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A federal health insurance program designed specifically for people age 65 and over and for certain disabled people. Medicare is funded by payroll taxes. It extends the Social Security program beyond retirement, disability, and survivor benefits into the field of medical expense benefits. Coverage provided under Medicare is divided into four parts: A through D.


Medicare Part A (Hospital Insurance)

Covers institutional medical care, including inpatient hospital care, skilled nursing home care, post-hospital home health care, and hospice care. A special premium is required for coverage between age 65 and full retirement age. No premium is due once full retirement age is met.


Medicare Part B (Medical Insurance)

Covers physicians' services, outpatient hospital care, physical therapy, ambulance trips, medical equipment, and some preventive services. Part B provides supplemental coverage to Part A. Optional. Requires a premium payment. Those with Part C cannot also have Part B since Part C includes Parts A and B.


Medicare Part C ("Medicare Advantage")

Is a managed care plan alternative to original Medicare. Provided through commercial insurance companies, this all-encompassing plan combines the coverage of Parts A and B in managed care format similar to a PPO. Optional. Requires a premium payment.


Medicare Part D

Provided through Medicare-approved commercial insurers, Part D adds prescription drug coverage to Medicare Parts A and B. Available to anyone covered under Parts A and B. Optional. Requires a premium payment.


Medicare Eligibility

Available to U.S. citizens and certain permanent residents who

- Are age 65 and older; or
- Have been receiving Social Security disability checks for at least two years; or
- Have end-stage renal disease (ESRD, which is kidney disease requiring a transplant or dialysis); or
- Have Amyotrophic Lateral Sclerosis (ALS, or Lou Gehrig’s disease).


Medicare Enrollment

Application for Social Security retirement benefits at age 65 automatically triggers enrollment into Parts A and B. One must opt out of Part B to decline coverage. Alternative, they can opt into Part C. If a person wants to enroll in Medicare but not receive SS retirement benefits until later, there is a separate enrollment process.


Medicare Initial Enrollment Period

A seven-month period including the month in which the recipient turns 65 in which enrollment into Medicare is permitted.


Medicare General Enrollment Period

Qualified individuals who did not sign up for Part A or Part B during the IEP when they were first eligible can sign up during a general enrollment period (GEP) between January 1 and March 31 each year. Coverage will begin July 1. It may be necessary to pay a higher premium for late enrollment.


Medicare Annual Election Period (Open Enrollment Period)

Period of time when qualified individuals may make changes to their Medicare Advantage plans, switch from a traditional Medicare plan to a Medicare Advantage plan, or change Part D prescription drug plans. Runs from October 15 through December 7; new coverage becomes effective the following January 1.


Medicare Disenrollment Period

Individuals who wish to switch from a Medicare Advantage plan to Original Medicare may do so during a special disenrollment period that runs from January 1 through February 14 each year.


Medicare Special Enrollment Period

Individuals who are working and covered under their employer medical plan may defer coverage of Medicare Part B until they actually retire. For these individuals a special enrollment period (SEP) allows them to sign up for Part B after their IEP without penalty. The SEP is available any time during the eight-month period that begins the month after the employment or the group health plan coverage ends, whichever happens first.


Medicare Part A Benefit Period

Medicare Part A covers eligible hospital costs for up to 90 days in any single benefit period. A benefit period ends 60 days after release from the hospital. Medicare recipients also have an additional one-time 60-day reserve.


Medicare Part A Hospital Deductibles and Coinsurance

- Days 1-60: All eligible hospital costs are covered after the Medicare beneficiary pays a deductible ($1,260 in 2015).
- Days 61-90: Recipient pays a daily coinsurance ($315 in 2015), and Medicare pays the daily balance.
- 60-day lifetime reserve: Recipient pays a daily coinsurance ($630 in 2015), and Medicare pays the daily balance.


Skilled Nursing Care

Nursing care normally in a facility that is provided under the supervision of skilled professionals and under a doctor's orders.


Medicare Part A Skilled Nursing Facility Deductibles and Coinsurance

Medicare Part A pays the full cost for care in a skilled nursing facility for the first 20 days of such care. Skilled nursing care continues to be covered beyond the first 20 days up to 100 days with a daily patient coinsurance of $157.50 (2015).

