Long Term Care/Disability Coverage Flashcards
Medicaid
- eligibility determined by a persons assets
- individuals entering a nursing home can apply for Medicaid and are eligible once assets are spent down
- penalty period based on amount of assets gifted in five years prior to entering the nursing home
- if nursing home cost $5000 a month, and & $15000 was gifted in the prior 5 years, the penalty period would be 3 months of no Medicaid coverage once assets were spent down.
Medicare
- available to those eligible for social security
- benefits are extremely restrictive
- Medicare only pays if the patient is capable of realizing and improvement in his or her condition.
Continuing Care retirement communities (CCRC)
Retirement community that offers several levels of care on site
- independent living
- Assisted living
- Memory Care
- Skilled nursing and Rehabilitation
Private long term care policy
- provides care for care nor covered by health insurance.
Seven types of coverage:
- Skilled Nursing - Traditional nursing home, physician ordered.
- Intermediate Nursing - Occasional nursing care, physician ordered.
- Custodial Care - Assistance with eating, dressing, bathing, etc.
- Home Health Care - In-home nursing or necessary assistance.
- Assisted Living - Apartment style living with healthcare services.
- Adult Day Care - Daily assistance while a spouse or family member works.
- Hospice Care - For terminally ill, at home, hospital or nursing facility.
Eligibility for long term care benefits
Must be chronically ill or suffer from substantial cognitive impairment.
Chronically Ill - Unable to perform 2 of 6 ADLs for at least 90 days.
Activities of Daily Living include: Eating, bathing, dressing, transferring from bed to chair,
using the toilet, and continence.
Substantial cognitive impairment - Behavior threatens own/others health and safety.
Long Term Care insurance partnership program
-Program establishes eligibility rules for a partnership between Individual LTC Insurance and Medicaid
• Individuals use a LTC policy to pay the first portion of Long-term Care and then qualify for Medicaid without the spend down requirement.
- partnership qualified policy included an “asset disregard” for Medicaid to the extent of the total amount of
benefits received under the long-term care policy.
For example, if the long-term policy provides $200,000 of lifetime benefits, the individual will be able
to shelter $200,000 from the Medicaid spend down requirement.
What are long term care tax benefits?
- premiums are tax deductible and limited based upon age of the insured.
- benefits are tax free as long as policy is “qualified”
What provisions make a long term care policy qualified?
- person is expected to need care for at least 90 days
- unable to perform 2 or more activities of daily living or person suffers from substantial cognitive impairment.
Long term care misc info
- no surrender value
- limited to qualified long term care services
- uses dividends to reduce future premiums or increase benefits
- meets consumer protections laws
- does not pay for expenses covered under Medicare
Disability income insurance
- provides income to the insured in the event the insured is unable to work because of illness or injury
Policy issues:
Coverage (sickness and accident). Term (to retirement or to death). Elimination Period (0 to 180 days). Taxability of Benefits (depends on payor). Amount of Benefits (60 to 70%). Definition of Disability (own occupation, etc.). Residual Benefit. Probation Period.
What are the four different definitions of disability?
- Any occupation - considered disabled if the insured cannot perform the duties of “Any occupation”
Least expensive premium
- Modified any occupation - considered disabled if unable to perform duties of gainful occupation they are reasonably fitted by education, experience, training and prior economic status.
- Own occupation - considered disabled if insured cannot perform duties of his “own occupation”
More expensive premiums.
- Split definition - begins with own occupation and moves into modified any occupation after a year or two under own occupation definition.
What are the benefit periods of disability insurance?
Short term: coverage is for two years or less
Long term: coverage is until normal retirement age, death, or for a specified period of time.
What is the elimination period of disability insurance?
- amount of times until benefits begin
- during elimination period, the premium is typically waived.
- the elimination period serves as a deductible.
Taxation of disability benefits:
-If EMPLOYEE pays the premium with AFTER-TAX dollars:
Premiums are Not Deductible;
Benefits ARE Tax Free.
-If EMPLOYER pays the premium:
Premiums ARE Deductible to Employer; Benefits to Employee ARE TAXED
If EMPLOYEE pays premium with PRE-TAX dollars (cafeteria plan):
Benefits to employee ARE TAXED.
What is cost of living rider?
Benefits received will adjust for inflation, which maintains the insureds purchasing power.
What are disability residual benefits?
If insured goes back to work at less pay, the policy will pay the difference between current income and income prior to disability.
Chart taxation of insurance products
Must know for exam****
Need to memorize!
