MODULE 5 NAVIGATING HEALTH CARE OPTIONS IN RETIREMENT

Question 1

LIST THE CATEGORIES OF COVERAGE & THE AVERAGE PERCENTAGE OF COSTS EACH COVERS

Answer 1

catastrophic plans: pay for less than 60% of the total average cost of care. only available to individuals under age 30 unless they qualify for a hardship exemption
bronze plans: pay for 60% on avg & insured pays 40%
silver plans: pay 70% on avg & the insured pays 30%
gold plans: pay 80% on avg & insured pays 20%
platinum: pay 90% on avg & insured pays 10%

Question 2

EXPLAIN HOW A DEDUCTIBLE WORKS

Answer 2

deductible is the amount that the insured must pay before the plan pays anything. deductibles do not apply to every service; e.g. preventative care & wellness benefits, such as mammograms & well-baby care, are paid 100% by the insurance company. health insurance deductibles are annual deductibles, not a per incident deductible.

Question 3

COINSURANCE VS. COPAYMENT

Answer 3

coinsurance is a % of the expenses that is paid by the insurance company once the deductible is met for covered services. a copay is a set amount that the insured will pay for a service e.g. a doctor’s visit. copay amt may or may not be applied to the annual deductibel or coinsurance percentage, depending on the plan.

Question 4

WHAT IS A HEALTH SAVINGS ACCOUNT (HSA)?

Answer 4

a tax-exempt trust or custodial account established by an individual or employer w/ a US financial institution (bank/ins company) for the purposes of paying qualified medical expenses of the account owner (participant), their spouse or dependents

Question 5

4 IMPORTANT ADVANTAGES OF AN INDIVIDUAL’S HSA

Answer 5

(1) an individual (AC owner) may claim an income tax deduction for cash contributions made to an HSA, even if such person does not itemize deductions on their income tax return. in contrast, medical expenses must exceed 7.5% of AGI in 2020 before they may be deducted by an individual as itemized expenses on their income tax return
(2) interest & earnings on amounts held in an HSA accumulate tax-free
(3) employer contributions to an HSA on behalf of an employee-account owner do not result in taxable income
(4) distributions from an HSA to an account owner are tax free as long as they are used to pay for qualified medical expenses

Question 6

4 IMPORTANT ADVANTAGES OF AN HSA TO AN EMPLOYER

Answer 6

(1) employer contributions to an HSA are deductible for income tax purposes
(2) employer contributions to an employee-account owner’s HSA are not subject to payroll taxes
(3) employee salary reduction contributions may be made to the HSA feature that is part of an employer-sponsored cafeteria plan
(4) employers may be able to redesign their existing health plans to take advantage of HSA rules. e.g. an employer might be able to reduce the premiums paid for an existing health plan by increasing the deductible and/or OOP costs. the reduction in premium costs could be used to fund separate HSAs established for employee-participants of the health plan.

Question 7

DESCRIBE THE CONSERVATOR’S ROLE AND DRAWBACKS OF THE CONSERVATOR APPROACH TO DEALING W/ INCAPACITY

Answer 7

a conservator (sometimes called a financial guardian) is a court appointed fiduciary responsible for managing the property & financial affairs of a legally or mentally incapacitated person.there are 2 problems w/ conservator approach to incapacity planning:

(1) the competency of the person in question must be determined through a court hearing, and
(2) the court may require the posting of a security bond for the conservator & require detailed reports & accounting to the court

Question 8

GENERAL POA

Answer 8

a POA is a written document executed by one person (the principal) authorizing another person to act on their behalf on any financial matter. a “special POA” or “limited POA” allows the principal to authorize another person to act on their behalf in a specific matter only.

the POA ceases when the principal dies or becomes incapacitated. thus, a general nondurable POA is no help when principle becomes incapacitated

Question 9

DURABLE POA

Answer 9

a durable POA does not cease upon incapacity of the principal, it ceases upon death. this makes it a more effective instrument for dealing w/ incapacity

Question 10

REVOCABLE LIVING TRUST

Answer 10

a trust set up on behalf of the grantor. assets are transferred into the trust before the grantor experiences any incapacity. it is operative & managed from the time it is established.

