Private Insurance Plans for Seniors

Question 1

Medicare Supplements

Answer 1

is health insurance that provides coverage to fill the gaps in Medicare coverage.

Question 2

Medicare Select

Answer 2

is a type of Medicare supplement (Medigap) plan sold in some states that can be any of the standardized Medigap plans (A-N) but which requires policy holder to receive services from within a defined network of hospitals and - in some cases - doctors in order to be eligible for full benefits.

Question 3

Medicare Part D

Answer 3

is a program that offers a prescription drug benefit to help Medicare beneficiaries pay for the drugs they need. The drug benefit is optional and is available to anyone who is entitled to Medicare Part A or enrolled in Part B. This benefit is available through private prescription drug plans (POPs) or Medicare Advantage (PPO) plans.

Question 4

Long-Term Care Insurance

Answer 4

refers to the broad range of medical and personal services for individuals (often the elderly) who need assistance with daily activities for an extended period of time.

Question 5

Skilled Nursing Care

Answer 5

is daily nursing care ordered by a doctor; often medically necessary. It can only be performed by or under the supervision of skilled medical professionals and is available hours a day.

Question 6

Custodial Care

Answer 6

is the level of health or medical care given to meet daily personal needs, such as dressing, bathing, getting out of bed, and soon. Though it does not require medical training, it must be administered under a physician’s order.

Question 7

Home Health Care

Answer 7

is skilled or unskilled care provided in an individual’s home, usually on a part-time basis.

Question 8

Adult Day Care

Answer 8

is a type of care (usually custodial) designed for individuals who require assistance with various activities of daily living, while their primary caregivers are absent. Offered in care centers.

Question 9

Respite Care

Answer 9

is a type of health or medical care designed to provide a short rest period for a caregiver. Characterized by its temporary status.

Question 10

Core Benefits

Answer 10

All Medicare Supplement plans cover coinsurance on hospital costs, up to an additional 365 days after Medicare Part A hospital benefits run out.

Question 11

Long-Term Care Partnership Programs

Answer 11

The Long-Term Care Partnership Program is a Federally-supported, state-operated initiative that allows individuals who purchase a qualified long term care insurance policy or coverage to protect a portion of their assets that they would typically need to spend down prior to qualifying for Medicaid coverage.

Question 12

Continuing Care

Answer 12

Designed to provide a benefit for elderly individuals who live in a continuing care retirement community.

Question 13

Medicare Supplement Policies (Medigap)

Answer 13

• Medicare Supplement (Medigap) insurance is specifically designed for individuals by the age of 65 who have enrolled in Medicare however, anyone currently receiving Medicare Parts A and B is eligible to participate in a Medigap policy
• Medicare in-hospital deductible is addressed with Medicare Supplemental Insurance
• A Medigap policy is a Medicare supplement insurance policy sold by private insurance companies to cover medical costs not covered by the government in Medicare Parts A and B.
• Medigap policies do not pay costs for Medicare Parts C and D
• As of June 2010, there are 10 standardized Medigap plans. Each of the 10 plans has a letter designation of A, B, C, D, F, G, K, L, M, or N
• These policies were standardized by the National Association of Insurance Commissioners (NAIC) to help consumers understand and compare them and make informed buying decisions
• These standards can be found in NAIC’s Medicare Supplement Insurance Minimum Standards Model Act
• Medicare Supplement policies sometimes provide preventative medical care benefits such as annual physical exams
• A Medicare Supplement policy must NOT contain benefits which duplicate Medicare benefits
• Individuals over 65 who have just enrolled in Medicare Part B for the first time cannot be refused a Medicare Supplement policy and cannot be rated if they apply for coverage within 6 months of Part B enrollment (in other words, Medicare Supplements must be guaranteed issue during open enrollment)
• All Medicare supplement policies must be guaranteed renewable and can only be canceled by the insurer for nonpayment of premiums
• Hospice care is included in most standard Medicare Supplement insurance policies
• Hospice care typically offers a family counseling benefit
• Medicare Supplement policies typically provide foreign travel emergency health care coverage as a core benefit when you travel outside the U.S.
• Coverage for Medicare Part B excess charges is a Medicare Supplement additional benefit.
• Medicare Supplement Plans F and G are the only Medicare Supplement insurance plans that cover costs known as Medicare Part B excess charges
• An excess charge is the difference between what a doctor or provider charges and the amount Medicare will pay
• In general, the following six minimum standards apply to all policies designated as Medicare Supplement Insurance.

