INSURANCE TO PROTECT SAVINGS (Chapter 4)

Question 1

A&S Terminology

Extended health insurance

Answer 1

• An Insurance plan owned by, paid for by and payable to the applicant.
• Used to “top up” the protection provided by the provincial health care plans by those who are not members of a group plan, or to enhance coverage provided by a group plan for those who are members of such a plan.

Question 2

A&S Terminology

Group extended health coverage

Answer 2

Insurance coverage to group members and their families without medical underwriting for basic coverage. Its benefits are usually subject to deductibles and co-insurance clauses.

Question 3

A&S Terminology

Enhanced medical and hospital care

Answer 3

• The enhanced medical (also called enhanced health care) benefit offered under group plans is designed to “top up” or otherwise supplement benefits offered through the provincial plan.
• Benefit that covers professional and semi-professional medical and related services not insured by the provincial health care plans such as Chiropractors, Massage therapists, Naturopaths, Optometrists.

Question 4

A&S Terminology

Travel insurance

Answer 4

Name for a wide variety of coverages for those who travel outside of their home province.

Question 5

A&S Terminology

Deductible and co-insurance

Answer 5

• A deductible is a dollar amount of otherwise qualifying expenses that must be paid 100% by the insured before the plan picks up any of the expense.
• The co-insurance factor indicates the percentage of a qualifying expense that will be covered by the plan.

Question 6

REVIEW

There are about 4 long-term care options what are they?

Answer 6

• Home care;
• Respite care;
• Assisted living;
• Nursing home (facility) care

Question 7

REVIEW

What are the 6 Activities of daily living (ADLs)?

Answer 7

• Dressing
• Bathing
• Toileting
• Transferring
• Eating
• Maintaining continence

Question 8

REVIEW

Does LTC have riders, if so what are they?

Answer 8

YES

• Cost-of-living adjustment (COLA)
• Return of premium (ROP)

Question 9

REVIEW

What’s the difference between Critical illness (CI) and long-term care (LTC) insurance?

Answer 9

• Critical illness policies are designed to provide a tax-free sum of money to assist an insured in adapting to his changed circumstances caused by a life-threatening illness.
• Long-term care policies provide tax-free funds for care services for those insured persons who can no longer care for themselves independently, due to illness, injury or the effects of aging.

Question 10

REVIEW

What are the tax treatment of long-term care benefits?

Answer 10

All benefits paid out under a long-term care policy are tax-free to the insured

Question 11

REVIEW

What are the tax treatment of long-term care premiums?

Answer 11

• Premiums paid for LTC insurance are not a deductible expense for income tax purposes.
• They qualify as eligible expenses for purposes of claiming the federal Medical Expense Tax Credit.

Question 12

REVIEW

What are the calculations for Residual disability benefits

Answer 12

Pre-disability income - part-time income ÷ Pre-disability income = Percentage%
($80,000 - $32,000 ÷ $80,000 = 60%)

While working part-time after suffering a disability, 60% of maximum disability benefit can be claimed, combined with the part time income post disability

Question 13

REVIEW

Disability can be measured as “partial” or “total” and within that range there are four distinct definitions that are employed by different policies what are they?

Answer 13

• Own occupation;
• Regular occupation;
• Any occupation;
• Total disability (according to the CPP).

Question 14

CHAPTER 4 - Insurance to protect savings

What are two of the most common sources of extended health insurance?

Answer 14

• Individual extended health insurance, (including travel insurance);
• Group extended health insurance.

Question 15

There are about 3 Individual extended health coverage that are parallel to group plan, what are they?

Answer 15

• Medical care;
• Dental care;
• Travel insurance.

Question 16

What are some of the coverage provided under medical care?

Answer 16

• Extended health care (for hospital or home care medical services not covered under provincial plans);
• Prescription drugs;
• Accidental death and dismemberment (AD&D);
• Dental care;
• Vision care;
• Emergency travel medical services

Question 17

TRUE OR FALSE?

