Module 5: Navigating Health Care Flashcards
Purpose of Health Care
- Manage the risk of major health care expenses occurring
- Health care deductible continuously increase and out-of-pocket maximums
The Patient Protection and Affordable Care Act
2010- Department of health was required to make a website
Tax on tanning
Adult dependent coverage to age 26
Made denying children with preexisting issues illegal
2011- HSA no longer able to pay for over the counter drugs not perscribed
2012- Uniform coverage summaries for base health care plans
2013- Itemized deduction threshold raised to 10% of AGI
Added 0.9% Medicare tax increase for singles with 200k earnings
2014- Medicare coverage for those making up to 138% of federal poverty level
Individuals required to have health care
Eliminated annual limit on coverage
Employers with 50+ employees required to help pay health care
All health insurance plans must cover
- Outpatient care
- Emergency Services
- Hospitalization
- Maternity and newborn care
- Mental health and addiction
- Prescription drugs
- Rehab
- Lab services
- Preventitive services
- Pediatric services
5 Levels of health care plans
Catastrophic- Insurer Pays for less than 60% of total average cost of care. Only available if under 30
Bronze- Pays 60% on average and insured pays 40%
Silver Plans- Pays 70% and insured pays 30%
Gold- Pays 80% on average and insured pays 10%
Platinum- Pays 90% and insured pays 10%
Deductibles / Max out of pocket
Deductible- Amount insured must pay before plan pays anything
Annual deductibles unlike car insurance
Max out of Pocket- Set amount in which the insurer will become liable for all expenses past
Coinsurance vs copayment
Percent of expenses paid by insurance company once deductible is met
Usually applies up to a maximum out of pocket amount (13,100 for 2017) and then all other expenses are covered
Copayment- Set amount insured will pay for a service
Does not apply to the maximum out of pocket or coinsurance
Health Savings Plans
Eligible to participate if:
- In a High deductible plan
- Not enrolled in Medicare (if over 65 probably covered by SS)
- Cannot be claimed as dependent
Used for qualified medical expenses
Can save up to $3,400 for individual, $6,750 for family (55 can put in additional $1000)
May hold other coverage outside of High deductible plan if it is for:
Accidents, disability, dental, vision or long term care
Qualified Medical Expenses
Typically Include Expenses for:
- Diagnosis, cure, mitigation, treatment or prevention of disease
- including drugs, transport to hospital and qualified long-term care
Does not include premiums unless for:
- Long-term care insurance or if unemployed
- Also if employer does not pay a portion of the cost
If over 65 then includes:
Medicare part A and B, Medicare HMO, and employee sponsored coverage
HSA Trust or Custodial Requirements
Cash contributions only unless its a rollover
Rollovers are not subject to a maximum annual contribution limit
One rollover of an IRA to an HSA is permitted
Qualified retirement plans, HRAs and Flexible spending accounts are not permitted to be rolled over into an HSA
Account owner must request withdral if over contribution max
HSA Distributions
If used for qualified medical expenses then tax free
Not used is assessed 20% penalty along with regular income tax
20% tax does not apply if over 65, someone dies, disability occurs
Do not have to designate whether disbursement is for payment or reimbursement of medical expenses but should keep track to avoid tax
If death occurs:
- HSA is moved to spouse if spouse is named beneficiary
- Nonspousal beneficiary receives assets but is taxed on FMV
- To the estate, the HSA assets are included as income on final tax return
HSA contributions may be claimed as a deduction and are not subject to payroll taxes
Assets accumulate tax free
No annual distribution requirement
ERISA does not require a company to act as fiduciary of an HSA
Employer contributions are not subject to payroll tax
Chapter 1 review Qs
- List categories of coverage and avg % of costs each covers.
Platinum: 90% insurer, 10% insured Gold: 80%, 20% Silver: 70, 30 Bronze: 60, 40 Catastrophic: less than 60%
- Explain how a deductible works
- Insured has to pay for all medical expenses (unless a copayment) until they hit the deductible - Coinsurance vs copayment?
- Coinsurance is the amount that the employer will pay of bills exceeding deductible up to the Max out of pocket limit (13,100)
- Copayment is a specific dollar amount that an insured may have to pay for a service such as a doctors visit - What is a HSA?
