SENIOR HEALTH INSURANCE - affordableeducators.com · SENIOR HEALTH INSURANCE. 228 The Senior Health Care Crisis, 4 Selling Health Insurance To Seniors, 11 Original Medicare, 15 Medicare

SENIOR HEALTH INSURANCE

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The Senior Health Care Crisis, 4Selling Health Insurance To Seniors, 11Original Medicare, 15 Medicare Supplments / Medigap Plans, 38Medicare Advantage Plans, 49 Medicare Presciption Drug Plan, 64Long Term Care, 72Medi-Cal and Hospice, 89Pulling It All Together, 105 iPad and Tablet Users See DEMO & Links Above

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CONTENTS Agent responsibilities 11Agent visits to a senior's home 13Aggressive Medigap Plans 79All forms of communication 14Annual notice of change of plan, Plan D 67Clinically speaking, long term care 72Communications 14Consumer protection issues 12Creditable prescription drug coverage 64Donut hole 68Home care benefits, long term care 78Home health care, not covered by Medicare 26Hospice 102Illegal to sell Medigap Policy 48Initial enrollment period, Medicare 16Long term care 72Long term care & Medicare 79Long term care funding 76Long term care insurance 82Long term care policies types 84Long term care services 75Long term care, clinically speaking 72Medi-Cal & Hospice 89Medi-Cal & long term care 93Medi-Cal abuse 96Medi-Cal eligibility 90Medical emergency, Medicare Advantage 55Medi-Cal services 89Medi-Cal v. Medicare 81Medi-Cal, needs based 93Medicare Advantage coverage 53Medicare Advantage enrollment 52Medicare Advantage FAQs 62Medicare Advantage Plan costs 60Medicare Advantage Plans 49Medicare Advantage Plans must include 53Medicare Advantage premiums 60Medicare assignment 35Medicare changes 7Medicare covers medical expenses 81

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Medicare FAQs 35Medicare Future 33Medicare Gaps 32Medicare out of pocket 18Medicare Part A benefits 21Medicare Part A Coverage 19Medicare Part B Coverage 27Medicare Part B, not covered 29Medicare Part D 64Medicare Plan D benefits 69Medicare Plan D costs 67Medicare premiums 18Medicare Prescription Drug Plan 64Medicare Summary Notices 35Medicare Supplement Plans 38Medicare Terms 15Medicare, Original 15Medigap coverage 41Medigap enrollment 40Medigap FAQs 47Medigap plan costs 46Medigap Plans 38No balance billing 58Open enrollment, Medicare 17Original Medicare covers 5Original Medicare coverage gaps 15Palliative care 102Pulling it all together 105Selling health insurance to seniors 11Senior health care crisis 4Senior health insurance options 4Twisting 13

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THE SENIOR HEALTH CARE CRISIS The United States spends over two-and-a-half times more on health care than most of the world’s other developed nations. Estimates are between 15 and 18 percent of our

gross domestic product (GDP) each year goes to support the country’s health care systems. The percentage of the U.S. economy spent on health care for individuals ages 65 and older exceeds 5 percent. Thanks to the baby boomer generation born in the late 1940s and 1950s, the number of American senior citizens is growing rapidly. As the boomer population reaches age 65, seniors are projected to reach 83.7 million –approximately twenty percent of the total US population. Roughly 10,000 people will turn 65 every day for the next 20 years! This increasing elderly population has and will necessitate more senior healthcare. On top of this, consider the following:

Retiring baby boomers will more than double Medicare and Medicaid costs by 2020.

Retired 65-year-old couples can expect to pay $275,000 in out-of-pocket expenses for health care, excluding long-term nursing care and rehabilitation — but only have a 50 percent chance of covering these costs.

The conclusion of many research studies is that the challenges of caring for the elderly and, particularly the baby boom bulge, will be significant. The issues to resolve include:

Making sure society develops payment and insurance systems for long-term care that work better than existing ones,

Taking advantage of advances in medicine and behavioral health to keep the elderly as healthy and active as possible,

Changing the way society organizes community services so that care is more accessible.

Until this happens, seniors must cope with the healthcare and insurance choices they now have. OVERVIEW OF SENIOR HEALTH INSURANCE OPTIONS

Medicare

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Since Medicare was established in 1965, few seniors have decided to self-pay for their own health care. Of course, the very well-heeled can afford to choose to engage the services of top-notch specialists, or buy additional services that Medicare does not provide, but the overwhelming majority of seniors in the U.S. choose to enroll in Medicare for their health care needs.

One can generally get Medicare coverage in either of two ways:

Original Medicare -- the government-run health insurance program or seniors or those with disabilities, or

Medicare Advantage Plans -- offered through Medicare-contracted private insurance companies.

Everyone must FIRST sign up for Original Medicare which has two parts:

Medicare Part A -- Inpatient hospital, skilled nursing facility, hospice, and eligible home health care. As noted above, this type of Medicare health insurance is also known as Medicare hospital insurance

Medicare Part B -- Coverage generally includes medically necessary outpatient services, including (but not limited to) doctor visits, durable medical equipment, lab tests, ambulance services, mental health care, and preventive services.

Once enrolled in Part A and/or Part B Original Medicare, a senior may have other Medicare coverage options available, including:

Medicare Part C coverage (Medicare Advantage plans) -- Provide Original Medicare coverage through Medicare-approved private insurance companies. These plans are required to cover at least the same level of benefits that you’d have under Part A and Part B, with the exception of hospice care (which is still covered under Part A of Original Medicare).

Medicare Part D coverage (prescription drug benefits), and Medicare Supplement insurance (also known as Medigap).

Medicare Gaps

Original Medicare covers many senior health care services, but it has relatively high deductibles, copay or cost-sharing requirements and there no limit on beneficiaries’ out-of-pocket spending for services covered under Parts A and B. In addition. Original Medicare does not pay for some services that are important for older people and people with disabilities, such as long-term services, dental services, eyeglasses, and hearing aids. Medicare Prescription Drugs Part D also has coverage gaps. A big one is known as the “doughnut hole” where beneficiaries can end up paying 25% of their drug costs and a 5 percent coinsurance requirement for catastrophic

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drugs.. While this gap is will gradually close by 2020, it can expose beneficiaries to high out-of-pocket costs. To offset Medicare gaps, beneficiaries have turned to:

Medicare Advantage Plans where additional services, not offered by Original Medicare are provided. In 2018, one-third of all beneficiaries are enrolled in Medicare Advantage plans rather than traditional Medicare, some of whom also have coverage from an employer plan or Medicaid. Medicare Advantage plans are required to limit beneficiaries’ out-of-pocket spending for services covered under Medicare Parts A and B to no more than $6,700, and may also cover supplemental benefits not covered by Medicare, such as eyeglasses, dental services, and hearing aids. Some have copays or monthly premiums, but the catastrophic exposures are covered.

Employer-sponsored retiree health plans which may pay for

supplemental (Medigap Plans). Over time, however, fewer beneficiaries are expected to have this type of coverage, since the share of large firm employers offering it to their employees has dropped from 66 percent in 1988 to 25 percent in 2017.

Medigap policies paid for by beneficieries, also called Medicare

Supplement Insurance, provide supplemental coverage for roughly one-fourth of beneficiaries in Original Medicare. These policies, typically sold by private insurance companies, fully or partially cover Medicare Part A and Part B cost-sharing requirements, including deductibles, copayments, and coinsurance.

Medi-Cal the federal-state program that provides health and long-

term care coverage to low-income people, is a source of supplemental coverage for millions of senior age Medicare beneficiaries with low incomes and modest assets. These beneficiaries are known as dually eligible beneficiaries because they are eligible for both Medicare and Medicaid. Medicaid helps pay for Medicare’s premiums and cost sharing for dually eligible beneficiaries, most of whom also qualify for full Medicaid benefits, which include long-term care.

NO Supplemental Coverage. Roughly 15% of Original Medicare

beneficiaries have NO supplemental coverage. Medicare Drug Plan D Medicare prescription drug (Part D) coverage is an optional benefit. Medicare offers drug coverage to everyone with Medicare. Eligible candidates should consider joining a Medicare drug plan. If they decide not to join a Medicare drug plan when first eligible, and they don’t have other creditable prescription drug coverage or get Extra Help, they will likely pay a late

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enrollment penalty if they join a plan later. Medicare Advantage Plans typically include Part D coverage while traditional Supplement plans do not. Long Term Care With the aid of technology and today’s advanced healthcare systems, more people are living to age 80, 90 or beyond. This reflects the truth behind the marketing phrase “60 is the new 40”. Now, with on-going scientific programs beginning to offer hope of truly understanding the genetics of aging, we may soon see additional increases in life expectancy. Longer life expectancy increases a person’s need to plan for long-term care . . . especially since Medicare, Medicare Supplements and Medicare Advantage do not cover these costs. This may involve the purchase of long term care insurance or making sure seniors have funds to self-pay for these health services. Medi-Cal While Medi-Cal can help pay for senior healthcare and even long term care, it is a known fact that enrollees need to come close to impoverish themselves to qualify. This is not an attractive idea for many seniors so Medi-Cal is not much of a safety net. Then again, if more seniors get caught off-guard with escalating health costs and their own longevity, it may become an forced choice for more seniors than originally planned.

NEW MEDICARE CHANGES THAT EFFECT SENIOR HEALTH Changes In Senior Health Coverage As though the choices for seniors and their agents are not difficult enough, major changes are on the horizon. Our government is learning that the current Medicare system is not sustainable. Enrollees in Medicare and Medicare Supplement plans like Medigap policies or Medicare Advantage are visiting the doctor too often (a result of little or no copayment) placing a strain on the entire system. The issue gets worse when one adds the high cost of medical care today and medical fraud. Once result is that certain popular programs, such as Medigap Plan F and Medigap C Plans are being phased out. Enrollees already on these plans will be able to keep them, but they will not be available to newcomers. You will need to thoroughly understand the choice of Original Medicare PLUS Medigap Plan G, considered the replacement for Plan F. This course will help. These changes make your job harder, and the need to counsel clients more important. Another result is a larger burden (higher deductibles, co-pays and more) is being shifted to senior healthcare enrollees in Medicare programs. Private insurers and their actuaries are also realizing that the cost to care for seniors, especially long term, have gone well beyond original projections.

