Module 5

Question 1

Qualified Medical Expenses for Purposes of an HSA

Answer 1

Include expenses for diagnosis, cure, mitigation, treatment, or prevention of disease, including prescription drugs, transportation required to obtain care, and qualified long-term care expenses. Qualified medical expenses do not include those covered by insurance.

Question 2

Coinsurance

Answer 2

A percentage of the expenses that is paid by the insurance company once the deductible has been met for covered services.

Question 3

Copayment

Answer 3

A set amount that the insured will pay for a service such as a doctor visit.

Question 4

Levels of Coverage and Benefits

Answer 4

1.) Bronze - Covers 60%
2.) Silver - Covers 70%
3.) Gold - Covers 80%
4.) Platinum - Covers 90%
5.) Catastrophic Coverage

Question 5

Power of Attorney (POA)

Answer 5

A power of attorney is a written document executed by one person authorizing another person to act on their behalf. The person granting the authority is known as the principal, and the person receiving the authority is known as the attorney-in-fact or the agent.

Question 6

General Power of Attorney

Answer 6

Authority ceases when the principal dies or becomes incapacitated.

Question 7

Durable Power of Attorney

Answer 7

Specifically states that the agent’s authority does not cease when the principal becomes incapacitated

Question 8

Revocable Living Trust

Answer 8

The trust is operative and manages the transferred assets even before incapacity occurs.

Question 9

Contingent Trust (Standby Trust)

Answer 9

Substantial funding occurs only after the grantor becomes incapacitated.

Question 10

Conservator

Answer 10

Individual given court-ordered authority and responsibility to manage the affairs of those who can no longer make their own financial or health care decisions.

Question 11

Living Will

Answer 11

A revocable document that allows a person to make known their wishes regarding life-prolonging medical treatment in cases where individuals cannot speak for themselves.

Question 12

Medical Proxy (Advanced Medical Directive)

Answer 12

A revocable written document in which the principal authorizes a named person to make health care decisions on the principal’s behalf in the event of their own incapacity.

Question 13

Medicare

Answer 13

A social insurance program that is meant to provide hospital and medical care for the elderly and certain disabled Americans.

Question 14

Benefit Period

Answer 14

A benefit period begins the first day that an individual receives a Medicare-covered service as an inpatient in a hospital or other covered facility, and ends when that individual has been out of that facility or another that mainly provides skilled nursing or rehabilitation services for 60 consecutive days.
*Each benefit period has a new deductible

Question 15

Medicare Part D

Answer 15

Prescription drug coverage

Question 16

Medicare Part A Coverage

Answer 16

Part A (Hospital Insurance) helps cover:
1.) Inpatient hospital care
2.) Skilled nursing care–inpatient care in a skilled nursing facility (not custodial or long-term care)
3.) Hospice care
4.) Home health care (on a part-time or intermittent basis)
5.) Inpatient care in a religious non-medical health care institution

Question 17

Medicare Enrollment Period

Answer 17

This is a seven-month window: the three months prior to turning 65, the birthday month, and the following three months.

Question 18

Medicare Part B

Answer 18

Often referred to as “physician’s coverage,” covers physician and outpatient expenses deemed “medically necessary,” such as durable medical equipment, lab tests, x-rays, mental health, and some home health care. Preventive care is also covered.

Question 19

Medicare Part B Coverage

Answer 19

The following medical services are covered by Part B:
1.) Doctor’s services, including preventive care and many screenings
2.) Ambulance services
3.) Durable medical equipment
4.) Blood
5.) Mental health
6.) Home health services (skilled nursing or therapy)
7.) X-rays and lab tests
8.) Limited outpatient prescription drugs

Question 20

Four Strategies for Filling Gaps Between Actual Costs and Medicare Coverage:

Answer 20

1.) Using Medicare Part C
2.) If possible, maintaining coverage through an employer-provided health insurance plan
3.) For low-income seniors, qualifying for state assistance in paying some or all Medicare costs (Medicaid), and
4.) The purchase of so-called Medigap insurance from private vendors.