For care in a skilled nursing facility to be considered "necessary" and thereby covered by Medicare, it must meet certain criteria. For one, the care must be preceded by a hospital stay for the same or related condition and admission to the skilled nursing facility must be within 30 days of the time the patient leaves the hospital. Second, the stay in the skilled nursing facility must be at least three days long.


Medicare Part A Home Health Care Coverage

Covered services include:

- Part-time or intermittent skilled care
- Home health aide services
- Durable medical equipment and supplies
- Certain other services

No prior hospitalization is required for these services to be covered, nor is there a maximum number of allowable home health care visits. Medicare Part A pays 100 percent of the approved amount for services. It also pays 80 percent of the approved amount for durable medical equipment, such as wheelchairs.


Medicare Part A Hospice Care Benefits

The benefit period for hospice care consists of two 90-day periods and an unlimited number of 60-day extensions of benefits. The hospice benefit can be extended beyond the 240-day limit if the beneficiary is recertified as terminally ill.

The hospice benefit has no deductibles. Medicare pays reasonable costs of providing hospice care.


Hospice Care

In-home care for terminally ill individuals.


Medicare Part B Medical Insurance Coverage

-doctors' services
-inpatient and outpatient -medical and surgical -services and supplies
-physical and speech therapy
-occupational therapy
-outpatient diagnostic tests and X-rays
-medical supplies


Medicare Part B Medical Insurance Exclusions

-prescription drugs
-routine eye care and eyeglasses
-hearing aids and hearing exams
-dental care
-health care received outside the United States
-skilled nursing facility care
-cosmetic surgery
-personal comfort items


Medicare Part B Premiums and Deductibles

Part B requires the insured to pay a monthly premium based on the insured’s annual income. In addition, the insured must pay an annual deductible ($147 in 2015). Part B pays 80 percent of Medicare-approved health care charges.


Medicare Savings Program

A state-run program offered in each state that helps reduce Medicare costs and Part B premiums for persons with limited income and financial resources.


Part C: Medicare Advantage

Offers the full range of Medicare Parts A and B services to participants through managed care plans and networks.


Part D: Prescription Drug Insurance

Part D is optional and is available to anyone covered under Part A or B.


Part D Deductible and Coinsurance

Part D requires a monthly premium that varies from plan to plan. These plans may or may not involve an annual deductible but normally require beneficiaries to pay a certain amount of coinsurance. Furthermore, most Medicare drug plans have a coverage gap (informally called the Medicare donut hole) that requires the plan beneficiary to pay all drug costs out-of-pocket after the beneficiary and the plan have spent a certain amount for covered drugs during the year. Once the beneficiary has reached the plan’s out-of-pocket limit during the coverage gap, drug coverage resumes.


Medicare Supplement Plans ("Medigap" Policies)

Underwritten and sold by commercial insurance companies, Medicare supplement policies are designed
solely to supplement Original Medicare. The plans are labeled "A" through "N", but E, H, I and J have been discontinued. State are required to offer Plans A and Plan C or F. Regardless of their health status, people may purchase a Medicare supplement policy if they are 65 and
apply within six months (called the “open enrollment period”) after enrolling in Medicare Part B.


Medicare SELECT

a Medigap policy is a traditional indemnity policy, a Medicare SELECT plan is a managed care
alternative sold through a managed care provider OR an insurance company that offers the policy's benefits through a network. Every Medicare SELECT plan must be labeled with the type of Medigap plan that it is based on. It must
also include the word SELECT.



Provides health care coverage and health-related
services to people with low incomes and other needy individuals. Eligibility for Medicaid is determined by state requirements in three areas:
1.) Disability or age
2.) Income limitations
3.) Asset limitations

in general health coverage is provided to:
- Children in families earning less than the federal poverty threshold (generally eligible for CHIP);
- Pregnant women with family incomes below a special federal level;
- People who are blind or disabled whose incomes are less than a specified federal level; and
- People who are age 65 and older whose income and financial resources are less than their state’s
qualifying limit.


Care Insurance

LTC policies generally cover the following types of longterm
-Assisted living care
-Nursing home services
-Home health care services
-Hospice care
-Adult daycare services
-Residential community living services
-Respite care services (providing temporary respite for a family member who has assumed
caregiving responsibilities)


Three Levels of Long-Term Care

1.) Skilled Nursing Care
2.) Intermediate Care
3.) Custodial Care


Skilled Nursing Care

Continuous, 24-hour
care delivered by licensed medical professionals,
under the direct supervision of a doctor or physician. Skilled nursing care is usually delivered in a
nursing home.