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Here too, premiums and benefits are affected. Likewise, long term care insurance for seniors is expected to cost more and deliver fewer benefits in the years ahead. These trends are the inevitable outcome of an unsustainable senior health care plan. As agents, we can ignore it, nor the discontent it will breed among seniors unhappy with their health insurance. But, we can choose to educate clients on the new norm: Some coverage is better than none. Had this been done early in life, our entire society would be better prepared for senior healthcare choices. Specific Medicare Changes in 2020 A change in Medicare Supplement law will take place in 2020 affecting Medicare Supplement plans C, F and high deductible F. Medicare Supplement plans are sold by private companies to fill the gaps in traditional Medicare Part A and Part B. Medicare Supplement plans help pay for things like coinsurance, copayments or deductibles on Medicare-covered services. This new law change prohibits the sale of Medicare Supplement policies that cover the Part B deductible to “newly eligible” Medicare beneficiaries on or after January 1, 2020. Who is considered a “newly eligible” Medicare beneficiary? “Newly eligible” is defined as anyone who: Attains age 65 on or after January 1, 2020, or who becomes eligible for Medicare benefits due to age, disability or end-stage renal disease on or after January 1, 2020. Why are these changes being made for “newly eligible” Medicare beneficiaries? Plans C, F and high deductible F are the only plans that cover the Part B deductible. Individuals enrolled in these plans have no out-of-pocket costs for Medicare covered services. Medicare beneficiaries eligible after 2020 will be required to share in the cost of services by paying for the Part B deductible. Do enrollees need to change plans if they currently have a Plan C, F or high deductible F? People who are currently enrolled in a Medicare supplement Plan C, F or high deductible F, can keep it and the Part B deductible will continue to be covered. These plans are not going away. Further, these plans are guaranteed renewable. This means as long as enrollees pay their premiums, the insurance company cannot cancel coverage. Can clients purchase a Plan C, F or high deductible F after January 1, 2020? If they are eligible for Medicare prior to January 1, 2020 they may buy a Plan C, F or high deductible F. However, companies selling Medicare Supplement plans may or may not offer plans C and F after January 1, 2020.

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Will enrollees see a significant increase in my Plan C, F or high deductible Plan F premium after 2020 because no new people will be sold these plans? Premium rates are based on individual age, not on the number of younger and healthier policy holders buying these plans. Consumers who currently have Plans C, F and high deductible F can keep these plans and most states do not expect the rates for these plans to dramatically increase. Will new plans be offered for those “newly eligible” after January 1, 2020? The high deductible Plan F will be replaced with a new high deductible Plan G. Plans A, B, D, G, K, L, M and N will continue to be offered. New Improvements To Medicare

Not all is negative on the senior health care horizon. AARP, says the following are improvements can expect to improve Medicare:

Donut hole An expensive element of the Medicare Part D prescription drug benefit requires enrollees with high prescription costs to pay more for their medicines after they reach a certain level of spending in one year. This creates a coverage gap – also called the “donut hole.” After a beneficiary’s out-of-pocket spending reaches a second threshold, they enter catastrophic coverage and pay substantially less. Under the Affordable Care Act (ACA), the donut hole was scheduled to close in 2020. But the spending bill Congress passed in March will close the donut hole for brand-name drugs in 2019. The gap will close for generic drugs in 2020. Therapy cap gone Beneficiaries of original Medicare won’t have to pay the full cost of outpatient physical, speech or occupational therapy because Congress permanently repealed the cap that has historically limited coverage of those services. Better information Medicare is updating the handbook it sends to beneficiaries every fall. It will include checklists and flowcharts to make it easier to decide on coverage. The online Medicare Plan Finder tool will be easier to use and an improved “coverage wizard” will help enrollees compare out-of-pocket costs and coverage options between original Medicare and Medicare Advantage. More telemedicine Medicare is steadily broadening the availability of telehealth programs that let patients confer with a doctor or nurse via telephone or the internet. In 2019, it will begin covering telehealth services for people with end-stage renal disease or during treatment for a stroke.

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Lifestyle support Beginning in January, Medicare Advantage plans have the option to cover meals delivered to the home, transportation to the doctor’s office and even safety features in the home such as bathroom grab bars and wheelchair ramps. To be covered, a medical provider will have to recommend benefits such as home-safety improvements and prepared meals. In-home help Medicare Advantage plans also will have the option to pay for assistance from home health aides, who can help beneficiaries with their daily activities including dressing, eating and personal care. These benefits represent a revised and broader definition of the traditional requirement that Medicare services must be primarily health related. Plan test drives New regulations will let people try an Advantage plan for up to three months and, if they aren’t satisfied, they can switch to another Medicare Advantage plan or choose to enroll in original Medicare. Congress required this flexibility in the 21st Century Cures Act, designed to accelerate innovation in health care.

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SELLING HEALTH INSURANCE TO SENIORS AGENT RESPONSIBILITIES The marketing of senior health insurance requires agent

skills in many venues: Social Security, Medicare, Medi-Cal, long term care, physical and mental health assessment, public assistance, taxes, asset evaluation and more. In addition, agents must comply with on-going changes in policies and the law. There are many ethical and legal decisions you will confront in marketing long-term care. Remember, you are guiding clients in a decision that may be one of the most important they will ever make. Agent Alert

The many gaps in the senior health care choices present a unique opportunity for insurance agents to play a role as health care counselor. The purpose of this course is to arm you with information you need to provide logical guidance and reasonable health care options for seniors.

It is also important to understand you may have liability when you do not counsel senior clients properly. In Grace v. Interstate Life, for example, an agent sold his client a health insurance policy while in her 50's. After the client reached 65, he continued to collect premiums despite the fact that Medicare would have replaced most of the benefits of her policy. The court considered the agent’s lack of duty to notify his client a serious breach of ethics. Understand, that seniors are vulnerable, sometimes too quick to take advice, even from people they just met. Seniors are more likely than others to feel they need coverage simply because you tell them they do or they may unnecessarily worry that they'll become a burden to family if they don't have enough insurance. Please understand that as an agent you bear a higher standard of care when dealing with seniors. You should never: Contact a senior unsolicited. Use high-pressure tactics. Urge them to cash in an existing annuity or life insurance policy to buy a

new annuity, life insurance policy, or other investment unless it is warranted.

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Claim to be from Medicare, Social Security, or another government agency. This is illegal.

Make unsuitable recommendations like dropping coverage they may not be able to re-purchase without health questions or committing to long term contract when they need better liquidity.

CONSUMER PROTECTION ISSUES YOU SHOULD KNOW An insurance producer has the duty of honesty, good faith and fair dealing. In addition, he must make sure to avoid any of the following which shall be construed as being an unfair practice, unfair methods of competition, or unfair and deceptive acts. Needless to say, there is a higher standard when dealing with seniors compared to other demographic groups. Following are a few examples of what not to do in the selling insurance to seniors.: Making unfair or inaccurate comparisons Advising or selling excessive insurance Falsifying records for purposes of defrauding any company or person Misrepresenting insurance company assets Misrepresenting the terms of an insurance policy Rebating-giving something of value in order to induce someone to buy

the insurance policy Defamation of any insurance company Using unverified numbers in advertising financial standings Replacing previously owned long term care policies unnecessarily Having a history of replacing policies with a high lapse rate Telling anyone that dividends are guaranteed Misleading anybody regarding estimating the amount of a potential

dividend To make any misleading statement or representation in order to induce

someone to buy an insurance policy Making any false or injurious statement about any insurance company. It is unlawful to try to induce a person to let their insurance policy lapse

or be forfeited in order to purchase a new insurance policy Cannot imply, in any way, that your insurance policy is endorsed or

guaranteed by any state or other governmental body. Using advertising materials that have not been reviewed or using

unethical approaches to contact prospects. Failing to follow all California rules regarding disclosures, continuing

education, buyer notification (including insurance shopper's guide), inquiries regarding client's existing insurance

Lack of concern for suitability of the product sold to the actual needs of the client.

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In addition to these unfair trade practices the following acts are prohibited: Twisting -- Knowingly making or in a misleading way the comparison of any insurance policies or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance with another insurer. High pressure tactics -- Employing any method of marketing having the effect or tending to induce the purchase of insurance through force, fright, threat, whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance. Cold lead advertising -- Making use directly or indirectly of any method of marketing which fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance agent or insurance company. Marketing Abuse -- Complicated policies loaded with fine print and the culpability of seniors as consumers could be fertile territory for abuse for some agents. Likewise, the mere expectation of needing dependable health care strikes at the heart of the elderly since it means a loss of one's health and independence. These are reasons why seniors are vulnerable and why you must be sure not to use scare tactics and stories of people being thrown out in the streets because they lack health or long-term coverage and lack the financial ability to provide for themselves. California has adopted special measures to make sure agents follow ethical procedures when selling to seniors. Here are few to bear in mind: Advertisements directed to produce leads must disclose that an agent

may contact that person if that is the fact. Emphasis is placed on the illegality of marketing materials that deceive

or mislead the prospect as to the agent or company's true status, character or capacity. For example, it would be illegal under this legislation to use initials or logos similar to the Social Security Administration (SSA), that might induce someone into thinking that your company was somehow associated with the SSA.

It is a violation to make a senior believe that he would lose some right, privilege or benefit if he fails to respond to your ad.

Limits using terms like "seminar", "class" or "informational meeting" when the true intent is to present an insurance product.

Agent visits to a senior’s home? Under present legislation, and for many products sold, you must now deliver a notice to seniors in writing no less than 24 hours prior notice to any initial meeting. For pre-existing insurance relationship a notice must still be delivered prior to the meeting. And, at any time a senior request you to leave, you must do so immediately!

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Virtually all forms of communication you have with a senior client are considered advertising. And, when it comes to advertising, all statements, representations and sales presentations must be free from any form of information that can be construed as being misleading or untruthful in any way. Some examples include; All conversations regarding insurance must be identified by the agent as

being insurance and cannot disguise the product. Sales promotions cannot be misleading in any way. The agent must fully disclose the name of the insurance company

represented at all times. Agents must insure that when making presentations, in any type media,

that the materials being used are truthful and all reacquired information is being disclosed.