o The policy must supplement both Part A and Part B of Medicare

o The policy must automatically adjust its benefits to reflect statutory changes in Medicare

o The policy must cover all expenses not covered by Part A from the 61st to the 90th day. Furthermore, it must cover the lifetime reserve copayment and must provide full coverage for an additional 365 days after Medicare benefits are exhausted.

o If the policy excludes coverage for preexisting conditions, the exclusion cannot exist for longer than six months. That is, no coverage can be denied as a preexisting condition after the policy has been in effect for six months.

o Part B expenses not covered by Medicare (that is, the 20% co-payment) must be covered by the Medigap policy. However, policies may include a deductible before this benefit becomes payable.

o The policy must include a minimum 30 day free-look provision.

Question 14

Core Benefits

Answer 14

All Medicare Supplement plans cover coinsurance on hospital costs, up to an additional 365 days after Medicare Part A hospital benefits run out. All Medigap policies also cover at least part of these costs:

• Medicare Part A hospice coinsurance or copayment
• Medicare Part B coinsurance or copayment
• First 3 pints of blood received as a hospital inpatient

Question 15

Medicare Select

Answer 15

Medicare Select Coverage means Medicare supplement coverage through a preferred provider organization (PPO) or any other type of restricted network whose coverage has been approved by the state. A PPO is a health care provider or an entity that contracts with health care providers that establish alternative or discounted rates of payment and offers the insureds certain advantages for selecting the member providers. Examples of Medicare Select organizations include provider groups, hospital marketing plans, and groups that are formed or operated by insurers or third-party administrators. An insured must choose providers that belong to a network (except in cases of emergencies).

• With a Medicare Select plan, the insured agrees to use preferred providers, and in exchange, pay a lower premium

Question 16

Medicare and Managed Care

Answer 16

There are a number of Managed Care Organizations (MCOs) that have contracted with the Health Care Financing Administration to provide both Part A and Part B services to Medicare recipients. Medicare managed care plans are offered by private companies. A company can make a plan available to everyone with Medicare in a state or only be open in certain counties. A company also may choose to offer more than one plan in an area providing different benefits and costs. Each year a managed care company can decide to join or leave Medicare.

Question 17

Medicare Part C (Medicare Advantage)

Answer 17

Medicare Advantage Plans are Medicare provided by an approved Health Maintenance Organization or Preferred Provider Organization. Some of these plans do not charge premiums beyond what is paid by Medicare and others do. These are coordinated care plans that generally offer people with Medicare additional benefits and coordinated care beyond the standard Medicare coverage (such as eye exams, hearing aids, dental care, and prescription drugs).

Another choice is a Private Fee For Service (PFFS) Plan. In this type of plan an individual may go to any Medicare-approved doctor or hospital that accepts Medicare payments. The insurance plan, rather than the Medicare Program, decides how much it will pay and what the Medicare enrollee pays for the services rendered. The plan could include extra benefits that are not covered under the original Medicare plan.

• HMO’s, PPO’s, and Private Fee-For-Services are all types of a Medicare Advantage Plan
• In addition to the premium, Medicare Advantage enrollees normally must pay a small copayment per visit or per service
• Medicare Part C does NOT cover long-term care

Question 18

Medicare Part D

Answer 18

Medicare Part D is a prescription drug plan administered by one of several private insurance companies, each offering a plan with different costs and lists of drugs that are covered. Participation in Part D requires payment of a premium and a deductible.