- Account that can be used to pay for qualified expenses and premiums for those in assisted living/unemployed - 4 advantages of an HSA
- Able to save for medical expenses, tax deferred, tax deductible, no tax on employer contributions - 4 advantages for an employer
- Lower health care costs, tax deductible, salary reduction contributions allowed (reduces payroll tax), and not technically the fiduciary
Chapter 2: Planning for incapacity
Wills- Only specify what happens after death
If not planned, court decides who will act for the person
Incapacity Planning must address:
- Management of client property
- Decision making for clients personal and medical care
Management of Property
- POA- Person granting authority is principal
Person receiving authority is agent
General POA is not sufficient as it ends with death or incapacitation
Durable POA would stay effective until death
- Trusts
- Doesn’t require a court appearance and keeps financial affairs private
Revocable living trust- Manages assets before incapacity occurs
Contingent- Funding occurs after incapacity, only a shell where assets could be transferred.
Must grant a durable POA to move assets into trust
- Conservator
- Court appointed person to look over property
- Must go through court proceeding to determine incapacity of the principal
- May also have to post a performance bond
Personal and Medical Care Decision Making
- Living Wills
- Revocable document to make known wishes regarding long-term care
- Must be written, signed and witnessed by non family
- Applies only when death is imminent - Durable POA for Health Care (Medical Proxy)
- Gives an individual the right to determine what treatment to give
- Also applies to non terminal decisions
- Could be non-immediate. If so, then it springs forth when principal is deemed unable to communicate by two doctors
Chapter 2 Review
- Describe role of conservator and drawbacks.
- Conservator is appointed by the court after an individual becomes incapacitated to look over property ownership. Major drawback to this are that the principal must be determined to be incapacitated in a public hearing and may have to post a performance bond - Explain following terms
A. General POA- Loses effect upon incapacity
B. Durable POA- Stays effective
C. Revocable Living Trust- Takes in funds before incapacity
D. Contingent- Account opened for assets to be put into upon incapacity by a Durable POA - Living will and limitations?
- Details what medical treatment a principal may want when it comes to long term care. Applies only when it is a terminal disease and can cause conflict between care giver and family. - Durable POA vs living will?
- Durable POA is able to appoint an individual to make medical decisions. Decision making can even start before incapacity
Chapter 3 Medicare Overview
- Provide medical care to elderly and disabled
- Paid for by payroll taxes
- Plan can pay for roughly 50% of expenses
- Benefits provided in three areas A, B, and D
- C is Medicare Advantage, and allows private insurance companies to provide
Vocabulary of Medicare
Benefit period- Once out of a hospital for 60 consecutive days, a new deductible would have to be paid
Coinsurance- Once the deductible is met, a specific amount of the total that the insured must pay
Coverage Gap (part D)- Must pay full price of a drug after passing base coverage and until hitting annual limit
Deductible- Amount that must be incurred before coinsurance kicks in
Medicare Part A (usually originate from hospital stay)
Eligible after hitting 65 in most cases
Also eligible if disabled 24 months or if suffering from end stage renal disease
Not affected by earnings
Must be fully insured under social security or railroad retirement benefit
Could buy if not qualified due to not working 40 Quarters
If not receiving SS then must apply
Should enroll during initial enrollment period (7 month period around 65th birthday)
If working and covered by insurance, apply within 8 months of the end of service (special enrollment)
If miss enrollment, pay 10% penalty of premium and apply during 1st quarter of following years
Premiums are usually free if fully covered
Do not need to sign up every year
Part A services covered
- Inpatient hospital care
- Include room, meals, nursing, operating/recovery room, intensive care, lab tests, X-rays
- $1,316 deductible for first 60 days, $329 per day on days 61-90, $658 per day 91-150th day, All expenses beyond 150 days - Skilled nursing care
- Will provide for rehab for 100 days on a skilled nursing level if go to hospital for 3 days.
- $0 for first 20 days
- Pay coinsurance during 21-100 day period
- Posthospital Home Health Care
- Fully covered for 100 visits for each benefit period
- Full time care, food, blood, and drugs are not provided
- Must be needing treatment and periodic review by a physician
- Hospice Care-
- Provided for those with life expectancy of less than 6 months
- Medicare pays for all non-related disease treatments
- $5 copay for drugs and pain relief
- 5% copay of respite care costs
- Blood
- Patient pays for first three pints, after pays for nothing - Inpatient care at a religious medical institution
Medicare Part B (Physician’s coverage)
Covers: Preventative Care, Lab tests, x-rays, mental health and some home health care.