SUMMARY

Our education system does not prepare its citizens for uncovered health care surprises and many individuals do not assume the personal responsibility to learn these matters on their own. The result is that the vast majority of seniors, while lucky to have Medicare and/or Medi-Cal as a safety net, are financially and emotionally ill-prepared for what these systems fail to deliver or the obstacles to enrolling.

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ORIGINAL MEDICARE Original Medicare came into existence in 1965 and it was billed as a medical “savior” for older Americans. It continues to be a “safety net” allowing millions of Americans access to the finest health care system in the World.

The term "Original Medicare" is something you will see extensively in this course. It refers to basic Medicare as provided directly through the Medicare Program. Since Original Medicare was launched, options and alternatives have been developed like Medicare Advantage Plans, Medicare Supplements or the Part D Prescription Drug Plan. Each of these programs will be expanded upon in their own chapters.

AGENT ALERT

If you are filling a role as a healthcare counselor to your senior clients, you must advise those that choose Original Medicare by itself, about the associated gaps in coverage and potentially large out-of-pocket costs. Advocates of Original Medicare tout the ability to see any doctor that accepts Medicare. Yes, this isn't always true, it hardly trumps the potential out-of-pocket costs that can happen without supplemental (Medigap) coverage and/or Prescription D coverage. Even with these supplemental plans, there is also the issue of the complexity that comes with tracking three areas of coverage. For some, an all-in-one Medicare Advantage, plan may be a better choice (see the Medicare Advantage chapter for limitations).

MEDICARE TERMS Before we get too involved, let's go over a few terms you will need to know to understand Medicare coverage:

Premium: The amount paid each month to be covered by Medicare, Medicare plan, or other insurance.

Deductible: The amount paid out of your own pocket for Medicare-

covered health-care services and supplies before Original Medicare, an alternatives Medicare plan, or other insurance begins to cover expenses.

Copayment: A flat dollar amount (for example, $20) that must be

paid for a service after one has reached any deductibles that apply and after Original Medicare or another Medicare plan begins to cover health-care expenses. This is one form of “cost sharing” insureds may be responsible for after Medicare has paid its share of costs. Some

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examples of situations when one may need to pay a copayment include doctor appointments or when the insured fills a prescription.

Coinsurance: Another form of cost sharing, this is a percentage of the

total cost of the Medicare-covered equipment or service the insured may need to pay after you have reached any deductibles that apply for Original Medicare or another Medicare plan. For example, one might pay 20%, while Medicare pays 80% of the cost.

Annual out-of-pocket maximum: The maximum amount an insured

must pay out of his own pocket each year before his Medicare plan pays 100% of his covered health-care expenses. Original Medicare doesn’t have an out-of-pocket annual maximum limit.

Plan maximum: The maximum amount of coverage provided by the

Medicare insurance plan in a certain benefit period. The insured will be responsible for all costs once he reaches this maximum.

MEDICARE ENROLLMENT

Eligibility Applicants are eligible for Medicare if they are age 65 or older and if they or their spouse worked and paid Medicare taxes for at least 10 years. Everyone that enrolls in Medicare is automatically enrolled in Medicare Part A (see below). If an applicant does not sign up for Medicare Part B (an additional premium of about $130 per month -- see below) when they are first eligible, he may need to pay a late enrollment penalty for as long as he has Medicare. His monthly Part B premium could be 10% higher for every full 12-month period that he was eligible for Part B, but didn’t take it. Where To Enroll Eligible Medicare applicants can enroll in Medicare Part A and/or Medicare Part B in the following ways:

Online at www.SocialSecurity.gov. By calling Social Security at 1-800-772-1213 (TTY users 1-800-325-

0778), Monday through Friday, from 7AM to 7PM. In-person at a local Social Security office.

When To Enroll The Original Medicare Initial Enrollment Period is a seven-month window that begins three months before the applicants 65th birthday, includes his birthday month, and ends three months after he turns 65. It’s important to

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take action during this window of time. If not, the applicant could face a late enrollment penalty or a gap in coverage.

Open Enrollment

Medicare changes every year. The changes may necessitate a beneficiary change his coverage. Years ago, when one contemplated such a change, they simply changed, at any time, using various forms. Today there are complex rules called "open enrollment". Failure to comply can mean the insured is stuck with his plan for another year.

The Open Enrollment Period – sometimes called the Annual Election Period or Annual Coordinated Enrollment Period – runs each year from October 15 to December 7.

During this time, Medicare beneficiaries can:

Switch from Medicare Parts A and B (original Medicare) to Part C (an Advantage Plan).

Switch from an Advantage Plan to original Medicare (Parts A and B) Change an existing Advantage Plan Change a Part D prescription drug plan

Medicare Plan providers are required to alert insureds about changes to their plan, such as changes in deductibles, copays, coinsurance, coverage amounts, participating doctors, etc. Absent these alerts, every Medicare beneficiary should review changes in his health, prescription drugs, doctors leaving his network, etc. Changes in these areas might mean the beneficiary is better to switch to Original Medicare or from Origin al Medicare to a Medicare Advantage Plan.

Example: Herb chose a Medicare Advantage Plan last year because his favorite doctor was listed as a provider. During open enrollment, Herb learned his doctor is dropping the Med Advantage Plan and serving ONLY Original Medicare patients. If Herb wants to stick with his doctor, he will need to drop his Advantage Plan and go back on Original Medicare during open enrollment.

Example: Irene is taking an expensive brand name blood pressure medication. Before open enrollment, her Medicare Provider sent her an alert saying their formulary (the drugs they will cover) will only pay for a generic version of this medicine. Irene has had a bad experience with the generic versions so she decides to switch, during open enrollment, to a plan that still covers the brand name drug. Before switching, however, her agent let her know that she could pay an additional amount to keep her brand name drug, i.e., in the end, for a few extra dollars, she did not have to switch and lose her favorite doctors for the sake of one medicine.

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MEDICARE PREMIUMS Medicare is not free. Most individuals will pay some kind of premium for Medicare coverage.

The Medicare Premium is the monthly payment insureds make to have a Medicare insurance plan. Medicare insurance has four parts, each with its own associated premium or cost:

Part A (Hospital Insurance), Part B (Medical Insurance), Part C (Medicare Advantage), and Part D (Prescription Drug Coverage).

Premiums for Parts A and B are determined by and billed through Medicare. The premium for Part A can be up to $422 a month as of 2018, but most individuals don’t pay any premiums . . . as long as they worked for at least 10 years in the U.S. These premiums are actually paid through Social Security taxes collected throughout the years.

The standard Part B premium as of 2018 is $134, but most people with Social Security benefits will pay less ($130 on average). See Medicare Savings Programs below for individuals who cannot afford these premiums.

Medicare Advantage Plans may charge premiums, although most do not. An individual who has chosen a Med Advantage Plan instead of Original Medicare will still have to continue paying premiums associated with Medicare Part A and Part B. More on this later.

Medicare Part D Premiums average $34 a month in 2018 although plan costs vary depending on the plan you choose and where you live. In many Medicare Advantage Plans, Part D is included at $0 monthly cost. Of course, there are associated copays that vary based on the drug and location. MEDICARE OUT-OF-POCKET COSTS More than one-fourth of all Medicare beneficiaries spend 20 percent or more of their incomes on premiums plus medical care, including cost-sharing and uncovered services. Overall, Original Medicare beneficiaries spent between $3,000 and $6,000 in estimated out of pocket costs. While Original Medicare costs are regulated by the federal government, THERE ARE NO CAPS ON OUT-OF-POCKET HEALTH EXPENSES AN ORIGINAL MEDICARE BENEFICIARY CAN SPEND. Medicare supplement or Medicare Advantage Plans can help limit out-of-pocket costs. It is also well known that out-of-pocket spending rises with age among beneficiaries ages 65 and over and is higher for women than men. Not

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surprisingly, Medicare beneficiaries with poorer self-reported health status spend more than those who rate themselves in better health. As shown in the chart below, Medicare spending is affected by a number of factors, including the number of beneficiaries, how care is delivered, the use of services, and health care prices.

MEDICARE COSTS AT A GLANCE

Part A premium

Most people don't pay a monthly premium for Part A (sometimes called "premium-free Part A"). If you buy Part A, you'll pay up to $422 each month. If you paid Medicare taxes for less than 30 quarters, the standard Part A premium is $422. If you paid Medicare taxes for 30-39 quarters, the standard Part A premium is $232.

Part A hospital inpatient deductible and coinsurance

You pay: $1,340 deductible for each benefit period Days 1-60: $0 coinsurance for each benefit period Days 61-90: $335 coinsurance per day of each benefit period Days 91 and beyond: $670 coinsurance per each "lifetime reserve

day" after day 90 for each benefit period (up to 60 days over your lifetime)

Beyond lifetime reserve days: all costs

Part B premium The standard Part B premium amount is $134 (or higher depending on your income). However, some people who get Social Security benefits will pay less than this amount ($130 on average).

Part B deductible and coinsurance

$183 per year. After your deductible is met, you typically pay 20% of the Medicare-approved amount for most doctor services (including most doctor services while you're a hospital inpatient), outpatient therapy, and durable medical equipment (dme)

Part C premium The Part C monthly premium varies by plan. Compare costs for specific Part C plans.

Part D premium The Part D monthly premium varies by plan (higher-income consumers may

pay more). Compare costs for specific Part D plans.