Intermediate Care

Ongoing care necessary to address a person's condition but not needed
24 hours a day. Intermediate care is delivered by registered nurses, licensed practical nurses, and
nurses' aides, who are being supervised by a doctor. Typically provided to patients who are
recovering from acute medical conditions, intermediate care is usually delivered in a nursing
home, but depending on the individual case, it can also be provided at one's home, an assisted
living facility, or a community-based


Custodial Care

Provided to help a person meet daily living requirements, like
bathing, dressing, or eating. While custodial care must be directed and monitored by a licensed
physician, it does not need to be administered by skilled professionals and is frequently provided
by nurse’s aides. Custodial care can be provided in nursing homes, assisted living facilities, adult
centers, respite centers, or a person's home.


LTC Benefit Triggers

Benefits can generally be triggered by:
-The insured's inability to perform two or more activities of daily living (ADLs);
-The insured's loss of cognitive ability such that it limits his or her ability to care for himself or
herself without help or supervision (cognitive abilities include the ability to think, reason,
perceive, or remember); or
-Medical necessity.


Six LTC Activities of Daily Living

1.) Dressing
2.) Eating
3.) Transferring (moving from a bed to a chair, for example)
4.) Bathing
5.) Toileting
6.) Continence (the ability to control urinary and bowel functions)


LTC Elimination Period

The waiting period that exists based on number of service or calendar days following the trigger event before a policy will pay benefits.


LTC Benefit Amount

The dollar amount that will be paid for qualifying care, typically expressed as a
daily amount. Usually a flat daily limit.


LTC Benefit Period

The length of time for which benefits will be paid. Commonly two to five years, but may be longer depending upon benefits used.


LTC Benefit Rider Options

- Inflation protection
- Guarantee of insurability
- Return of premium
- Nonforfeiture benefit


Inflation Protection

Agents are required to advise prospective buyers that an inflation protection
option is available. This option does have an additional premium cost. Federal law makes inflation
protection automatic unless the buyer rejects it in writing.


Guarantee of Insurability (Guaranteed Purchase Option)

The guarantee of insurability option enables the
policyowner to increase the daily benefit with no additional underwriting. The option to increase benefits
becomes available every two or three years, depending on the contract. If an option is exercised, the
premium increases based on the insured’s age at the time of the increase.


Return of Premium

Returns a part of the premium paid for the LTC coverage to the insured's
estate or to a named beneficiary when the insured dies. The amount of the premium returned is based on
whether the insured used the policy's benefits and if so, to what extent.


Nonforfeiture Benefit

States that if the policyowner cancels the LTC policy, a minimal amount
of paidup
LTC benefits will remain in force. The amount of paidup
coverage is typically equal to the
sum of premiums that were paid to fund the policy. This amount is treated as a pool of money subject to
the daily benefit limit of the canceled policy.


Waiver of Premium Provision

Most LTC policies include a waiver of premium provision that waives the policy’s premiums if the
insured becomes eligible to collect benefits.


Two LTC Inflation Protection Options

1.) Simple inflation protection increases the original benefit on a simple interest basis, usually by 5
percent per year. This option is generally recommended for insureds in their 60s or older.

2.) Compound inflation protection increases the original benefit on a compound interest basis,
usually by 5 percent per year. This option is generally recommended for insureds younger than age


Common LTC Policy Exclusions

- Alcohol and drug dependency
- Selfinflicted
injuries, including attempted suicide
- Conditions resulting from war (declared or undeclared)
- Conditions arising from criminal activity
- Injury or illness for which workers' compensation will pay benefits


Qualified LTC Policy

LTC insurance benefits that reimburse qualifying care expenses are not subject to federal income
taxation. This means that reimbursement policies do not face the possibility of taxable benefit payments.
However, taxqualified
LTC policy benefits that derive from an indemnity contract are subject to a
federally established daily benefit cap. The cap rises annually; in 2015 it is $330 per day. Benefit
payments that exceed the cap are subject to income taxation unless they are offset by the taxpayer’s
unreimbursed longterm
care expenses. Had more stringent standards for qualification than non-qualified LTC policies.