Module 6

Question 1

Power of Attorney - def & main features 2

Answer 1

A written document executed by one person (the principle) authorizing another (attorney-in-fact) to act on his behalf
Must be a written document
Must be structured and established prior to incapacity

Question 2

Attorney-in-fact - def

Answer 2

Receives authorization

Question 3

Principle - def

Answer 3

Gives authorization

Question 4

General power of attorney - main features

Answer 4

Ends upon the incapacity of the principle, thus making it an ineffective tool for incapacity planning. Useful for giving someone temporary authority to do something such as buying a house.

Question 5

Durable power of attorney - main features

Answer 5

Does not cease upon the incapacity of the principle, thus making it an effective tool for incapacity planning

Question 6

Springing power of attorney - def

Answer 6

The agent’s authority begins upon incapacity of principle

Question 7

Conservator - def

Answer 7

An guardian appointed by a court to be a fiduciary to manage the financial and property affairs of someone who is legally incapacitated (such as a minor) or mentally incapacitated, as proven by a court.

Question 8

Disadvantages of conservatorship 2

Answer 8

Court may require a competency hearing for incapacitated adults
May have hefty legal fees

Question 9

Living will - def

Answer 9

A revokable will giving life-sustaining medical directives related to hydration, respiration, and nutrition.

Question 10

Durable power of attorney for health care (medical proxy) - def

Answer 10

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

Question 11

Medicare part A - Eligibility requirements 4

Answer 11

Age 65 and eligible for social security
Age 65 and dependent or survivor of a person entitled to part A
After entitlement to disability benefits for 24 months
U.S. citizens age 65+ enrolled in part B paying for part A

Question 12

Medicare - general def

Answer 12

Government provided health insurance not affected by assets or income consisting of multiple parts: A for Hospital, B for physician, and D for drugs.

Question 13

Medicare part A - benefits 5

Answer 13

Hospitalization
Skilled nursing care
Home health care
Hospice
Blood

Question 14

Medicare part A - gaps 3

Answer 14

Deductible
Co-payment
Costs beyond benefits provided (extended medical stays, long term care, etc.)

Question 15

Medicare Part A - Cost to patient 5

Answer 15

Days 1-60 - $1156 deductible
Days 61-90 - $289 per day co-pay
Days 91-150 - $578 per day co-pay (one time 60 day use)

Question 16

Medicare part B - eligibility requirements 2

Answer 16

All persons eligible for part A

U.S. citizens over age 65 paying premiums

Question 17

Medicare part B - benefits 7

Answer 17

Physician services 
In and out patient medical services and supplies
Physical and speech therapy
Ambulance
Home health care
Hospital outpatient
Blood

Question 18

Medicare part B - Gaps 3

Answer 18

Deductible
Coinsurance costs greater than medicare-approved charges
Care not provided - routine physicals, eyeglasses, hearing aids, dental care, prescriptions, outside hospital, vaccines, nursing home

Question 19

Medicare part B - costs to patient 4

Answer 19

Medical services - $140 annual deductible + 20% co-pay of the approved amount
Home health care - $0 for services, 20% for durable medical equipment
Outpatient hospital care - same as medical services
Blood - first 3 pints + 20% of remaining amount

Question 20

Medicare part D - Benefit

Answer 20

Prescription drug coverage

Question 21

Annual costs to patient 4

Answer 21

Deductible - $320
Co-pay - $652.50 for $2610 of coverage
Donut hole - $3727.50
Excess of donut hole - 5% copay

(costs reset annually!)

Question 22

Actual charge - def

Answer 22

Amount physician will charge

Question 23

Approved amount - def

Answer 23

Amount medicare will base its payment on (which may be less than the actual charge)

Question 24

Benefit period - def

Answer 24

Relating to part A, how many days an individual will be covered. Starting on the day that the individual receives covered care and ending 60 consecutive days after he leaves the facility.