On a per capita basis, Medicare spending is said to be shrinking, on the aggregate, due to the baby boom bulge, it is growing substantially. In essence, Medicare is likely to be affected by budgets and rising healthcare costs. All of which could influence changes in coverage amounts, coinsurance, copays, deductibles and likely result in even higher out-of-pocket costs for beneficiaries. COVERAGE -- MEDICARE PART A Medicare Part A covers some costs related to hospital stays and is available for people who are 65 years old and over. When all program requirements are met, Medicare part A will help pay the costs for medically necessary inpatient services customarily supplied in a hospital or skilled nursing facility and for hospice care for the terminally ill. Medicare Part A also pays the full cost of medically necessary home health care and 80 percent of approved

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costs for durable medical equipment supplied under the home health benefit. Medicare Part A covers only those services that are considered medically necessary and only those charges that are considered reasonable. Part A Eligibility All persons age 65 and over who are entitled to monthly Social Security cash benefits or monthly cash benefits under Railroad Retirement Benefits are eligible for Medicare Part A benefits free of charge. Others may be eligible for Medicare if they pay a monthly premium. Persons age 65 and over can receive Medicare benefits even if they continue to work. Enrollment in the program while working does not affect the amount of future Social Security benefits. Enrollees in Part A are automatically offered the option of enrolling in Part B. However, they do not have to accept Part B if they do not want the coverage. Part A is financed through the Social Security (FICA) tax paid by workers and employers. The Health Care Financing Administration enters into agreements with state agencies and with intermediaries to administer the Hospital Insurance Plan. State agencies survey institutions to determine whether they meet the conditions for participation as a hospital, skilled nursing facility, home health agency, or hospice. They also help the institutions meet the conditions for participation. As previously mentioned, an individual does not have to pay a monthly premium for Medicare Part A if he or a spouse is entitled to benefits under either the Social Security or Railroad Retirement systems, if he has worked a sufficient period of time in government employment to be insured, or if he is under age 65 and has met the disability program’s requirements. Those who do not meet the above coverage requirement may voluntarily enroll in Medicare for a monthly premium determined by the number of quarters (less than 40) that they paid into Social Security or Railroad Retirement. A dependent or survivor of a person entitled to hospital insurance benefits, or a dependent of a person under age 65 who is entitled to retirement or disability benefits, is also eligible for hospital insurance benefits. Additionally, a dependent or survivor is eligible for hospital insurance benefits if that person is entitled to a spouse’s or widow’s Social Security benefit. A Social Security disability beneficiary is covered under Medicare after entitlement to disability benefits for 24 months or more. Those covered include disabled workers at any age, disabled widows and widowers age 50 or over, and beneficiaries age 18 or older who receive benefits because of disability beginning before age 22.

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Medicare Part A Benefits

Part A-covered hospital services generally include medically necessary services and equipment to treat a condition. This may include a semi-private room, general nursing services, and prescription drugs needed as part of your inpatient treatment.

Part A covers hospice care if your doctor determines that you’re terminally ill and have six months or less to live. Medicare Part A coverage of hospice services includes doctor and nursing services, hospice aide services, physical and occupational therapy services, prescription drugs for symptom control, and limited, short-term respite care for caregivers.

Medicare Part A coverage may also cover certain home health services, including physical therapy, speech-language pathology, occupational therapy, and/or speech therapy services.

Part A Hospital Benefits Hospital benefits entitle an individual to 90 days of in hospital care for each benefit period. A benefit period begins when the insured enters the hospital and ends after he has been out of the hospital (or skilled nursing facility) for at least 60 continuous days. There is a deductible for each benefit period. In addition, the individual must pay a coinsurance amount for days 61 through 90. After exhausting 90 days of coverage, Medicare will pay for an additional 60 days of care in that person’s lifetime. However, the insured may have to pay a coinsurance amount during these final 60 days of care.

Inpatient Hospital Care Coverage Medicare Part A (Hospital Insurance) covers hospital services, including these:

Semi-private rooms Meals General nursing Drugs as part of inpatient treatment Other hospital services and supplies

This includes care in these facilities:

Acute care hospitals Critical access hospitals Inpatient rehabilitation facilities Long-term care hospitals

It also includes these:

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Inpatient care as part of a qualifying clinical research study Inpatient mental health care given in a psychiatric hospital or other

hospital

All people with Part A are covered when all of these are true:

A doctor makes an official order which says the insured needs 2 or more midnights of medically necessary inpatient hospital care to treat an illness or injury, and the hospital formally admits the insured.

The insured needs the kind of care that can be given only in a hospital. The hospital accepts Medicare. The Utilization Review Committee of the hospital approves the stay

while the insured is in a hospital.

What's not covered

Private-duty nursing Private room (unless medically necessary) Television and phone in your room (if there's a separate charge for

these items) Personal care items, like razors or slipper socks

Costs / Deductibles / Coinsurance

$1,340 deductible for each benefit period . Days 1–60: $0 coinsurance for each benefit period. Days 61–90: $335 coinsurance per day of each benefit period. Days 91 and beyond: $670 coinsurance per each "lifetime reserve day"

after day 90 for each benefit period (up to 60 days over your lifetime). Beyond lifetime reserve days: all costs.

Skilled Nursing Facility (SNF) Care Coverage Medicare Part A (Hospital Insurance) covers skilled nursing care provided in a skilled nursing facility (SNF) under certain conditions for a limited time. Medicare-covered services include, but aren't limited to:

Semi-private room (a room you share with other patients) Meals Skilled nursing care Physical and occupational therapy (if they're needed to meet your

health goal) Speech-language pathology services (if they're needed to meet your

health goal)

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Medical social services Medications Medical supplies and equipment used in the facility Ambulance transportation (when other transportation endangers

health) to the nearest supplier of needed services that aren’t available at the SNF

Dietary counseling Who's eligible? People with Medicare are covered if they meet all of these conditions:

Insured has Part A and has days left in his benefit period. Insured has a qualifying hospital stay. The insured's doctor has decided that he needs daily skilled care given

by, or under the direct supervision of, skilled nursing or therapy staff.. Insureds get these skilled services in a SNF that's certified by

Medicare. The insured needs these skilled services for a medical condition that

was either:

A hospital-related medical condition. A condition that started while he was getting care in the skilled

nursing facility for a hospital-related medical condition.

Long-Term Care Hospitals

How often is it covered? Medicare Part A (Hospital Insurance) covers care in a long-term care hospital (LTCH). LTCHs specialize in treating patients when both of these apply:

They may have more than one serious condition. They may improve with time and care, and return home.

Costs Generally, insureds won't pay more for care in a long-term care hospital than in an acute care hospital. Under Medicare, the insured is only responsible for one deductible for any benefit period. This applies whether he is in an acute care hospital or a long-term care hospital (LTCH). Insureds don't have to pay a second deductible for his care in a LTCH if:

The insured is transferred to a LTCH directly from an acute care hospital

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The insured is admitted to a LTCH within 60 days of being discharged from an inpatient hospital stay

If an insured is admitted to the LTCH more than 60 days after any previous hospital stay:

A new benefit period begins. The insured will have to pay a deductible and coinsurance because he

is in a new benefit period. These charges are the same as if the insured were being admitted to an acute care hospital.

NOTE: A long term care hospital is NOT the same as a long term care facility offering custodial care over months or even years. Long Term Hospital care is covered BECAUSE AN INSURED'S CONDITION MAY IMPROVE WITH TIME AND CARE. The same insured transferred to a long term care facility because his condition IS NOT LIKELY TO IMPROVE is not covered.

Hospice & respite care

Hospice care is usually given in the insured's home, but it also may be covered in a hospice inpatient facility. Depending on your terminal illness and related conditions, the plan of care your hospice team creates can include any or all of these services:

Doctor services Nursing care Medical equipment (like wheelchairs or walkers) Medical supplies (like bandages and catheters) Prescription drugs for symptom control or pain relief Hospice aide and homemaker services Physical therapy services Occupational therapy services Speech-language pathology services Social work services Dietary counseling Grief and loss counseling for you and your family Short-term inpatient care (for pain and symptom management) Short term respite care Any other Medicare-covered services needed to manage your pain and

other symptoms related to your terminal illness and related conditions, as recommended by your hospice team

When a patient chooses hospice care, he decides he no longer wants care to cure his terminal illness and/or his doctor determines that efforts to cure the illness aren't working.

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Medicare won't cover any of these once a hospice benefit starts:

Treatment intended to cure a terminal illness and/or related conditions. A hospice patient, always has the right to stop hospice care at any time.

Prescription drugs to cure an illness (rather than for symptom control or pain relief).

Care from any hospice provider that wasn't set up by the hospice medical team. An insured must get hospice care from the hospice provider he chooses. All care for the terminal illness must be given by or arranged by the hospice team.

Room and board. Medicare doesn't cover room and board if an insured gets hospice care in his home or if he lives in a nursing home or a hospice inpatient facility. If the hospice team determines that you need short-term inpatient or respite care services that they arrange, Medicare will cover the stay in the facility, however, there may be a small copayment for the respite stay.

Care an insured gets as a hospital outpatient (like in an emergency room), care one gets as a hospital inpatient, or ambulance transportation, unless it's either arranged by the hospice team or is unrelated to the terminal illness and related conditions.

Eligibility An insured can get hospice care if he has Medicare Part A (Hospital Insurance) AND meets all of these conditions:

The chosen hospice doctor and the regular doctor certify that the insured is terminally ill (expected to live 6 months or less).

The insured accepts palliative care (for comfort) instead of care to cure his illness.

The insured signs a statement choosing hospice care instead of other Medicare-covered treatments for the terminal illness and related conditions.

Only the hospice doctor and the regular doctor can certify that an insured is terminally ill and have a life expectancy of 6 months or less. After 6 months, one can continue to get hospice care as long as the hospice medical director or hospice doctor recertifies (at a face-to-face meeting) that he is terminally ill. Costs Paid By Original Medicare

$0 for hospice care.

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The insured may need to pay a copayment of no more than $5 for each prescription drug and other similar products for pain relief and symptom control while he is at home. In the rare case a drug isn’t covered by the hospice benefit, the hospice provider should contact the insured's Medicare drug plan to see if it's covered under Part D.

The insured may need to pay 5% of the Medicare-approved amount for inpatient respite care.

Medicare doesn't cover room and board when one gets hospice care in his home or another facility where he lives (like a nursing home).