Most of the provincial health care plans offer primary residents coverage for dental fees and appliances.

Answer 17

FALSE

Most of the provincial health care plans do not offer coverage for dental fees and appliances.

[Ref. 4.2.2]

Question 18

Benefits provided under an individual dental plan fall into one of two categories, what are they?

Answer 18

• Routine Maintenance
• Major Restorative Services

Question 19

Routine maintenance includes such items as…

Answer 19

• Regular check-ups;
• Periodic x-rays;
• Cleaning;
• Fillings;
• Extractions.

Question 20

TRUE OR FALSE?

Regular maintenance items in dental care coverage are covered to an annual maximum amount, perhaps $2,000, and are subject to the policy’s basic co-insurance factor, with the insured usually having to pay in the 10% to 15% range.

Answer 20

FALSE

Regular maintenance items are covered to an annual maximum amount, perhaps $1,000, and are subject to the policy’s basic co-insurance factor, with the insured usually having to pay in the 20% to 25% range.

[Ref. 4.2.2.1]

Question 21

TRUE OR FALSE?

Major restorative services in dental care coverages include things such as crowns and inlays and are usually subject to a lower co-insurance factor, generally 50%.

Answer 21

TRUE

• The amount that insurance will cover is based on a fee schedule set by the provincial dental associations and revised periodically.

[Ref. 4.2.2.1]

Question 22

What are some of the protection that travel insurance offer?

Answer 22

• Emergency medical expenses;
• Costs for lost or damaged luggage;
• Trip cancellation;
• Return of an ill or injured traveler to his home, etc…

Question 23

CHAPTER 4 - Insurance to protect savings

Why do people get travel insurance?

Answer 23

To offset the risk of catastrophic medical expenses for travellers outside the country.

Question 24

TRUE OR FALSE?

Credit cards usually don’t offer travel insurance.

Answer 24

FALSE

Many credit cards offer travel insurance protection, either as standard coverage automatically provided with the issuance of the card or as an option.

[Ref. 4.2.3.2]

Question 25

How does travel insurance handle pre-existing conditions?

Answer 25

• Non-disclosure of a pre-existing condition (medication) can lead to denial of a claim
• Conditions that were diagnosed prior to the 90- or 180-day period but which are chronic (like diabetes) may also result in restricted coverage
• The existence of a pre-existing condition will not void all coverage, but a claim may be denied if treatment is required specifically related to the pre-existing condition.

Question 26

Travel insurance have the common exclusions in addition to a couple more exclusions that are not soo common, what are they?

Answer 26

• Engaging in hazardous activities (such as hang gliding, parasailing or scuba diving);
• Travelling to countries on a “watch list”;
• Medical treatment in non-emergency situations.

[Ref. 4.2.3.4]

Question 27

What are some of the factors that affect the premiums on travel insurance? (name at least three)

Answer 27

• Amount of coverage
• Number of days that the traveller expects to spend outside his province of residence
• The greater the amount of coverage and the more risks that the policy covers, the bigger the premium
• The longer the trip, the higher the premium cost
• Traveller’s proposed destination can also have a significant impact on the premium. (Destinations such as Middle East and Latin America, are considered high-risk and command more expensive insurance premiums)
• Age and medical history of the traveller

Question 28

What are the tax implications of individual extended health insurance premiums and benefits?

Answer 28

Premiums paid for individual extended health coverage are not deductible for income tax purposes but may qualify for the federal medical expense tax credit. Benefits are received tax-free.

Question 29

What are the types of coverage under group extended health plan?

Answer 29

• Prescription drugs;
• Enhanced medical and hospital care;
• Dental care;
• Vision care;
• Accidental death and dismemberment (AD&D).

Question 30

Prescription drugs are divided into two categories, what are they?

Answer 30

• Prescription
• Non-prescription (or over-the-counter) drugs

Question 31

Covered prescription drugs are further subdivided into two categories, what are they?