Question 11

CONTINGENT (STANDBY) TRUST

Answer 11

a legal shell. it is funded when the grantor becomes incapacitated. someone must have the legal authority to transfer the grantor’s assets to the trust & manage them on behalf of the grantor. this is a person w/ a durable POA (sometimes w/ a “springing” power)

Question 12

WHAT IS A LIVING WILL & WHAT ARE ITS LIMITATIONS?

Answer 12

allows a person to state in advance what life-sustaining medical measures should be taken by a health care provider if the maker of the living will is incapable of consenting to treatment, the situation is terminal & death is imminent

Question 13

EXPLAIN HOW A DURABLE POA FOR HEALTH CARE DIFFERS FROM THE LIVING WILL

Answer 13

a durable POA for health care authorizes an agent to make health care decisions on behalf of the principal. unlike the living will, which applies only to life-sustaining treatment in terminal situations, this medical proxy is not limited to terminal situations but ALL health care situations in which the principal is incapable of giving informed consent

Question 14

ELIGIBILITY REQUIREMENTS FOR RECEIVING MEDICARE BENEFITS

Answer 14

(1) available to all US citizens who are age 65+
(2) disabled (according to the SSA’s stringent definition)
(3) victims of permanent kidney failure

Question 15

MEDICARE PART A

Answer 15

provides insurance for inpatient hospital care

(1) posthospital skilled nursing care
(2) home health care
(3) hospice care for the terminally ill
(4) psychiatric hospital care
(5) blood

most of these benefits are limited. e.g. inpatient hospital care will pay up to 90 days of hospitalization per benefit period, w/ a 60 day lifetime reserve

Question 16

MEDICARE PART B

Answer 16

provides supplemental medical insurance to help Medicare enrollees pay for physician services & other services not covered under Part A

ex. in 2020, after the patient pays the first $198 of physician charges & outpatient hospital care, Part B will pay for 80% of subsequent charges.
* also pays for 100% home health care costs

Question 17

WHO RECEIVES BENEFITS UNDER PARTS A & B?

Answer 17

benefits of Part A are provided to most Medicare enrollees; some exceptions when Medicare bene must pay a premium for Part A

Part B benefits are only available to people who pay regular monthly premiums

Question 18

FOR MEDICARE PURPOSES, WHAT IS A BENEFIT PERIOD & WHY IS IT IMPORTANT?

Answer 18

benefit period is VERY IMPORTANT in Part A Medicare coverage.

a benefit period begins when a patient first enters a hospital or covered facility, and ends when that patient has been out of that facility or another for 60 consecutive days.

this period is important bc each one involves a patient deductible.

e.g. if a patient is admitted to a hospital, goes home, but has a relapse 61 days after release, readmission to the hospital will initiate a new benefit period - and a new deductible for the patient

Question 19

MEDIGAP

Answer 19

describes the costs not covered by either part A or B of Medicare. these costs include deductibles, the cost of hospital stays that exceed the number of days covered by Part A, coinsurance pmts, any costs that exceed Medicare-approved charges, the cost of nonhospital prescription drugs, & the cost of nursing homes

Question 20

WHAT IS THE AIM OF MEDIGAP INSURANCE, & HOW IS IT CATEGORIZED TO HELP CONSUMERS COMPARE POLICIES?

