Navigating Health Care Options and Managing Risk in Retirement

Question 1

Ten Essential Health Benefits

Answer 1

(1) Outpatient care, (2) Emergency Services, (3) Hospitalization, (4) Maternity Care, (5) Mental health and addiction treatment, (6) Prescription Drugs, (7) Rehabilitative services and devices, (8) Lab Services, (9) Preventative Services, (10) Pediatric Services

Question 2

Categories of coverage

Answer 2

(1) Catastrophic: Insurance pays less than 60%, (2) Bronze: Insurance pays 60%, (3) Silver: Insurance Pays 70%, (4) Gold: Insurance pays 80%, and (5) Platinum: Insurance pays 90%

Question 3

Deductible

Answer 3

(1) A deductible is the amount the insured must pay before insurance pays anything. (2) Deductibles do not apply to every service for example wellness and preventative care. (3) Health insurance deductibles are annual deductibles, not per incident.

Question 4

Coinsurance

Answer 4

(1) Coinsurance is the percentage of expenses that is paid by the insurance company once the deductible is met. (2) Copayment is a set amount the insured will pay for certain services. (3) Copay may or may not be applied to the deductible, depends on the plan.

Question 5

Health Savings Account

Answer 5

(1) A Health Savings Account is a tax exempt trust or custodial account, (2) established by an individual or employer, (3) with a U.S. financial institution (like a bank or insurance company) (4) for the purpose of paying qualified medical expenses for the account owner, dependents, or spouses.

Question 6

Advantages of a Health Savings Account

Answer 6

(1) Income tax deduction for cash contributions, even if the person doesn’t itemize. As opposed to 7.5% medical expense itemized deduction, raised to 10% in 2013. (2) Employer contributions and salary reduction contributions are not subject to payroll taxes. (3) Employers may be able to redesign existing health plans to take advantage of the HSA rules by increasing deductibles and/or out-of-pocket expenses.

Question 7

Conservatorship

Answer 7

(1) A conservator is a court appointed fiduciary, (2) responsible for managing the property and financial affairs., (3) of a legally or mentally incapacitated person. (4) Problems with conservatorships include: the competency of the person in question must be determined in court, and the court may require the posting of a security bond for the conservator and require detailed reports and accounting to the court.

Question 8

General Power of Attorney

Answer 8

(1) A power of attorney is a written documented executed by one person authorizing another person to act on his or her behalf. (2) The authority of the power of attorney ceases when the person dies or becomes incapacitated.

Question 9

Durable Power of Attorney

Answer 9

(1) A durable power of attorney does not cease upon the incapacity of the principal (but ceases upon death.) (2) This makes it a more effective instrument for dealing with incapacity.

Question 10

Revocable Living Trust

Answer 10

(1) A revocable living trust is a trust set up on behalf of the grantor. (2) Assets are transferred into the trust before the grantor experiences any incapacity. (3) It is operative and managed from the time it is established.

Question 11

Contigent (Standby) Trust

Answer 11

(1) A contingent trust is merely a legal shell. (2) It is funded when the grantor become incapacitated. (3) This means someone must have the legal authority to transfer the grantor’s assets to the trust, (4) and manage them on behalf of the grantor. (5) This is a person with a durable (springing) power of attorney.

Question 12

Living Will

Answer 12

(1) A living will allows a person to state in advance what life-sustaining medical measures should be taken by a health care provider, (2) if the maker of the living will is unable to consent to treatment, the situation is terminal and death is imminent.

Question 13

Difference between Living Will and Durable Power of Attorney

Answer 13

(1) A durable power of attorney allows an agent to make health care decisions on behalf of a principal, (2) while the living will only applies to life-sustaining treatment in terminal situations. (3) The durable power of attorney applies whenever the principal is unable to give informed consent.

Question 14

Long-term versus Short-term disability coverage

Answer 14

(1) Short-term disability coverage provides benefits for disability for up to 2 years, (2) with 0-7 day elimination, and (3) only available as a group policy. (3) Alternatively, Long-term disability coverage extends for longer periods of time, (4) often until 65, (5) with waiting periods from 30 days to 2 years. (6) These may be group or individual.

Question 15

Occupational Classification

Answer 15

(1) Occupation classification refers to the category which underwriters place applicants for disability insurance, (2) according to the nature of their work. (3) Blue collar, white collar, professional. (4) Blue collars are seen as most likely to file a claim and least likely to return to work. (5) Until recently, professionals were seen as least likely to claim, and quickest to return to work.

Question 16

Noncancelable versus Guaranteed Renewal Policy

Answer 16

(1) A non cancelable policy guarantees the insured the right to renew (2) for a stated number of years or to a stated age, (3) with premiums and renewals guaranteed, (4) but not necessarily level. (5) Alternatively, a guaranteed renewal policy guarantees the right to renew, but (6) allowed insurers to raise premiums for a class of insured.

Question 17

Any occupation definition of a disability

Answer 17

(1) The any occupation definition is the strictest definition of a disability. (2) a policy with this definition only if the insured is incapable of seeking gainful employment.

Question 18

Modified any occupation definition of a disability

Answer 18

(1) The modified any occupation definition of a disability includes any gainful occupation for which the insured is reasonably fitted by: (2) education, (3) training, (4) experience, and (5) prior economic status.

Question 19

Own occupation definition of a disability

Answer 19

(1) Own occupation is the most liberal definition, (2) In this definition the policyholder is considered disabled if he or she is unable to engage in the principal duties of his or her occupation. (3) Any illness of occupation limiting the insured from engaging in his or her present occupation is considered disabling.