Home Health Services

When Covered Medicare Part A (Hospital Insurance) and/or Medicare Part B (Medical Insurance) covers eligible home health services like these:

Part-time or intermittent skilled nursing care Part-time or intermittent home health aide care Physical therapy Occupational therapy Speech-language pathology services Medical social services

Usually, a home health care agency coordinates the services the insured's doctor orders. Home health services NOT covered by Medicare include

24-hour-a-day care at home Meals delivered to the home Custodial or personal care (help bathing, dressing, and using the

bathroom) when this is the only care the insured needs Homemaker services

Eligibility All people with Part A and/or Part B who meet all of these conditions are covered:

An insured must be under the care of a doctor, and he must be getting services under a plan of care created and reviewed regularly by a doctor.

The insured must need, and a doctor must certify that he needs, one or more of these:

Intermittent skilled nursing care (other than drawing blood)

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Physical therapy, speech-language pathology, or continued occupational therapy services. These services are covered only when the services are specific, safe and an effective treatment for your condition. The amount, frequency and time period of the services needs to be reasonable, and they need to be complex or only qualified therapists can do them safely and effectively. To be eligible, either: 1) an insured's condition must be expected to improve in a reasonable and generally predictable period of time, or 2) he needs a skilled therapist to safely and effectively make a maintenance program for his condition, or 3) the insured needs a skilled therapist to safely and effectively do maintenance therapy for his condition.

The home health agency caring for the insured is approved by Medicare (Medicare certified).

The insured must be homebound, and a doctor must certify that he is homebound.

One is not eligible for the home health benefit if he needs more than part-time or "intermittent" skilled nursing care. An insured may leave home for medical treatment or short, infrequent absences for non-medical reasons, like attending religious services. He can still get home health care if he attends adult day care. Home health services may also include medical supplies for use at home, durable medical equipment, or injectable osteoporosis drugs. Costs Under Original Medicare

$0 for home health care services. 20% of the Medicare-approved amount for durable medical equipment

(dme) (DME). Before an insured starts getting his home health care, the home health agency should tell him how much Medicare will pay. The agency should also tell if any items or services they give aren't covered by Medicare, and how much the insured will have to pay for them. This should be explained by both talking with the insured and in writing. The home health agency should give a notice called the "Advance Beneficiary Notice of Noncoverage" (ABN) before giving services and supplies that Medicare doesn't cover. COVERAGE -- MEDICARE PART B

Premiums

Unlike Part A, most people pay a monthly premium for Medicare Part B, which may vary from year to year and depend on their situation. Other costs related to Medicare Part B coverage may include deductibles, copayments,

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and/or coinsurance costs. Costs may vary depending on the specific service or item. If an insured is not sure what he may have to pay, it’s a good idea to check with a doctor or supplier before receiving the service.

Eligibility & Enrollment Original Medicare Part B changes annually. That means that services covered and premiums can change. However, it basically covers most reasonable and necessary medical services with little benefit in the long term care areas. An individual can receive this coverage once he turns 65. If he waits to enroll in Part B until after age 65, the monthly premium may be higher, since Medicare imposes a 10 percent premium penalty for every year that enrollment is delayed. However, if an individual is working and is covered under his employer's group health plan, he may delay enrolling without a penalty until seven months after retirement. This enrollment period is a seven-month period beginning on the first day of the third month before the month he attains age 65. If a person decides not to enroll in the initial enrollment period, he may enroll during a special enrollment period beginning with the first day of the first month in which he is no longer enrolled in a group health plan by reason of employment, and the enrollment period ends months later. Deductibles, Charges & Costs

An insured pays $183 per year for your Part B deductible. After his deductible is met, he typically pays 20% of the Medicare-approved amount for most doctor services (including most doctor services while he is a hospital inpatient)

Medicare sets approved charges for all of the medical services it covers, such as:

Doctors’ services are covered wherever furnished in the United States. This includes the cost of house calls, office visits, and doctors’ services in a hospital or other institution. It includes the fees of physicians, surgeons, pathologists, radiologists, anesthesiologists, and osteopaths.

Services of clinical psychologists are covered if they would otherwise be covered when furnished by a physician.

Services by chiropractors with respect to treatment of subluxation of the spine by means of manual manipulation are covered.

Fees of podiatrists are covered, including fees for the treatment of plantar warts, but not for routine foot care. The cost of treatment of debridement of mycotic toenails is not included if performed more frequently than once every 60 days. Exceptions are authorized if medical necessity is documented by the billing physician.

The cost of routine physicals, most vaccine shots, examinations for eyeglasses and hearing aids is not covered.

The cost of diagnosis and treatment of eye and ear ailments is covered.

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Plastic surgery for purely cosmetic reasons is excluded. However, plastic surgery for repair of an accidental injury, an impaired limb, or a malformed part of the body is covered.

Charges imposed by an immediate relative (for example, a doctor who is a son or daughter or brother or sister of the patient) are not covered.

Radiological or pathological services furnished by a physician to a hospital inpatient are covered.

Immuno-suppressive drugs used in the first year of transplantation are covered.

Original Medicare Part B does not cover many common health expenses such as prescription drugs, routine checkups, vision and hearing care, custodial care, and dental care. It also does not cover experimental procedures. Medicare does cover biannual mammograms, tri-annual pap smears, or flu vaccines.

If an insured needs certain types of medically necessary durable medical equipment, such as walkers or hospital beds, he may be covered under Part B. He may be required to rent or buy the equipment from suppliers enrolled in the Medicare program, or Medicare may not cover it.

Medicare Part B coverage includes a variety of preventive services to keep insureds healthy and detect health conditions early on. This includes yearly ‘Wellness’ exams, screenings for various diseases and health conditions, nutrition therapy, tobacco cessation counseling, and certain vaccines (including flu shots, hepatitis B shots, and pneumococcal shots).

Part B includes limited prescription drug coverage. Certain types of medications (typically the ones that need to be administered by a doctor) may be covered, including injectable drugs or medications given by infusion. For all other prescription drug benefits under Original Medicare, an insured needs to sign up for Medicare Part D coverage or seek a supplemental or Medicare Advantage Plan that includes Pat D drugs (see below for more information).

Assignment Some health care providers take assignment which means that they agree to accept Medicare’s approved charge as payment in full, i.e., the insured would not be responsible for the 20% copay. Local Medicare carriers have a directory which lists all doctors and suppliers in the area who take assignment. If an individual wants to limit the amount he pays for medical expenses, he can obtain a copy of this directory and use it when choosing a health care provider. Even when doctors do not take assignment, federal law limits the amount that they may charge Medicare patients. This limit is 15 percent above

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Medicare's approved charge. Some states have stricter limits with respect to what doctors can charge Medicare patients. Payment of Claims A Patient’s Request for Medicare Payment form is used for submitting a supplementary medical insurance claim. This form must be submitted to the Medicare carrier in order for supplementary medical insurance to pay for covered services of doctors and suppliers. All Social Security offices and Medicare carriers and most doctors’ offices have copies of this form. If a doctor or supplier participates in Medicare or uses the assignment method of payment, he submits the claim. If the doctor of supplier does not accept assignment, the patient submits the claim, using the Patient’s Request for Medicare Payment form. It doesn’t matter whether all bills are from one doctor or supplier or from a number of different doctors or suppliers. A patient can send in the bills either before or after he pays them. The itemized bill must show the following: The place where the patient received the services A description of the services The charge for each service The doctor or supplier who provided the services The patient’s name and health insurance claim number If the bill does not contain all of this information, payment may be delayed. It is also helpful if the nature of the patient’s illness, that is, the diagnosis, is shown on the bill. A patient submitting a claim for the rental or purchase of durable medial equipment should include the bill from the supplier and the doctor’s prescription. The prescription must show the equipment needed, the medical reason for the need, and estimate how long the equipment will be medically necessary. Before any supplementary medical insurance payment can be made, a person’s record must show that he has met a $75 deductible. Once a person has met the deductible, he should send in future bills for covered services as soon as he gets them so that Medicare payment can be made promptly. If all medical bills for the year amount to less than $75, supplementary medical insurance will not pay any part of that person’s bills for the year. If the person filing a claim dies and payments are due, special rules apply for services covered under the supplementary medical insurance plan. Hospital insurance payments due will be paid directly to the hospital, skilled nursing facility, home health agency, or hospice that provided covered services. If the bill was paid by the patient or with funds from the patient’s estate, payment will be made either to the estate representative or to a surviving member of the patient’s immediate family. If someone other than the patient

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paid the bill, payment may be made to that person. If the bill has not been paid and the doctor or supplier does not accept assignment, the supplementary medical insurance payment can be made to the person who has the legal obligation to pay the bill for the deceased patient. This person can claim the supplementary medical insurance payment either before or after paying the bill. The time limit for submitting a supplementary medical insurance plan claim is 15 months. For example, for services received between October 1, 2018 and September 30, 2019, a claim must be submitted by December 31, 2020. If a person disagrees with a decision on the amount Medicare will pay on a claim or whether services received are covered by Medicare, he has the right to ask for a review of the decision. The notice from Medicare advising a person of the payment decision also tells him about his right of appeal and how to request it. If a person needs more information about his right to appeal, he should contact his local Social Security office, the Medicare intermediary or carrier, or the Peer Review Organization (PRO) in his state. Peer Review Organizations assign committees to conduct reviews involving Medicare and its decisions. A supplementary medical insurance claim may be appealed by the patient, the doctor, or the supplier who submits the claim. Medicare will notify the claimant of the decision made on the claim. If the person disputes the decision, he can ask the Medicare carrier for a review of the claim. If the claim is still disputed and if the amount in dispute is $100 or more, a hearing can be requested. Appeals can eventually be appealed to a federal court.

MEDICARE SAVINGS PROGRAMS

Seniors who cannot afford to pay their Medicare premiums and who do not qualify for Medi-Caid (Medi-Cal) can get help through various state programs. Current Programs and Amount Paid

Qualified Medicare Beneficiary Program -- pays for Medicare Part A and B, deductibles, copays and coinsurance

Specified Low-Income Beneficiary Program -- pays for Medicare Part B premiums only

Qualifying Individual Program -- pays for Medicare Part B premiums only.