Monthly premium: $134 to $428
Annual deductible of $183
Pays 80% of approved charges (50% for mental health)
NO OUT OF POCKET LIMIT
Could decide to not approve, but there is a 10% premium penalty every 12 months that you delay (unless working, then 8 months after end of work)
Part B Coverage (Do not originate from hospital stay)
Includes the following:
- Doctors services (preventitive care)
- Ambulance services
- Durable medical equipment
- Blood
- Mental health
- Home health services
- X-rays and lab tests
- limited perscription drugs
- annual wellness visits
Does not include-
- Most dental/drugs, eye exams, cosmetic surgery, acupuncture, long term care
- Flu and pneumonia vaccines
- Mammograms, Pap smears, pelvic exam, certain lab tests
If the doctor does not accept Medicare, the patient could have to pay up to an additional 15% on top of the coinsurance
Max amount legally allowed to charge is 115% of Medicare amount
Medicare Part D
Premium- Around $42/month, based on monthly means
Deductible- $400
Donut Hole- Co-insurance up to $3,700 is 25% out of pocket. Once above $7,725, coinsurance begins again at only 5% out of pocket. Between $3,700 and $7,725 no help.
Individuals in coverage gap pay 40% of brand-name covered drugs, 50% of generics due to Affordable care act
Medigap (Private Business/Part C) does not offer a prescription drug coverage
Plans are made available through private companies who have contracts with Medicare
Pay 1% per month penalty for delaying premiums, never goes away like part b
-Do not pay penalty if covered by employer or if low-income
Chapter 3 Review
- Eligibility requirements for receiving Medicare?
- 65 or older, disabled or victim of Kidney Failure - Explain Part A and B benefits
A- Inpatient health care, posthospital skilled nursing, hospice, blood.
B- Supplemental medical insurance for physician services. $183 deductible, 20% out of pocket - Who receives benefits under Parts A and B?
- Anyone fully insured over 65 for Part A plus some others who pay for it.
- Part B only receive if paying monthly premiums - Benefit period and Why?
- In hospital to 60 days out. Important because you have to pay new deductible each new benefit period
Chapter 4: Medigap Strategies
Four strategies for filling gap between Medicare coverages:
- Using Medicare Part C
- Maintaining coverage through employer
- Qualifying for state assistance for low income seniors
- Purchase medigap insurance
6 significant Medigaps
- Deductible for Part A ($1,316 for inpatient care) and B ($183)
- Cost of extended hospitalization under Part A ($329 past 60 days, 658 past 90 days, full cost after 150)
- Coinsurance (20%) on doctor services
- Excess costs of part B approved charges
- Self-administered perscription drugs
- Nursing home costs
Medigap Insurance Plans
Review Pre Test in book page 44-45
- Standardized policies often sold under a letter
- May only purchase one plan
- Does not work in tandem with Medicare Part C and will not cover spouse
- Vision/Dental is typically not included
- All plans cover full amount of part A coinsurance and hospital costs
- All Plans cover either all of majority of Part B coinsurance, blood and hospice care coinsurance/copay
- C through N offer shilled nursing facility care coinsurance
- B though N offers Part A deductible
- C and F cover B Deductible
- F and G offers excess charge coverage
- C through G and M,N offer foreign travel emergency coverage
- At home recovery covered in D through G
E, H, I, J are not packages
F has highest premiums
K,L must hit a dollar point to get covered
Medigap Age-Based/Community Based Pricing
Community based- Same price for all ages
Age based= Younger the lower
Premiums can vary state to state, company to company
May want to check rating of insurer on Ambest.com
Best rating is A++, D is basically the worst (E = under supervision, F= liquidation)
Should try to get an A- plan at least, B’s should be cautious
Chapter 4 Review
- What is Medigap?
- Insurance for out of pocket costs not covered by Medicare - What is aim of medigap insurance and how is it categorized?
- Aim to lower out of pocket costs, and clasified into different letters depending on what services are offered
