purchase a long-term care policy is in the
50’s and 60’s, but the need for care will likely arise 20 or 30 years later. - Inflation options vary, but typically include:
3% or 5% simple (equal)
A $100 daily benefit with 5% simple inflation will increase to
$150 per day after 10 years.
3% or 5% compound
A $100 daily benefit with 5% compound inflation will increase
to $163 per day after 10 years. - The additional premium for a compound inflation rider will be higher
than for a simple inflation rider.
For older applicants (70-75 or older), simple inflation may suffice.
Younger applicants will typically need compound inflation (based
on the same percentage amount).
LONG-TERM CARE INSURANCE: ELIMINATION PERIOD
LONG-TERM CARE INSURANCE: ELIMINATION PERIOD
- The period between being medically eligible and when benefits
begin
-Maybe 0, 30, 60, 90, or 180 days - Shorter elimination period = higher premium
- Read the policy: Insurance companies have different methods of
counting days toward the elimination period.- Care received by family members may or may not count as
days of care.
- Care received by family members may or may not count as
- Clients should have enough liquid assets to cover LTC costs during
the entire elimination period.
LONG-TERM CARE INSURANCE INDEMNITY VS.
REIMBURSEMENT METHOD OF PAYMENT
Indemnity (Per Diem)
Reimbursement
LONG-TERM CARE INSURANCE INDEMNITY VS.
REIMBURSEMENT METHOD OF PAYMENT
Indemnity (Per Diem) BEST !
* Pays daily benefit for each day care is received, regardless of the actual expenses incurred
-Benefits will never last longer than the benefit period selected.
Reimbursement
* Pays the actual expenses, up to the daily dollar limit
- Benefits may last longer than the stated benefit period.
* Creates a pool of money to be used for LTC expense
LONG-TERM CARE INSURANCE: ALTERNATIVES
LONG-TERM CARE INSURANCE: ALTERNATIVES
- Life insurance with long-term care rider
- Annuity contracts with long-term care provisions
- Viatical or Life Settlement Contracts
- Reverse Mortgages
LIFE INSURANCE WITH LONG-TERM CARE RIDER (1 OF 2)
LIFE INSURANCE WITH LONG-TERM CARE RIDER (1 OF 2)
- Becoming increasingly popular for funding LTC needs
- In 2018, 85% of LTC product sales were hybrid policies (Life +
LTC rider, or annuity + LTC rider).* - Life insurance premiums are generally fixed while LTCI
premiums can (and often do) increase.
each premium dollar - In 2018, 85% of LTC product sales were hybrid policies (Life +
LIFE INSURANCE WITH LONG-TERM CARE RIDER (2 OF 2)
LIFE INSURANCE WITH LONG-TERM CARE RIDER (2 OF 2)
- Monthly benefit is typically 2% - 4% of the face value, up to a
maximum of 3 – 4 x the face value amount.- Benefit triggers are same as for traditional LTCI.
- Benefit may be paid under indemnity or reimbursement
method. - Benefits are usually received income tax free
Bed Reservation -
Bed Reservation -
Some policies will pay to reserve a bed in the nursing home when the insured leaves to go into a hospital. This reservation can last a specified number of days or until the insured returns from the hospital.
Chronic Illness -
Chronic Illness
- Having a physical or cognitive impairment that prevents the insured individual from performing at least two of the six activities of daily living for at least a 90-day period, or requiring substantial supervision to prevent the insured from posing a danger to himself, herself, or others.
Adult day care
Adult Day Care -
Services provided during the day at a community-based center. Programs address the individual needs of functionally or cognitively impaired adults.
Assited Living
Assisted Living -
Senior housing that provides individual apartments, which may or may not have a kitchenette. Facilities offer 24-hour on site staff, congregate dining, and activity programs. Limited nursing services may be provided for an additional fee.
Bed reservation
Bed Reservation -
Some policies will pay to reserve a bed in the nursing home when the insured leaves to go into a hospital. This reservation can last a specified number of days or until the insured returns from the hospit
Expense Purchase Option
Expense Incurred Method –
This method provides for reimbursement of expense once bills are submitted to the insurance company. The reimbursable amount cannot exceed the benefit amount.
Guaranteed purchase option
Guaranteed Purchase Option
- Allows the insured to increase the benefits by a stated percentage periodically
Guaranteed Renewable
Guaranteed Renewable -
The company must renew the policy each year as long as premiums are paid
Home Health care
Home Health Care
Limited part-time or intermittent skilled nursing care and home health aide services, physical therapy, occupational therapy, speech-language pathology services, medical social services, durable medical equipment (such as wheelchairs, hospital beds, oxygen, and walkers), medical supplies, and other services provided in the patient’s home.Hospice Care - Offers a special way of caring for people who are terminally ill, typically utilizing a team-oriented approach to address medical, physical, social, emotional, and spiritual needs
Intermediate Case Nursing Facility
Intermediate-Care Nursing Facility
- A licensed facility with the primary purpose of providing health or rehabilitative services. Typically provides custodial care along with intermittent, as opposed to daily, medical care
Long-Term Care Services -
Long-Term Care Services -
Medical and non-medical care for people with chronic illnesses or disabilities that assists people with Activities of Daily Living, such as dressing, bathing, and using the bathroom. Long-term care can be provided at home, in the community, or in a facility.
Medicaid -
Medicaid -
A state and federal assistance program that pays for medical care and most long-term care expenses for eligible persons with low incomes and limited assets.
Medicare -
Medicare -
A federal program that pays for healthcare for persons age 65 and over and for people under age 65 with disabilities.
Mental and Nervous Disorders -
can polices exclude ?