Answer 20

Medigap aims to fill many of the gaps between the costs of healthcare & coverage provided by Parts A & B.

to help consumers make sense of a variety of competing insurance plans - which cover some charges & not others - these policies fall into 10 standardized packages labeled A through N (E, H, I & J no longer issued but may be grandfathered)

Question 21

MEDICARE ADVANTAGE PLANS

MEDICARE PART C

Answer 21

the Balanced Budget Act of 1997 created Medicare Part C (Medicare Advantage), which includes plans offered by health maintenance organizations (HMOs), preferred provider organizations (PPOs), and provider-sponsored organizations (PSOs)

Question 22

WHO IS ELIGIBLE FOR MEDICARE ADVANTAGE PLANS?

Answer 22

to be eligible for Part C, an individual:

(1) must already have Parts A & B,
(2) cannot have end-stage renal disease (ESRD), &
(3) must live in a county or geographic area where a Medicare Advantage Plan is available

Question 23

ADVANTAGES & DISADVANTAGES OF MEDICARE ADVANTAGE PLAN

Answer 23

advantages:

(1) benefits not covered by traditional fee-for-service Medicare (drugs & eyeglasses)
(2) predictable OOP costs (w/ managed care plans)
(3) no need for Medigap policy
(4) greater emphasis on preventative care

disadvantages:

(1) limited or denied benefits, if network providers are not used
(2) when outside the service area, benefits may be limited to medically necessary & ER care
(3) HMOs can terminate programs

Question 24

MEDICAID

Answer 24

a joint federal & state program that picks up on the deductible & copayments ordinarily paid by Medicare enrollees

Question 25

MEDICAID ELIGIBILITY

Answer 25

limited to certain individuals w/ low incomes

Question 26

KEY POLICY FEATURES TO CONSIDER IN SELECTING A LONG TERM CARE POLICY?

Answer 26

similar to those considerations in disability income policies:

(1) elimination (waiting period) before which benefits are paid
(2) maximum benefit period (e.g. five years)
(3) the daily benefit (e.g. $100/day)
(4) inflation protection

LTC policy, however, has a unique provision: “providers of care”. some policies will pay benefits only if the person enters a nursing home; others stipulate that they will provide benefits for home care only, while others will pay for either

Question 27

ROLE OF MEDICARE IN LONG TERM CARE

Answer 27

Medicare does not provide much coverage for LTC. at the most, it will cover some of the cost of staying in a skilled nursing facility or at-home care that follows he release from a covered hospital stay. even in these cases the number of covered nursing home days & hours-per-day of at-home care are limited.

Question 28

ADLs & IMPLICATIONS FOR RECEIVING LTC BENEFITS

Answer 28

ADLs “ACTIVITIES OF DAILY LIVING”

• dressing
• bathing
• toileting
• continence
• transferring (ability to move in and out of a bed, chair, or wheel chair)
• eating

in a qualified LTC insurance policy, the inability to perform any 2 of these ADLs triggers the long-term care benefit

Question 29

AFFORDABLE CARE ACT

Answer 29

Patient Protection & Affordable Care Act of 2010, designed to make affordable coverage available to those who don’t have access to health insurance through an employer. 5 different coverage levels are offered: catastrophic, bronze, silver, gold, & platinum

Question 30

MEDICARE PRIVATE FEE FOR SERVICE PLAN (PFFS)

Answer 30

offered by private insurance companies, working with the Medicare system. coverage may or may not be available in a particular area. participants can receive care from any Medicare-approved doctor or hospital that accepts the terms of the plan’s payment.

care can also be received outside the individual’s service area. the insurance company (rather than Medicare) determines what the participant will pay for services received.

Question 31

MEDICARE SPECIAL NEEDS PLANS

Answer 31

specifically targeted for people living in nursing homes or who live at home yet require the same level of care as normally provided in a nursing home. participants must be both Medicare & Medicaid eligible, and have a specific chronic or disabling disease. these plans will frequently coordinate services from various providers

Question 32

MEDICARE PART D (PRESCRIPTION DRUG PLAN)

Answer 32

a plan in which individuals pay a monthly means-tested premium that varies based on the particular plan. average monthly premiums are around $42, and most plans require the individual to pay an annual deductible and a copay for each prescription.