Chapter 15: Long-Term Insurance

Question 1

Medicaid strategy

Answer 1

Spend down or gift assets to qualify for medicaid.
- 5 year look back
- purchase a 5 year LTC policy
Use the policy to pay for expenses while you gift or spend assets. If the policy qualifies for the partnership program whatever you spent in the 5 year period for LTC you can exclude that $ amount to qualify to medicaid.

Question 2

Aging population

Answer 2

The population aged 65 or over is the fastest-growing age group; today it represents about 13 percent of the population, a figure that is expected to increase to
between 20 percent and about 25 percent over the next 50 years. The segment of the population aged 85 and over is growing at an even faster rate.

Question 3

Percentage people using nursing homes

Answer 3

One percent of persons between the ages of 65 and 74 reside in nursing homes, and the percentage increases to 6 percent between the ages of 75 and 84. At age 85 and
over, the figure rises to approximately 25 percent.

Question 4

It is becoming more difficult for families to provide

long-term care for these reasons:

Answer 4

• geographic dispersion of family members
• increased participation in the paid workforce by women and children
• fewer children in the family
• more childless families
• higher divorce rates
• inability of family members to provide care because they, too, are growing old

Question 5

Look back period

Answer 5

Medicaid benefits are postponed if assets were disposed of at less than their fair market value within a specific time period (called the look-back period).
The Deficit Reduction Act of 2005 lengthens the look-back period from 3 years to 5 years for most transfers.

Question 6

Partnership Program

Answer 6

Several states have attempted to encourage better coverage for long-term care by waiving
or modifying certain Medicaid requirements if a person carries a state-approved long-term
care policy. Such a policy is part of a state partnership program under which insurers
issue long-term care insurance policies that meet requirements established by the state.

Question 7

Continuing care retirement communities (CCRCs)

Answer 7

• Growing in popularity
• Pay an “entrance fee” that allows them to occupy a dwelling unit but usually does not give them actual ownership rights.
• Residents pay a monthly fee that includes meals, some housecleaning services, and varying degrees of health care.
• A resident must be in reasonably good
  health and able to live independently at the time he or she enters the facility.
• Expensive

Question 8

Some Ways to Pay for Long-Term Care?

Answer 8

• Personal income and assets
• Family support
• Medicaid/public assistance programs
• Continuing care retirement communities
• Accelerated benefits in life insurance policies
• Long-term care insurance

Question 9

Long term care insurance

Answer 9

A form of health insurance that usually
provides coverage for custodial care and skilled-nursing care. Benefits may be provided for
care received in many different settings, including nursing homes, hospice facilities, assisted-living residences, at home, and in adult day care centers.

Question 10

Long Term Care Taxation

Answer 10

Health Insurance Portability and Accountability Act in 1996 (HIPAA) provides favorable tax treatment to long-term care insurance contracts that meet certain standards.

Question 11

qualified long-term care insurance contract. This is defined as any insurance contract that meets all the following requirements:

Answer 11

• The only insurance protection provided under the qualified long-term care insurance contract is for qualified long-term care services.
• The contract cannot pay for expenses that are reimbursable under Medicare.
• The contract must be guaranteed renewable.
• The contract does not provide for a cash surrender value or other money that can
be borrowed or paid, assigned, or pledged as collateral for a loan.
• All refunds of premiums and policyowner dividends must be applied as future reductions in premiums or to increase future benefits.
• The policy must comply with various consumer protection provisions.

Question 12

chronically ill individual is one who has been certified as meeting one of the following requirements, often referred to as benefit triggers:

Answer 12

• The person is expected to be unable to perform, without substantial assistance from another person, at least two activities of daily living (ADLs) for a period
of at least 90 days due to a loss of functional capacity. The act allows six activities of daily living: eating, bathing, dressing, using the toilet, maintaining continence,
and transferring in and out of a bed, chair, or wheelchair. A qualified long-term care insurance contract must contain at least five of the six ADLs.
• Substantial supervision is required to protect the individual from threats to health and safety because of severe cognitive impairment.

Question 13

Nursing Home Care

Answer 13

Nursing home care encompasses skilled-nursing care and custodial care in a licensed facility. Skilled-nursing care consists of nursing and rehabilitative care that can be performed only by, or under the supervision of, skilled medical personnel and must be based on a doctor’s orders.

Question 14

Bed Continuation Benefit

Answer 14

bed reservation benefit, which continues payments to a long-term care facility) if a patient temporarily leaves
because of hospitalization or any other reason. Without a continuation of payments, the bed may be assigned to someone else

Question 15

Assisted-living Care

Answer 15

Assisted-living care is provided in facilities that care for the frail elderly who are no longer able to care for themselves but do not need as high a level of care as a nursing home provides.

Question 16

Hospice Care

Answer 16

Hospice care does not attempt to cure medical conditions but rather is devoted to easing the physical and psychological pain associated with dying. In addition to providing services for the dying patient, a hospice may offer counseling to family members. A hospice may
be a separate facility, but this type of care can also be provided on an outpatient basis in the dying person’s home.

Question 17

Alzheimer’s Facilities

Answer 17

The states require long-term care insurance policies to cover Alzheimer’s disease and related forms of degenerative diseases and dementia under the same terms as they cover other conditions that qualify an individual as chronically ill. Therefore, coverage is provided if an individual receives services in a nursing home, in an assisted-living facility, or at home—as long as the policy covers the specific type of care. Most policies, however, have some specific reference to Alzheimer’s facilities.

Question 18

Home Health Care

Answer 18

Home health care includes part-time skilled-nursing care, therapy, and part-time services from home health aides. It also often includes help from a homemaker companion who is an employee of a state-licensed home health care agency. The companion may assist with such tasks as cooking, shopping, cleaning, bill paying, or other household chores.

Question 19

Respite Care

Answer 19

• the purchase or rental of needed medical equipment and emergency alert systems
• modifications to the home, such as a ramp for a wheelchair or bathroom modifications
• respite care, which allows occasional full-time care for a person who is receiving informal home health care. These persons are usually receiving care from a family member or friend. This benefit gives these caregivers needed time off. Respite care can be provided in a person’s home or by moving the person to a nursing facility or an assisted-living facility for a short stay

Question 20

Facility only policy

Answer 20

Many early long-term care policies were designed to provide benefits only if the insured was in a nursing home. This type of policy was frequently referred to as a nursing home policy. These policies still exist, but they frequently also provide benefits for care in other
settings, such as assisted-living facilities and hospices.

Question 21

Reimbursement Policies

Answer 21

The majority of newer policies pay benefits on a reimbursement basis. These contracts reimburse the insured for actual expenses up to the specified policy limit. For example, a policy with a daily benefit amount of $200 will pay only $150 if that was the insured’s actual charge for care.

Question 22

Per Diem Policies

Answer 22

The benefits selected are paid regardless of the actual cost of care. In this case, a policy with a daily benefit of
$200 will pay $200 even if actual long-term care charges for the day are only $150. Per diem contracts are seldom coordinated with any benefits that are payable under Medicare.

Question 23

Shared Benefit or Shared Benefit Rider

Answer 23

Under this concept, each spouse can access the other spouse’s benefits.