Question 21

The Six Significant Gaps in Medicare Coverage Are:

Answer 21

1.) Deductibles for Part A ($1,600 for first 60 days of inpatient hospital care) and Part B ($226)
2.) Cost of extended hospitalization under Part A ($400 per day for 61st through 90th day, $800 per day for 91st through 150th day, full cost after 150th day)
3.) Coinsurance (20%) on doctors’ services and outpatient care under Part B
4.) Costs in excess of Medicare Part B approved charges—Medicare will pay only so much for specific medical services; if the client’s doctor charges more than the Medicare limit, the client may have to pay the difference
5.) Most self-administered prescription drugs, and
6.) Nursing home costs—Medicare generally limits payment for long-term care in a nursing home. Following a three-day stay in a hospital, if the individual enters a Medicare-approved skilled nursing facility within 30 days, the first 20 days of care are covered in full, and days 21–100 are covered after paying a daily deductible. Coverage terminates after day 100.

Question 22

Medigap Insurance Plans

Answer 22

All policies offer the same basic benefits, but some offer additional benefits so individuals can choose one that meets their needs.

Question 23

Plan M vs. Plan N

Answer 23

Plan M. The plan covers 50% of the Part A inpatient hospital deductible. It does not cover the Part B deductible. It also fully covers the core benefit and SNF daily coinsurance charges, and has the foreign travel emergency benefit.
Plan N. The plan has 100% coverage for the Part A inpatient deductible. It does not cover the Part B deductible. Plan N’s coverage for the Part B coinsurance charge is subject to a new copayment structure with copays of up to $20 for office visits and up to $50 for emergency room visits.

Question 24

Medicare Part C

Answer 24

Enables Medicare beneficiaries to elect coverage under privately managed care plans.

Question 25

Four Basic Plan Types of Medicare Part C

Answer 25

1.) Medicare HMO
2.) Medicare PPO
3.) Fee for service
4.) Special Needs Plan

Question 26

Medicare Part C HMO

Answer 26

Medicare HMO patients must receive medical care through HMO-contracted doctors and hospitals (i.e., in-network). Prescription drug coverage is normally provided through the HMO, and patients frequently receive additional services, such as physicals and well-checkups.

Question 27

Medicare Part C PPO

Answer 27

Medicare preferred provider organization (PPO) plans generally provide many of the same services of an HMO, but with far fewer restrictions.

Question 28

Medicare Part C Private Fee for Service

Answer 28

A Medicare private fee for service (PFFS) plan is offered by a private insurance company, working with the Medicare system. The insurance company (rather than Medicare) determines what the participant will pay for services received. It is hard to identify what services may be offered, as they vary significantly by plan.

Question 29

Medicare Part C Special Needs Plans

Answer 29

These plans cover individuals with special health needs. Special needs plans must provide the benefits of Parts A, B, and D. Often they will provide extended benefits with lower copayment amounts. Special needs plans are specifically targeted for people living in nursing homes or, who while at home, require the same level of care as normally provided in a nursing home.

Question 30

Medicaid

Answer 30

Medicaid is a government health insurance program designed for individuals with low income or minimal assets. Medicaid is a federally initiated program, but is primarily administered and partially funded at the state level. As such, each state sets its own criteria to qualify for benefits.

Question 31

Medicaid Spend-Down

Answer 31

The so-called “Medicaid spend-down” is a planning strategy in which clients will spend down their personal assets to a set limit in order to become eligible for Medicaid coverage. Another strategy is for a parent to transfer assets to a trust for their children. This is commonly used by seniors who are in need of long-term care but lack the money to pay for it.

Question 32

Long-Term Care (LTC)

Answer 32

Covers a range of services one may require to meet their personal care needs due to chronic illness, physical disability, or cognitive impairment.