NOTE: The Qualified Medicare Beneficiary (QMB) program is the only Medicare assistance program that pays premiums for both parts of Original Medicare. According to the Social Security Administration, all states must

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provide Medicaid to QMB enrollees for Medicare cost-sharing. Cost-sharing is the amount of money an enrollee would have to spend in premiums, deductibles, copayments, and coinsurance. But if he is approved as a QMB, he is not responsible for paying any cost-sharing, according to the Center for Medicare Advocacy. This means that his Medicare costs, including your premiums, are 100% covered. Even individuals who have income from working, may qualify for one of these programs BUT, there are income and resource limits, participant must meet before they are qualified. Income Limits Individuals are limited to income ranging from $1,032 to $1,386 (2018) Married couple limits range from $1,292 to $1,872 (2018 Resources

Limits on what can be owned are also factored into eligibility: Individual countable resources cannot exceed $7,560 Married couples can have no more than $11,340

Countable resources include:

Money in a checking or savings account, Stocks Bonds

Countable resources don't include:

A home One car Burial plot Up to $1,500 for burial expenses Furniture Other household and personal items

MEDICARE GAPS

Medicare is a blessing for most senior Americans, but it does NOT cover everything. For example, seniors are often surprised to learn that Medicare does not pay for services like:

20% of many costs are not covered -- coinsurance. Long term care -- The type of care one receives in a nursing home or

other long-term facility. Medicare Part A only covers limited skilled

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nursing facility care where personal care (i.e. help with daily tasks like bathing and eating) isn’t the only type of care needed.

Dental or Vision Services -- Unless related to a medical condition Services NOT considered medically necessary Nursing care at home Custodial care (help with eating, bathing, dressing, etc) Homemaker help Cosmetic Surgery Home delivered meals Orthopedic shoes Lasik eye surgery Naturopath treatments Medical equipment not primary to a medical condition Medical marijuana Incontinence supplies Nutritional supplements Original Medicare offers limited prescription drug benefits, and you’re

only covered for medications you receive in certain inpatient and outpatient situations. Instead, Original Medicare beneficiaries can sign up for Medicare Part D prescription drug coverage through a separate Medicare Prescription Drug Plan. Keep in mind that these plans provide stand-alone prescription drug benefits, and insureds need to stay enrolled in Part A and/or Part B for hospital and medical coverage.

THE FUTURE OF MEDICARE Medicare faces a number of critical issues and challenges, especially in providing quality care to aging baby boomers and while keeping the program financially secure for future generations. The Affordable Care Act (ACA) included numerous changes designed to improve Medicare benefits, slow the growth in Medicare spending, and improve the quality and delivery of care. While Medicare spending is on a slower upward trajectory now than in past decades, total and per capita annual growth rates appear to be edging away from their historically low levels of the past few years. Medicare prescription drug spending is also a growing concern, with the Medicare Trustees projecting a comparatively higher per capita growth rate for Part D in the coming years than in the program’s earlier years due to higher costs associated with expensive specialty drugs. A number of changes to Medicare have been proposed, including:

Restructuring Medicare benefits and cost sharing Further increasing Medicare premiums for beneficiaries with relatively

high incomes Raising the Medicare eligibility age Shifting Medicare from a defined benefit structure to a “premium

support” system

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Allowing people under age 65 to buy in to Medicare; and accelerating (or otherwise modifying) the ACA’s payment and delivery system reforms.

How Medicare is financed is equally important:

Medicare is financed by general revenues (45% in 2016), payroll tax contributions (36%), beneficiary premiums (13%), and other sources.

Part A is funded mainly by a 2.9 percent payroll tax on earnings paid by employers and employees (1.45% each) deposited into the Hospital Insurance Trust Fund. Higher-income taxpayers (income greater than $200,000/individual and $250,000/married couple) pay a higher Medicare payroll tax on earnings (2.35%). The Part A Trust Fund is projected to be solvent through 2029.

Part B is funded by general revenues and beneficiary premiums; the standard premium is $134 per month in 2018, the same as in 2017. Medicaid pays Part B premiums on behalf of beneficiaries who qualify for Medicaid based on having low incomes and assets. Beneficiaries with incomes greater than $85,000 for individuals or $170,000 for married couples filing jointly pay a higher, income-related monthly Part B premium, ranging from $187.50 to $428.60 per month in 2018. Although the standard Part B monthly premium is unchanged for 2018, most beneficiaries paid a lower monthly premium in 2017 due to the hold-harmless provision (about $109, on average), and will therefore face an increase in their Part B premium for 2018.

Part C, the Medicare Advantage program, is not separately financed; Medicare Advantage plans provide benefits covered under Part A, Part B, and (typically) Part D, and these benefits are financed primarily by payroll taxes, general revenues, and premiums, as described. Medicare Advantage plan enrollees generally pay the monthly Part B premium and many also pay an additional premium directly to their plan. The average premium for Medicare Advantage drug plans in 2017 is $36 per month.

Part D is funded by general revenues, beneficiary premiums, and state payments. The average PDP premium for 2018 is $43.48 per month (weighted by 2017 enrollment). Part D enrollees with higher incomes pay an income-related premium surcharge, with the same income thresholds used for Part B. In 2018, premium surcharges range from $13 to $74.80 per month for higher-income beneficiaries.

As areas of financing Medicare become stressed, changes in the program can be anticipated. This can result in higher copays and coinsurance and deductibles and changes in coverage as well. No one knows for sure what the future will bring.

FAQs ABOUT MEDICARE

What out of pocket costs will an enrollee pay?

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Out-of-pocket costs in Original Medicare depend on:

Whether you have Part A and/or Part B. Most people have both. Whether your doctor, other health care provider, or supplier accepts

“assignment.” See the next page for more information. The type of health care you need and how often you need it. Whether you choose to get services or supplies Medicare doesn’t

cover. If you do, you pay all costs unless you have other insurance that covers them.

Whether you have other health insurance that works with Medicare. Whether you have Medicaid or get help from your state paying your

Medicare costs. Whether you have a Medicare Supplement Insurance (Medigap) policy. Whether you and your doctor or other health care provider sign a

private contract.

How do I know what Medicare paid on my behalf?

Original Medicare enrollees, will get “Medicare Summary Notices” (MSN) in the mail every 3 months that lists all the services billed to Medicare. The MSN shows what Medicare paid and what an enrollee may owe the provider. The MSN isn’t a bill. MSNs should be reviewed to be sure enrollees get all the services, supplies, or equipment listed

What’s a Medicare Assignment? Medicare Assignment means a doctor, provider, or supplier agrees (or is required by law) to accept the Medicare-approved amount as full payment for covered services. If your doctor, provider, or supplier accepts assignment:

Your out-of-pocket costs may be less. They agree to charge you only the Medicare deductible and

coinsurance amount and usually wait for Medicare to pay its share before asking you to pay your share.

They have to submit your claim directly to Medicare and can’t charge you for submitting the claim. Non-participating providers haven’t signed an agreement to accept assignment for all Medicare-covered services, but they can still choose to accept assignment for individual services. These providers are called “non-participating.” Here’s what happens if your doctor, provider, or supplier doesn’t accept assignment:

You might have to pay the entire charge at the time of service. Your doctor, provider, or supplier is supposed to submit a claim to Medicare for any Medicare-covered services they provide to you. If they don’t submit the Medicare claim once you ask them to call 1-800-MEDICARE (1-800-633-4227). TTY users can call 1-877-486-2048.

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They can charge you more than the Medicare-approved amount, but there’s a limit called “the limiting charge.” To find out if someone accepts assignment or participates in Medicare, visit Medicare.gov/physician or Medicare.gov/supplier. Or, you can call 1-800-MEDICARE.

Are there other types of Medicare health plans and projects? Some types of Medicare health plans that provide health coverage aren’t Medicare Advantage or Supplement (Medigap) Plans but are still part of Medicare. Some of these plans provide Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) coverage, while others provide only Part B coverage. In addition, some also provide Part D prescription drug coverage. Medicare Cost Plans Medicare Cost Plans are a type of Medicare health plan available in certain areas of the country. Here’s what you should know about Medicare Cost Plans:

You can join even if you only have Part B. If you have Part A and Part B and go to a non-network provider, the

services are covered under Original Medicare. You’ll pay the Part A and Part B coinsurance and deductibles.

You can join anytime the Cost Plan is accepting new members. You can leave anytime and return to Original Medicare. You can either get your Medicare prescription drug coverage from the

Cost Plan (if offered) or you can join a Medicare Prescription Drug Plan. Even if the Cost Plan offers prescription drug coverage, you can choose to get drug coverage from a different plan. Note: You can add or drop Medicare prescription drug coverage only at certain times. For more information about Medicare Cost Plans, visit the Medicare Plan Finder at Medicare.gov/find-a-plan. Your State Health Insurance Assistance Program (SHIP) can also give you more information.

PACE is a Medicare and Medicaid program offered in many states that allows people who otherwise need a nursing home-level of care to remain in the community. To qualify for PACE, you must meet these conditions:

You’re 55 or older. You live in the service area of a PACE organization. You’re certified by your state as needing a nursing home-level of care. At the time you join, you’re able to live safely in the community with

the help of PACE services. PACE provides coverage for many services, including prescription drugs, doctor or other health care practitioner visits, transportation, home care, hospital visits, and even nursing home stays whenever necessary. If you have Medicaid, you won’t have to pay a monthly premium for the long-term care portion of the PACE benefit. If you have Medicare but not Medicaid, you’ll be charged a

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monthly premium to cover the long-term care portion of the PACE benefit and a premium for Medicare Part D drugs. However, in PACE, there’s never a deductible or copayment for any drug, service, or care approved by the PACE team of health care professionals. Visit Medicare.gov/find-a-plan, to see if there’s a PACE organization that serves your community. Medicare Innovation Projects Medicare develops innovative models, demonstrations, and pilot projects to test and measure the effect of potential changes in Medicare. These projects help to find new ways to improve health care quality and reduce costs. Usually, they operate only a limited time for a specific group of people and/or are offered only in specific areas. Examples of current models, demonstrations, and pilot projects include innovations in primary care, care related to specific procedures (like hip and knee replacements), cancer care, and care for people with End-Stage Renal Disease. To learn more about the current Medicare models, demonstrations, and pilot projects, visit innovation.cms.gov. You can also call 1-800-MEDICARE (1-800-633-4227). TTY users can call 1-877-486-2048.