Question 19

LONG-TERM CARE INSURANCE

Answer 19

Nursing home care is often covered by long-term care insurance. However, long-term care (LTC) refers to a broad range of medical, personal, and environmental services designed to assist individuals who have lost their ability to remain completely independent in the community.

• Although care may be provided for short periods of time while a patient is recuperating from an accident or illness, LTC refers to care provided for an extended period of time (normally more than 90 days).
• Depending on the severity of the impairment, assistance may be given at home, at an adult care center, or in a nursing home.
• It is similar to most insurance plans in that the insured receives specified benefits in the event long-term care is required
• Most LTC policies pay the insured a fixed dollar amount for each day the policy covers, regardless of what the care costs

Question 20

Long-Term Care Coverages

Answer 20

• As individuals age, they are likely to suffer from acute and chronic illnesses or conditions. An acute illness is a serious condition, such as pneumonia or influenza, from which the body can fully recover with proper medical attention. The patient may also need some assistance with chores for short periods of time until recovery and rehabilitation from the illness are complete.
• Some people will suffer from chronic conditions, such as arthritis, heart disease, or hypertension, which are treatable but not curable illnesses
• Over time, a chronic condition frequently goes beyond being a nuisance and begins to inhibit a person’s independence
• Most long-term care insurance policies will pay benefits when you cannot perform at least two Activities of Daily Living (ADL).

Question 21

• The Activities of Daily Living

Answer 21

are a series of basic activities performed by individuals on a daily basis necessary for independent living at home or in the community. There are many variations on the definition of the activities of daily living, but most organizations agree there are 5 basic categories.

1. Personal hygiene - bathing, grooming and oral care
2. Dressing - the ability to make appropriate clothing decisions and physically dress oneself
3. Eating - the ability to feed oneself though not necessarily to prepare food
4. Maintaining continence - both the mental and physical ability to use a restroom
5. Transferring - moving oneself from seated to standing and get in and out of bed

Question 22

Categories of long-term care

Answer 22

• Skilled nursing care is continuous, around-the-clock care provided by licensed medical professionals under the direct supervision of a physician. Skilled nursing care is usually administered in nursing homes.
• Intermediate nursing care is provided by registered nurses, licensed practical nurses, and nurse’s aides under the supervision of a physician. It’s provided in nursing homes for stable medical conditions that require daily, but not 24-hour, supervision.
• Custodial care provides assistance in meeting daily living requirements, such as bathing, dressing, getting out of bed, toileting, and so on.

Question 23

Home and Community-Based Services

Answer 23

Home health care is care provided in the insured’s home, usually on a part-time basis. It can include skilled care (e.g., nursing, rehabilitative, or physical therapy care ordered by a doctor) or unskilled care (e.g., help with cooking or cleaning).

Question 24

Adult Day Care

Answer 24

Adult day care is designed for those who require assistance with various activities of daily living, while their primary caregivers (usually family or friends) are absent

Question 25

Long Term Care Partnership Plan

Answer 25

The Long-Term Care Partnership Program is a Federally-supported, state-operated initiative that allows individuals who purchase a qualified long-term care insurance policy or coverage to protect a portion of their assets that they would typically need to spend down prior to qualifying for Medicaid coverage. The difference between a Long- Term Care Partnership Plan and a Non-Partnership Plan is asset protection

Question 26

Social Security PURPOSE

Answer 26

The Social Security system provides a basic floor of protection to all working Americans against the financial problems brought on by death, disability, and aging. Social Security augments but does not replace a sound personal insurance plan. Unfortunately, too many Americans have come to expect Social Security will fulfill all their financial needs. The consequence of this misunderstanding has been disillusionment by many who found, often too late, they were inadequately covered when they needed life insurance, disability income, or retirement income.

Social Security, also known as Old Age, Survivors, and Disability Insurance (OASDI), was signed into law in 1935 by President Roosevelt as part of the Social Security Act. Social Security was established during the Great Depression to assist the masses of people who could not afford to sustain their way of life because of unemployment, disability, illness, old age, or death.