Question 33

Levels of Long-Term Care

Answer 33

1.) Skilled nursing care
2.) Intermediate care
3.) Custodial Care

Question 34

Long-Term Care Settings

Answer 34

1.) Home health care
2.) Board-and-care homes
3.) Assisted living facilities
4.) Continuing care retirement communities
5.) Skilled nursing homes

Question 35

Long-Term Care Insurance

Answer 35

Directly pays for LTC expenses while at the same time transferring this uncertain risk to an insurance company. Individuals typically purchase a policy when they are young and healthy (so that they can pass the medical underwriting and premiums are affordable), with the expectation that the benefits will be available to help pay for needed care later in life.

Question 36

Qualified Long-Term Care Policies

Answer 36

Allow some or all of the premium to be tax-deductible

Question 37

Partnership Policies

Answer 37

Allow individuals to protect their assets if they have purchased a long-term care insurance policy that qualifies as a partnership plan. Individuals who buy these policies then gain dollar-for-dollar protection for their assets and can still qualify for Medicaid if the policy benefits run out.

Question 38

Hybrid Long-Term Care Policy

Answer 38

Pairs a life insurance or annuity contract with long-term care insurance. The cost for the policy is more than what it would be for either life insurance or long-term care insurance, but less than buying the two policies individually.

Question 39

Long-Term Care Policy Premiums (Traditional & Hybrid)

Answer 39

An attractive feature of hybrid policies is that the premium for the long-term care insurance is guaranteed to never increase. Stand-alone long-term care insurance policies can increase premiums if the insurance company determines that the additional premium is needed to cover claims costs.

Question 40

Alternative Funding for Long-Term Care

Answer 40

1.) Self-funding
2.) Life insurance
3.) Medicare (short-term)
4.) Medicaid
5.) Home equity

Question 41

Medicare Part A Skilled Nursing Coverage

Answer 41

Within certain parameters, Medicare Part A helps pay for care in a skilled nursing facility. Medicare Part A is free for most recipients (who have worked in covered employment for at least 40 quarters). Doctor bills and outpatient hospital care are covered by Medicare Part B. On the other hand, Medicare has only very limited coverage for long-term care. Having Medicare does not mean a person has adequate LTC coverage. Medicare LTC coverage should be seen as rehabilitative care rather than as true LTC.

Question 42

The Affordable Care Act Prohibits…

Answer 42

The provisions prohibit both HSAs and FSAs from being used for over-the-counter medicines not prescribed by a doctor.

Question 43

Health Care Deductible Frequency

Answer 43

A health insurance deductible is an annual amount, not a per incident amount. Preventive care and wellness benefits, such as mammograms and well-baby care, are often paid 100% by the insurance company without a required deductible.

Question 44

Not Considered a Qualified Medical Expense for HSAs

Answer 44

Premium payments for a Medigap policy are not considered qualified medical expenses for purposes of the health savings account rules.

Question 45

If You Miss Your Initial Medicare Enrollment Period…

Answer 45

You will face a cumulative penalty equal to 10% of your premium for every 12-month period during which you could have signed up but didn’t.

Question 46

Medicare Part D Premium

Answer 46

People who enroll in Part D pay a monthly means-tested premium that varies based on the particular plan.

Question 47

To Qualify for a Medicare Advantage Plan…

Answer 47

Beneficiaries must be covered by parts A and B of Medicare and live in the plan’s service area.

Question 48

Medigap Coverage

Answer 48

Medigap insurance is designed to supplement Medicare’s benefits by filling in some of what Medicare does not cover, such as deductibles and coinsurance; it covers only Medicare-approved charges.

Question 49

Medicare Part A Covers…

Answer 49

1.) Inpatient hospital care
2.) Psychiatric hospital care
3.) Hospice care
4.) Home health care

Question 50

Medicare Part B Covers…

Answer 50

1.) Physician services
2.) Ambulance services
3.) Blood
4.) X-rays and lab tests