Answer 31

Brand-name and generic

Question 32

TRUE OR FALSE?

Enhanced medical and hospital care benefit cover other medical expenses like transportation by ambulance, and such medical equipment as crutches, wheelchair rental and oxygen equipment, to a minimum annual limit.

Answer 32

FALSE

Enhanced medical and hospital care benefit cover other medical expenses like transportation by ambulance, and such medical equipment as crutches, wheelchair rental and oxygen equipment, to a maximum annual limit.

[Ref. 4.3.1.2]

Question 33

TRUE OR FALSE?

Enhanced medical or hospital benefits are not usually subject to an annual deductible, but may incur a co-insurance payment on the part of the insured member.

Answer 33

TRUE

Question 34

Dental care is (for most group insurance plans), the most significant and the most costly element. provide four reasons why costs are magnified for group dental coverage

Answer 34

• Costs of dental care are high;
• Group dental coverage often includes the family of the group plan member;
• Access to dental care is discretionary (not merely on an emergency basis) and does not need a referral from a physician;
• Premiums for the coverage (or at least the plan member’s personal coverage) are usually covered by the sponsor of the plan (employer)

The way to control costs is to incorporate deductible and co-insurance charges, and annual and lifetime maximums on some services

Question 35

TRUE OR FALSE?

Dental care typically covers annual or semi-annual teeth cleanings, periodic check-ups, x-rays, fillings, extractions restorative work, cosmetic dental work (caps, teeth straightening or whitening)

Answer 35

FALSE

• Dental care typically covers annual or semi-annual teeth cleanings, periodic check-ups, x-rays, fillings, extractions and restorative work.
• Cosmetic dental work (caps, teeth straightening or whitening) is typically excluded from coverage.

[Ref. 4.3.1.3]

Question 36

Vision care coverage is another standard feature for most group health plans.

This benefit provides a reimbursement supplement for a variety of expenses incurred to assist with visual impairment such as…

Answer 36

• Prescription eyeglasses;
• Contact lenses;
• Optometrist fees (where not covered by provincial health plans)

Question 37

TRUE OR FALSE?

Benefits under group extended health care coverage covers all possible expenses, and they be immediately payable to the plan member.

Answer 37

FALSE

Benefits under group extended health care coverage may not cover all possible expenses, nor may they be immediately payable to the plan member.

[Ref. 4.3.2]

Question 38

TRUE OR FALSE?

In circumstances where group extended health insurance covers both the plan member and his family members, there may be two types of annual deductible: an individual deductible and a family deductible.

Answer 38

TRUE

Question 39

CHAPTER 4 - Insurance to protect savings

Explain The process of individual & family deductible

Answer 39

• Once any member of the family has filed claims sufficient to use up his individual deductible, no further deductible will apply to that person for the current year.
• Application of the individual deductible to claims arising from any member of the family will, in turn, reduce the family deductible.
• Once the family deductible has been used up, individual deductibles will no longer apply to any family members for the current year regardless of whether their individual deductibles have been used.

Question 40

TRUE OR FALSE?

Co-insurance factors are most commonly found in relation to dental benefits, but may apply to other benefits as well, depending on the plan.

Answer 40

TRUE

• In the case of claims filed early in the year, or where few claims are filed by a plan member, both a deductible and a co-insurance factor could apply.

[Ref. 4.3.2.1]

Question 41

What are the tax implications of group extended health insurance premiums and benefits?

Answer 41

• In most provinces and territories across Canada employer-paid premiums for group health care coverage are a deductible expense to the employer but are not considered a taxable benefit in the hands of the covered plan member
• Benefits (or reimbursements for expenses) received under the group plan are also tax-free to the plan member and his family.
• Non-employer group situations (e.g., association groups), where the extended health coverage premiums are paid by the group member, the premiums are not deductible by the member, but are a qualifying expense (along with medical expenses) for the medical expense tax credit