NOTE: Original Medicare Certain doctors and other health care providers who don’t want to enroll in the Medicare program may “opt out” of Medicare. You can still see these providers, but they must enter into a private contract with you (unless you’re in need of emergency or urgently needed care). Medicare won’t pay for any services you get under a private contract, so you’ll pay the provider’s entire charge out of your own pocket. You and your provider will set up your own payment terms through the private contract.

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MEDICARE SUPPLEMENTS MEDIGAP PLANS SUMMARY

Medicare Supplement Insurance (Medigap) policies were created to help pay some of the health care costs that Original Medicare doesn't cover, like:

Copayments Coinsurance Deductibles

Medigap policies are sold by private companies. Some Medigap policies also cover services that Original Medicare doesn't cover, like medical care when you travel outside the U.S. If you have Original Medicare and you buy a Medigap policy, here's what happens:

Medicare will pay its share of the Medicare-approved amount for covered health care costs first.

Then, the insured's Medigap policy pays its share.

Example: George incurs a $5,000 ambulance bill and has already met his yearly Medicare Part B deductible. Medicare Part B will pay 80% of his ambulance bill. George also has a Medicare Supplement plan that covers Part B copayments and coinsurance costs, so his Medigap policy would then pay the remaining 20% coinsurance of the $5,000 ambulance bill. Some Medicare Supplement plans may also cover Part B deductibles.

NOTE: Medigap plans ARE NOT:

Medicare Advantage Plans (like an HMO, PPO, or Private Fee-for-Service Plan)

Medicare Prescription Drug Plans Medicaid Employer or union plans, including the Federal Employees Health

Benefits Program (FEHBP) TRICARE Veterans' benefits Long-term care insurance policies Indian Health Service, Tribal, and Urban Indian Health plans

NOTE: An applicant needs to be enrolled in Original Medicare to be eligible for Medigap coverage, and he or she will need to stay enrolled in Original

SENIOR HEALTH

INSURANCE

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Medicare for hospital and medical coverage. Medicare Supplement plans aren’t meant to provide stand-alone benefits. AGENT ALERT: Things agents should know about Medicare Supplements Plans include: 1) Insureds must have Medicare Part A and Part B. 2) A Medigap policy is different from a Medicare Advantage Plan. Those

plans are ways to get Medicare benefits, while a Medigap policy only supplements Original Medicare benefits.

3) Insureds pay the private insurance company a monthly premium for their Medigap policy. They pay this monthly premium in addition to the monthly Part B premium paid to Medicare.

4) A Medigap policy only covers one person. If an insured and his spouse both want Medigap coverage, they will each have to buy separate policies.

5) Applicants can buy a Medigap policy from any insurance company that's licensed in their state to sell one.

6) Any standardized Medigap policy is guaranteed renewable even if the insured has health problems. This means the insurance company can't cancel a Medigap policy as long premiums are paid.

7) Some Medigap policies sold in the past cover prescription drugs. But, Medigap policies sold after January 1, 2006 aren't allowed to include prescription drug coverage. If insureds want prescription drug coverage, they can join a Medicare or purchase a Medicare Advantage Plan.

8) It's illegal for anyone to sell an insured a Medigap policy if he has a Medicare Advantage Plan, unless he is switching back to Original Medicare.

9) If an applicant who misses his personal enrollment period (see below)to apply for a Medigap Plan, me may have to answer health questions and pass medical underwriting to be approved, i.e., a Medigap applicant may be subject to pre-existing conditions..

10) Every Medigap policy must be clearly identified as “Medicare Supplement Insurance.”

11) One can generally use your Medicare Supplement plan with any provider that accepts Medicare. However, some types of Medigap plans known as Medicare SELECT plans require the insured to only use doctors and hospitals in provider networks.

12) Not all types of Medicare Supplement plans may be available in every state.

13) Premium costs may vary by plan and location, even for the same standardized benefits.

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OTHER MEDIGAP PLAN POTENTIAL COVERAGE GAPS ...Medigap plans don’t include prescription drug coverage (Part D). Insureds who need help with their medication costs, they will need to enroll in a stand-alone Medicare Prescription Drug Plan. ...Medicare Supplement plans DO NOT PAY for costs an insured may have with a Medicare Advantage plan. Medigap insurance can only be used to cover costs in Original Medicare. ...Medigap policies generally don't cover long-term care, vision or dental care, hearing aids, eyeglasses, or private-duty nursing.

ELIGIBILITY & ENROLLMENT

Personal Enrollment Period The best time to buy a Medigap policy is during the 6-month Medigap personal enrollment period. During that time an applicant can buy any Medigap policy sold in his state, even if he has health problems. This period automatically starts the month the applicant turns 65 and is enrolled in Medicare Part B (Medical Insurance). During this period, applicants can enroll in any Medicare Supplement Plan without answering ANY health questions, i.e., there are no pre-existing condition. After this enrollment period, an applicant with a pre-existing condition may not be able to buy a Medigap policy. If he can, it may cost more. Outside this enrollment period an applicant can apply for a new Medicare Supplement plan any time of year, but in most states he must now answer health questions and pass medical underwriting to be approved.

Example: Harry signed up for Medicare but was real busy when he turned 65, so he missed his personal six-month enrollment period to purchase a Medigap plan. With Harry's heart condition he was unable to get approved by any supplement company. Fortunately, Harry has another options: Sign up for a Medicare Advantage plan with no pre-existing condition limitations.

Example: Jan also missed her enrollment window. But because Jan was still working and maintained a creditable employer group health plan after she turned 65, Medicare's guaranteed issue law allowed her a new, 63-day guaranteed issue window to enroll in any Medigap plan A, B, C, F, K or L with no health questions. Unlike Harry, she did not need to worry about pre-existing conditions.

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Note: that Medigap Plan G is not one of the plans offered under Guaranteed issue rules. Plan G is a popular plan, so if you really want Plan G, you’ll need to apply for it and go through underwriting. Pre-Existing Conditions

Inside your personal enrollment period (see above) Medigap insurers cannot ask an applicant about any pre-existing conditions. After the initial enrollment period, there are several rules regarding pre-existing conditions:

An insurance company can't make the applicant wait for coverage to start, but it may be able to make the insured wait for coverage if you have a pre-existing condition.

In some cases, the Medigap insurance company can refuse to cover

any out-of-pocket costs for these pre-existing health problems for up to 6 months (called the "pre-existing condition waiting period"). After these 6 months, the Medigap policy will cover typically cover pre-existing condition.

Coverage for the pre-existing condition can be excluded if the

condition was treated or diagnosed within 6 months before the coverage starts under the Medigap policy. After this 6-month period, the Medigap policy will cover the condition that was excluded.

When you get Medicare-covered services, Original Medicare will still

cover the condition, even if the Medigap policy won't cover the out-of-pocket costs, but the insured is responsible for the coinsurance or copayment copayment

MEDIGAP COVERAGE PLANS Original Medicare, Part A and B, pays for many of your health-care services and supplies, but it doesn’t pay for everything. That is why your Medicare eligible clients need a Medicare supplement policy, also called Medigap, or a Medicare Advantage plan which eliminates the need for a Medigap Plan as most or all of the supplemental benefits covered in a Medigap policy are covered by a Medicare Advantage Plan along with Part A and Part B Medicare benefits. Medigap policies are standardized Every Medigap policy must follow federal and state laws designed to protect enrollees, and they must be clearly identified as “Medicare Supplement Insurance.” Insurance companies can sell only a “standardized” policy identified in most states by letters A through D, F through G, and K through

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N. All policies offer the same basic benefits, but some offer additional benefits so enrollees can choose which one meets their needs. Unlike Original Medicare, a Medicare Supplement plan is offered through private insurance companies. These Medigap plans help pay some of the hospital and medical costs that Original Medicare doesn’t cover, such as copayments, coinsurance, and yearly deductibles. Some Medicare Supplement plans also help pay for a few services that Original Medicare doesn’t cover, such as certain skilled nursing expenses, emergency overseas travel coverage or Part B excess charges. Two Medigap plans (see below) include a yearly out-of-pocket limit, which Original Medicare doesn’t include. Basically, a Medigap policy fills the “gaps” in Original Medicare coverage. Current Medigap or Medicare Supplement Plans Currently, there are 10 standardized Medigap plans, each represented by a letter (A, B, C, D, F, G, K, L, M, N; there’s also a high-deductible version of Plan F). These plans are available in most states; Massachusetts, Minnesota, and Wisconsin each have their own different set of standardized Medicare Supplement plans. Medigap Plans typically cover the following benefits:

Medicare Part A coinsurance and hospital costs (up to an additional 365 days after Medicare benefits are used)

Medicare Part B coinsurance or copayment Blood (first 3 pints) Part A hospice care coinsurance or copayment

Coverage levels and premiums vary, but the benefits of each plan within a lettered category remain the same despite the insurance company or location. For example, Plan A benefits are the same in New Jersey as they are in Oregon. If a Medicare Supplement plan includes a certain benefit, this benefit is covered 100% unless otherwise specified (see the chart below). The following additional benefits can be found in some Medigap Plans:

Skilled nursing facility care coinsurance Medicare Part A deductible Medicare Part B deductible Medicare Part B excess charges (the amount that a non-participating

provider may charge above the Medicare-approved cost for a service) Foreign travel emergency (up to plan limits)

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Two Medicare Supplement plans (Plan K and Plan L) include an out-of-pocket limit. Once your spending for Medicare-covered services reaches a certain amount, the Medigap plan will cover 100% of Medicare-covered costs for the rest of the year. Medigap policies generally do not cover the following health services and supplies:

Long-term care (care in a nursing home) Routine vision or dental care Hearing aids Eyeglasses Private-duty nursing Prescription drugs***

***However, a Medigap policy purchased prior to January 1, 2006 may include prescription drug coverage. Plans H, I, and J included limited prescription coverage for people who purchased them prior to 2006, although those plans are no longer sold. Medigap Policy Owners in this situation and who want to join a prescription drug plan (Med Pafrt D), must drop their prescription drug coverage from their Medigap since one can’t have two separate prescription drug coverage policies at the same time. Insured's considering such a switch should be advised that they may be subject to underwriting and may some "late" penalties.