Question 27

Social Security

WHO IS COVERED

Answer 27

Social Security extends coverage to virtually every American who is employed or self-employed, with few exceptions. Those not covered include:

• Most federal employees hired before 1984 who are covered by Civil Service Retirement or another similar plan
• Approximately 25% of state and local government employees who are covered by a state pension program and elect not to participate in the Social Security Program
• Railroad workers covered under a separate federal program called the Railroad Retirement System

Question 28

Social Security Payroll Taxes

Answer 28

• Funding for Social Security is collected from FICA payroll taxes.
• Social Security payroll taxes are collected from employers, employees, and self-employed individuals.
• FICA tax is applied to an employee’s income up to a certain income amount. This amount is called the taxable wage base.
• There is a maximum amount of earnings that can be subject to Social Security tax each year. This amount is indexed each year to the national average wage index. This maximum applies to employers, employees, and self-employed individuals. Medicare Part A taxes are not subject to a maximum taxable wage cap.

Question 29

Taxation of Social Security Benefits

Answer 29

• Social Security benefits are subject to federal income tax if the beneficiary files an individual tax return and his annual income is greater than $25,000.
• Joint filers will pay federal income tax on their Social Security benefits if their income is greater than $32,000.

Question 30

Calculating Benefits

Answer 30

• Based on the individual’s average monthly wage during his working years.
• The primary insurance amount (PIA) is used to establish the benefit. It is equal to the worker’s full retirement benefit at age 65.
• If a worker retires early, for example at age 62, his retirement benefits will be 80% of his PIA and will remain lower for the covered worker’s life.
• The PIA is based on the average earnings over your lifetime.

Question 31

TYPES OF OASDI BENEFITS Survivors Benefits

Answer 31

Social Security Survivors benefits or death benefits: pay a lump-sum death benefit or monthly income to survivors of deceased covered workers.

Survivor’s benefits: include a $255 lump-sum death benefit, surviving spouse benefits, child’s benefit, and parent’s benefit.

• A surviving spouse without dependent children is eligible for Social Security survivor benefits as early as age 60.
• Survivor benefits are also available to:

o A spouse of any age who is caring for children under age 16

o Children under age 18

o Children under age 19 who are full time students

o Children at any age if disabled before age 22 and remain disabled

• A Social Security benefit of 75% of the Primary Insurance Amount (PIA) is given to an underage child of a deceased worker.

Question 32

Disability Benefits

Answer 32

• Only available to covered workers who are fully insured,as defined by Social Security, at the time of disability.
• Disability income benefits are paid to the covered worker in the amount of the PIA after a 5-month waiting period.
• Only available prior to the age of 65
• Does not pay partial disability or short-term disability benefits
• Disability must be total and expected to last 12 months or end in death
• Benefits include monthly payments to the disabled worker, spousal benefits, and child’s benefits.
• Definition of Disability: In order to be considered totally disabled, an individual has to qualify according the following requirements:

o The inability to engage in any gainful work that exists in the national economy

o The disability must result from a medically determinable physical or mental impairment that is expected to result in early death, or has lasted, or is expected to last for a continuous period of 12 months

Question 33

Retirement Benefits

Answer 33

• Benefits are only available to covered workers who are fully insured upon retirement.
• Benefits are paid monthly.
• If a covered worker retires at the normal retirement age, he will receive 100% of the PIA.
• If a covered worker retires early at the age of 62, the maximum Social Security benefit is 80% of the PIA. This reduction remains all through retirement.
• Retirement benefits pay covered retired workers at least 62 years of age, their spouses and other eligible dependents monthly retirement income.
• Retirement benefits include monthly retirement payments to the covered worker, spousal benefits, and child’s benefits.

Question 34

Black-Out Period

Answer 34

• Benefits paid to the surviving spouse of a deceased person who was receiving Social Security.
• The “black-out period” begins when Social Security survivorship benefits cease.
• This is when the youngest child turns 16 years old, or immediately if there are no children.
• The “black-out period” ends when the surviving spouse turns at least 60 years old.