Question 25

Co-insurance - def

Answer 25

The portion or percentage of the medicare-approved amount that the beneficiary pays

Question 26

Deductible - def

Answer 26

the amount of expense a beneficiary must first incur before medicare begins payment for covered services

Question 27

Excess charge - def

Answer 27

The difference between the medicare-approved amount for a service or supply and the actual charge

Question 28

Medicare Advantage Plan - def

Answer 28

Medicare part C created by the balanced budget act of 1997, which includes policies from Health Maintenance organizations (HMOs), Preferred provider organizations (PPOs), and Provider Sponsored Organizations (PSOs)

Question 29

Eligibility requirements for Medicare Advantage Plans (Part C)

Answer 29

• Enrolled in Medicare parts A and B
• Cannot have End-stage renal disease
• Must live in an area where a Medicare Advantage plan is available

Question 30

Advantages of Medicare Advantage Plan (part C) 4

Answer 30

• Cover benefits not covered by traditional medicare (drugs and eyeglasses)
• Predictable out of pocket costs
• No need for a medigap policy
• greater emphases on preventive care

Question 31

Disadvantages of Medicare Advantage Plan (Part C)

Answer 31

• Benefits may be limited, or denied, if network providers are not used
• Benefits are limited to emergency care if outside the service area
• HMOs can terminate programs

Question 32

Short term disability income insurance - def

Answer 32

Provides benefits for disabilities for up to two years (generally six months) and has a waiting period of 0-7 days. Generally only available in a group policy.

Question 33

Long term disability coverage - def

Answer 33

Disability insurance that protects for a longer period of time, usually until age 65 in the case of an illness and until life in the event of an accident. Waiting periods are 30 days - two years.

Question 34

Occupational Classification - def

Answer 34

The risk category the insurance company’s underwriters put people into, determined by occupation. Going from poor to best: blue collar, white collar, professional.

Question 35

Any occupation (disability) - def

Answer 35

Only pays benefits if the individual is incapable of performing any occupation

Question 36

Modified any occupation (disability) - def

Answer 36

Only pays benefits if the insured is incapable of performing any work appropriate to his level of training, education, and pay.

Question 37

Own occupation (disability) - def

Answer 37

Pays benefit if the insured is incapable of performing his own occupation

Question 38

Elimination period - def

Answer 38

The the period after a claim is submitted and before the policy will pay out benefits. Like a deductible in that it makes the insured pay for part of the costs before benefits are paid.

Question 39

Probation period - def

Answer 39

The period of time the policy must be inforce before it will cover certain perils. This protects the insurer from providing benefits for preexisting conditions

Question 40

Max benefit that a high-income applicant is likely to be offered in a disability policy

Answer 40

2/3 of gross income excluding bonuses and stock options

Question 41

Residual disability - def

Answer 41

Makes up for lost income when the insured is unable to work full-time. Pays benefits in proportion to the income lost and often requires a period of total disability.

Question 42

Key policy features in selecting an LTC policy 4

Answer 42

• Elimination period
• Max benefit period
• Daily benefit amount, and
• Inflation protection

Question 43

Role of Medicare in LTC

Answer 43

Not much. May provide care after a stay in a hospital, but the nomber of covered nursing home days and hours-per-day are limited

Question 44

ADLs - def and implication for receiving LTC benefits

Answer 44

• Dressing
• Bathing
• Toileting
• Continence
• Transferring (chair to bed, bed to chair)
• Eating

Inability to perform any two of these ADLs triggers benefits.

Question 45

Health Savings Account (HSA) - def

Answer 45

A tax exempt trust or custodial account established by an individual or employer with a bank or insurance company for the purpose of paying qualified medical expenses of the owner, his spouse, or dependents.

Question 46

Advantages of HSAs for an individual 4

Answer 46

• An individual may claim an income tax deduction for cash contributions made to an HSA, even if he doesn’t itemize deductions.
Interest and earnings on amounts held in an HSA accumulate tax free
• Employer contributions to an HSA on behalf of an employee-account owner do not result in taxable income
• Distributions from an HSA to an account owner are tax free as long as they are used to pay for qualified medical expenses.

Question 47

Advantages of HSAs for an employer 4

Answer 47

• Employer contributions are deductible for income tax purposes
• Employer contributions to an are not subject to payroll taxes
• EMployee salary ralary reduction contributions may be made to the HSA feature that is part of an employer-sponsored cafeteria plan. Salary reduction contributions are not subject to payroll taxes
• Employers may be able to redesign their existing health plans to take advantage of the HSA rules.