Mental and Nervous Disorders -
Long-term care insurance policies can exclude coverage of some mental and nervous disorders, but the policy must cover serious biologically-based mental illnesses and other diseases, such as schizophrenia, major depression disorders, Alzheimer’s disease, and other age-related disorders. However, a long-term care insurer may refuse to sell a policy to someone already suffering from these otherwise covered conditions
Non-Forfeiture Benefit -
Non-Forfeiture Benefit -
The insurer must guarantee that the insured will receive some of the benefits paid for even upon cancellation or lapse of coverage.
Pre-Existing Conditions -
Pre-Existing Conditions -
A pre-existing condition is an illness or disability for which an insured has received previous medical advice or treatment usually within six months prior to the application for long-term care coverage
Refund of Premium -
Refund of Premium -
The company will refund some or all of the insured’s premiums minus any claims paid under the policy if the policy is canceled. The insured’s beneficiary will receive such refund if the insured dies
Restoration of Benefits -
Restoration of Benefits -
Some policies restore benefits to the original maximum amounts if the insured no longer needs long-term care services, usually after 180 days
Skilled Care Facility
Skilled Care Facility
- 24-hour nursing care for chronically-ill or short-term rehabilitative residents of all ages. It provides the highest level of service, and combines daily medical and custodial care
Special Needs Trust
Special Needs Trust -
A specific type of trust that is used to provide benefits to persons or beneficiaries with special needs. They are designed to protect eligibility for government assistance programs while improving the life of the beneficiary
Terminal Illness -
Terminal Illness
- Having a life expectancy of less than 24 months, which must be certified by a qualified health professional.
Total Plan Benefit –
Total Plan Benefit –
The total amount of money that could be paid under the LTC policy for charges incurred for covered services
Traditional Medical Care -
Traditional Medical Care -
Attempts to treat or cure illnesses
Waiver of Premium -
Waiver of Premium
- Allows the insured to stop paying premiums during the period in which he or she is receiving policy benefits. However, this provision may only apply to certain benefits, for example, nursing home or home healthcare.
Which of the following is correct for purposes of qualifying for Medicaid coverage and long-term care if an asset is transferred to another person or party for less than fair market value?
A. The Medicaid applicant transferred their house to their 22-year-old son who moved in one year ago to help with care.
B. The client transferred their home to their 25-year-old daughter who moved in three years ago to assist with care.
C. The penalty period begins with the month the assets were transferred for less than fair market value.
D. The penalty period is calculated by dividing the value of the property transferred by the national average monthly cost of a nursing home.
B The house can be transferred to a child under the age of 21 or a child who has lived in the home for at least 2 years before the Medicaid applicant moved to a nursing home and provided care helping the applicant stay in the home longer
Are premiums for LTC deductible ?
Premiums for qualified long term care insurance policies are deductible but the amount of the deduction is limited depending on the age of the covered person. Premiums for hybrid policies are not deductible. The benefits from long term care policies and long term care riders are not included in gross income
A double indemnity rider in a life insurance policy doubles the death benefit if death is a result of an accident, it does ????
A double indemnity rider in a life insurance policy doubles the death benefit if death is a result of an accident,
it does not make benefits available to pay long-term care expenses
The state may place liens on homes of Medicaid recipients during their lifetimes. The state can obtain payment of liens when properties are sold. During the spouse’s lifetime, the state may not recover assets from a Medicaid recipient’s estate. An asset that is exempt during the recipient’s lifetime, such as a house or car, can be the subject of recovery by a state after the individual’s death. Liens are used to recover Medicaid expenses, not to recover gifts made by the Medicaid recipients. The period of ineligibility (penalty period) is the way the states deal with gifts
A taxpayer who itemizes may take a deduction for premiums paid for which of the following types of individually owned insurance policies?
- Long-term care insurance
- Disability income insurance
- Major medical expense insurance
- Life insurance with a long-term care rider
A taxpayer who itemizes may take a deduction for premiums paid for which of the following types of individually owned insurance policies?
- Long-term care insurance
- Disability income insurance
- Major medical expense insurance
- Life insurance with a long-term care rider
1 and 3
Ted and Joan Kramer have assets of $290,000 and are planning for Joan to enter a nursing home. The Kramers would like to apply for Medicaid benefits to pay for Joan’s care. What should they do to spend down assets so Joan will be eligible immediately ?
Transfer all of their assets to Ted, and Ted will buy a Medicaid-compliant annuity with any assets exceeding the community spouse’s resource allowance.
Rationale
The Kramers will want to spend down their assets to the point where Ted is left with the community spouse’s resource allowance. Any amount of assets can be transferred from the Medicaid applicant to the community spouse, but assets above the community spouse’s resource allowance will need to be spent before Medicaid benefits will begin. The assets exceeding the community spouse’s resource allowance can be spent for a Medicaid-compliant annuity, and this transaction will be a permissible transfer. The annuity income will be paid to the community spouse, and the income is not taken into account for purposes of determining the resident spouse’s Medicaid benefits.
- Long Term Care Insurance
- Why we need LTC
- What health insurance does not cover
- Medicare A
- Medicaid
- How does insured qualify for benefits – either/or:
* ADL’s (2 of 6) – Bathing, Dressing, Eating,
Continence, Toileting, Transferring
OR- Substantial Cognitive Impairment
- Why we need LTC
Which of the following statements concerning state recovery of Medicaid costs is correct?
THE STATE may place LIENS ON THE HOMES of Medicaid recipients during their lifetimes.
Rationale
. The state can obtain payment of liens when properties are sold. During the spouse’s lifetime, the state may not recover assets from a Medicaid recipient’s estate. An asset that is exempt during the recipient’s lifetime, such as a house or car, can be the subject of recovery by a state after the individual’s death. Liens are used to recover Medicaid expenses, not to recover gifts made by the Medicaid recipients. The period of ineligibility (penalty period) is the way the states deal with gifts