Question 20

Elimination period

Answer 20

(1) The elimination period is the waiting time between when the disability occurred and the premiums start. (2) It acts like a deductible, forcing the insured to bear part of the loss. (3) The longer the elimination period, the lower the premiums.

Question 21

Probation period

Answer 21

(1) The probation period is the period of time the policy is in force before it covers the insured for specific perils. (2) This protects the insurance company from having to cover preexisting conditions, if the individual wishes to purchases a policy, (3) while ill or recovering from an illness.

Question 22

Maximum disability benefit for high-income applicant

Answer 22

(1) The maximum benefit for high income applicants is 2/3 of gross income. (2) This usually does not cover non-base income like from bonuses or stock options.

Question 23

Partial Disability

Answer 23

(1) The definition for partial disability is usually the same as for total disability, except (2) that the insured is unable to engage in one or more of own or any occupational activities. (3) Benefits are usually 50% of total disability benefit, and usually lasts for (4) 3-6 months, and an (5) initial disability may be required.

Question 24

Residual Disability

Answer 24

(1) Residual disability make up income lost when the insured is unable to work in a full-time capacity. (2) Residual disability pay benefits that are proportionate to the income lost and (3) often requires an initial period of disability.

Question 25

Eligibility Requirements for Medicare

Answer 25

(1) Medicare benefits are available to U.S. Citizens, (3) Who are: 65 years or older, (4) disabled (according to the SS Administration’s stringent definition, (5) or victims of permanent kidney failure.

Question 26

Medicare Part A

Answer 26

(1) Part A provides insurance for inpatient hospital care, (2) post hospital skilled nursing care, (3) and home health care, (4) hospice care of the terminal ill, (5) psychiatric hospital care, and (6) blood. (7) Most of these benefits are limited. Like 90 days of hospital care per benefit period, with a 60 day lifetime reserve.

Question 27

Medicare Part B

Answer 27

(1) Part B provides supplemental medical insurance to held pay for physician and other services not covered by Part A. (2) Pays for 100% of home health care costs

Question 28

Medicare Part A/B eligibility

Answer 28

(1) The benefits of Part A are provided to most medical enrollees, (2) there are some exceptions where the medicare beneficiary pays a premium. (3) However, Part B is available only to those who pay a monthly premium.

Question 29

Medicare Benefit Period

Answer 29

(1) The benefit period is very important to Part A coverage. (2) A benefit period starts when the patient first enters the hospital or covered facility, and (3) ends when the person has been out of that facility or another for 60 days. (4) The period is important because it involves the patient’s deductible.

Question 30

Medigap

Answer 30

(1) Medigap describes the costs not covered by Part A or Part B. (2) The costs include deductibles, (3) the cost of hospital stays exceeding the number of days covered by Part A, (4) Coinsurance payments, (5) any costs that exceed Medicare approved charges, (6) non hospital prescription drugs, and (7) nursing homes. (8) There are 14 plans but all must provide A Medical.

Question 31

Medicare Part D

Answer 31

(1) Prescription Coverage (2) Do not delay receiving Part B or Part D, and may be as high as 1% per month of delay.

Question 32

Filling Medicare Part A and B Gaps

Answer 32

(1) Medicare Part C, (2) Employer coverage, (3) Medicaid, or Medigap

Question 33

Medicaid

Answer 33

(1) Medicaid is a joint state and federal program that (2) picks up deductibles and copayments ordinarily assumed by Medicare enrollees. (3) Eligibility is limited to those with low incomes (generally below 133% poverty.)

Question 34

LTCI

Answer 34

(1) Doesn’t make sense for the very wealthy or the poor. (2) Maybe we should mention that when we present FGAs and go into the insurance, and estate needs. (3) How much of an elimination period, which could be up to a year, depends on how long you are willing to pay for insurance. (4) Most people who require long-term care will need it on average for 3 years. (5) Catastrophic is long elimination with 10 to 20 years of coverage. (6) Most important for couples when the cost of both in lc might be too much of a burden. (7) Alternatives involve setting aside the typical premiums for that age group into a Roth, Mutual fund, or tax deferred annuity.

Question 35

Income Limits for Medicaid LTC

Answer 35

(1) Medicaid LTC will cover individuals with assets less than $2,000, which means you could divest everything. (2) Or $3,000 for 2 people, and $311 for each additional period. (3) With about a $1000/month income restriction. (4) There is a five year look back for divesting assets.

Question 36

Medicare Advantage Plans

Answer 36

(1) The Balanced budget act of 1997 created Medicare Part C or Medicare advantage, which offers plans from (2) HMOs (health maintenance), (3) PPO (preferred provider), and PSO (provider sponsored) (4) And established a Medicare savings account.

Question 37

Medicare Advantage Eligibility

Answer 37

(1) Must have Part A and Part B, (2) cannot have end-stage renal disease. (3) Must live where Medicare advantage is available.

Question 38

Medicare Advantage Benefits and Disadvantages

Answer 38

(1) Advantage: coverage of drugs and eyeglasses, out of pocket costs, no medigap, and greater emphasis on preventative care. (2) Disadvantages: HMOs may terminate coverage, limited coverage areas,

Question 39

Key features of LTC policies

Answer 39

(1) The elimination period, (2) The maximum benefit period, (3) the daily benefit, and (4) inflation protection, (5) home care or nursing home care coverage

Question 40

ADLs

Answer 40

(1) Activities of daily living, (2) dressing, (3) bathing, (4) toileting, (5) continence, (6) transferring, and (7) eating.