The chart below shows basic information about the different benefits Medigap policies cover.

MEDIGAP INSURANCE PLANS

Yes = the plan covers 100% of this benefit No = the policy doesn't cover that benefit % = the plan covers that percentage of this benefit N/A = not applicable

Medigap Benefits Medigap Plans A B C D F* G K L M N

Part A coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used up

Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Part B coinsurance or copayment Yes Yes Yes Yes Yes Yes 50% 75% Yes Yes***

Blood (first 3 pints) Yes Yes Yes Yes Yes Yes 50% 75% Yes Yes Part A hospice care coinsurance or copayment

Yes Yes Yes Yes Yes Yes 50% 75% Yes Yes

Skilled nursing facility care coinsurance No No Yes Yes Yes Yes 50% 75% Yes Yes

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Part A deductible No Yes Yes Yes Yes Yes 50% 75% 50% Yes Part B deductible No No Yes No Yes No No No No No Part B excess charge No No No No Yes Yes No No No No Foreign travel exchange (up to plan limits)

No No 80%80%80%80%No No 80% 80%

Out-of-pocket limit** N/A N/AN/A N/A N/A N/A $5,240$2,620 N/A N/A * Plan F also offers a high-deductible plan. If you choose this option, this means you must pay for Medicare-covered costs up to the deductible amount of $2,200 in 2017 ($2,240 in 2018) before your Medigap plan pays anything. ** After you meet your out-of-pocket yearly limit and your yearly Part B deductible, the Medigap plan pays 100% of covered services for the rest of the calendar year. *** Plan N pays 100% of the Part B coinsurance, except for a copayment of up to $20 for some office visits and up to a $50 copayment for emergency room visits that don't result in inpatient admission.

AGENT ALERT: PLAN F & C ARE BEING PHASED OUT The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) passed by Congress and signed into law on April 16, 2015 will phase out Medigap Plan F and C, even though it is the most popular plan chosen by almost 2.3 of seniors wanting a supplement plan. Why? Because it covers both Medicare deductibles and all copays and coinsurance. It costs a little more to buy, but with no deductible or copays, people tend to visit their doctors more often. For that reason, it is also a more expensive for the government. So, starting January 1, 2020, Medigap plans sold to new people with Medicare won’t be allowed to cover the Part B deductible. Because of this, Plan F will no longer be available to people new to Medicare. Only new enrollees are effected. An insured who already has either these 2 plans (or the high deductible version of Plan F) or are covered by one of these plans before January 1, 2020, will be able to keep it. Applicants eligible for Medicare before January 1, 2020, but not yet enrolled, may be able to buy one of these plans. Plan G is the next most popular plan because it offers the same broad coverage as Plan F except for the Part B deductible, which is $185 in 2019. The only difference when you compare Medicare supplements Plan F and Plan G is that deductible

Spotlight On Plan G Better than 55 percent of all Medicare Supplement Insurance beneficiaries in 2018 were enrolled in Medigap Plan F, which was by far the most popular

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type of Medigap plan. Plan G was the second-most popular type of Medigap plan, with 10 percentof all Medigap enrollees. Since Plan F and Plan C are being phased out for new enrollees, agents would be advised to learn more about Plan G, which is expected to become the next best thing! Medicare Part B deductible Medicare Supplement Insurance Plan F offers coverage for the Medicare Part B deductible ($185 per year in 2019), and Medicare Plan G does not. This is the primary difference in coverage between these two types of Medigap plans. Because of this, Medicare Supplement Plan G may cost less than Part F. Of course, some like the idea that "everything" was covered. On average, however, the loss of the covered Part B deductible amounts to a little more than $15 per month. The possibility of lower premiums for Plan G should easily offset this cost. Plan availability Each type of Medicare Supplement Insurance plan may not be available in every location. In the past, more providers have offered Plan F than Plan G. However, with he phase out of Plan F. it is expected that most insurers will offer it. Currently, the law states that a supplement provider MUST offer at least Plan A. If they offer additional plans they must at least include Plan C or F. This is expected to change too. Plan Benefits

All Medicare Part A hospital costs and coinsurance 100% of the coinsurance or co-payment amount for Medicare Part B The cost of the first three pints of blood 100% of the cost of hospice care coinsurance or co-payment for Part A Any coinsurance costs for care at a skilled nursing facility 100% of the deductible amount for Part A 100% of the excess charges, but not the deductible, for Part B 80% of the plan’s limit for emergency medical services while traveling

in a foreign country

Plan G Qualification The same Personal Enrollment and Pre-Existing Conditions above apply to Plan G. Plan G Premiums Medigap Plan G rates vary widely, depending on what part of the country the enrollee resides, age, and gender. In most areas of the country, Plan G prices start at around $90-110/month. However, there are some states that are lower and some that are much higher. No matter the State, Plan G premiums will be lower than Plan F. Other Factors

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Premiums are not the only way someone might save with Plan G. Agents have also noticed that Plan G annual rate increases have been somewhat lower than those for Plan F. Why? Plan G is attractive to people who rarely go to the doctor so loss ratios are lower resulting in lower premiums. Of course, no one knows where this will go, especially once Plan F goes away and the masses, including those with more medical conditions, start buying Plan G. MEDIGAP PLAN COSTS The cost of Medigap policies vary widely. The same plan can have different premiums for different insurance companies because each insurance company sets its own premiums. Medigap policies can be priced or "rated" in three ways.

MEDIGAP PLAN POLICY COSTS

Type of pricing

How it's priced

What pricing means Examples

Community-rated (also called No-Age-Rated)

The same monthly premium is charged to everyone who has the Medigap policy, regardless of age.

Premiums are the same no matter how old you are. Premiums may go up because of inflation and other factors.

Mr. Smith is 65. He buys a Medigap policy and pays a $165 monthly premium.

Mrs. Perez is 72. She buys the same Medigap policy as Mr. Smith. She also pays a $165 monthly premium because with this type of policy, everyone pays the same price, regardless of age.

Issue-Age-Rated Policies

The premium is based on the age you are when you buy (are "issued") the Medigap policy.

Premiums are lower for younger buyers and won’t change as you get older. Premiums may go up because of inflation and other factors.

Mr. Han is 65. He buys a Medigap policy and pays a $145 monthly premium.

Mrs. Wright is 72. She buys the same Medigap policy as Mr. Han. Since she is older at the time she buys it, her monthly premium is $175.

Attained-Age-Rated Policies

The premium is based on your current age (the age you have "attained") so your premium goes up as you get older.

Premiums are low for younger buyers, but go up as you get older and can eventually become the most expensive. Premiums may also go up because of inflation and other factors.

Mrs. Anderson is age 65. She pays a $120 monthly premium. Her premium will go up every year. At age 66, her premium

goes up to $126

At age 67, her premium goes up to $132

At age 72, her premium goes up to $165

Mr. Dodd is age 72. He buys the same Medigap policy as Mrs.

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Anderson. He pays a $165 monthly premium. His premium is higher than Mrs. Anderson’s because it is based on his current age. Mr. Dodd’s premium will go up every year. At age 73, his premium

goes up to $171

At age 74, his premium goes up to $177

A WORD ON MEDICARE SUPPLEMENT PLANS As you can see from this discussion, Medigap plans can be detailed and frankly confusing. Add to this the fact that clients also need to add the Medicare Part D plan and it is easy to see why Medicare Advantage plans have grown substantially in the past several years. They offer "all-in-one" coverage. Some sources, however, believe them to be inferior coverage to a Medicare/Medigap/Part D combination in that they offer an HMO approach to senior health care where patients may not have a choice in what doctor they see. FAQs ON MEDIGAP PLANS What else should I know about Medicare Supplement Insurance (Medigap)? Important facts

You must have Part A and Part B. You pay the private insurance company a monthly premium for your

Medigap policy in addition to your monthly Part B premium that you pay to Medicare. Also, if you join a Medigap policy and a Medicare drug plan offered by the same company, you may need to make 2 separate premium payments for your coverage. Contact the company to find out how to pay your premiums. A Medigap policy only covers one person. Spouses must buy separate policies.

You can’t have prescription drug coverage in both your Medigap policy and a Medicare drug plan. The same insurance company may offer Medigap policies and Medicare Prescription Drug Plans.

It’s important to compare Medigap policies since the costs can vary between insurance companies for exactly the same coverage, and may go up as you get older. Some states limit Medigap premium costs.

In some states, you may be able to buy another type of Medigap policy called Medicare SELECT. If you buy a Medicare SELECT policy, you have rights to change your mind within 12 months and switch to a standard Medigap policy. When to buy

The best time to buy a Medigap policy is during your Medigap Open Enrollment Period. This 6-month period begins on the first day of the

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month in which you’re 65 or older and enrolled in Part B. (Some states have additional Open Enrollment Periods.) After this enrollment period, you may not be able to buy a Medigap policy. If you’re able to buy one, it may cost more.

If you delay enrolling in Part B because you have group health coverage based on your (or your spouse’s) current employment, your Medigap Open Enrollment Period won’t start until you sign up for Part B. • Federal law generally doesn’t require insurance companies to sell Medigap policies to people under 65. If you’re under 65, you might not be able to buy the Medigap policy you want, or any Medigap policy, until you turn 65. However, some states require Medigap insurance companies to sell Medigap policies to people under 65. If you’re able to buy one, it may cost more.

How does Medigap work with Medicare Advantage Plans? IMPORTANT: It’s illegal for agents to sell a Medigap policy to someone who has a Medicare Advantage Plan unless they’re switching back to Original Medicare.

If you have a Medigap policy and join a Medicare Advantage Plan, you may want to drop your Medigap policy.

Your Medigap policy can’t be used to pay your Medicare Advantage Plan copayments, deductibles, and premiums.

If you want to cancel your Medigap policy, contact your insurance company.

In most cases, if you drop your Medigap policy to join a Medicare Advantage Plan, you won’t be able to get it back.

If you join a Medicare Advantage Plan for the first time, and you aren’t happy with the plan, you’ll have special rights under federal law to buy a Medigap policy if you return to Original Medicare within 12 months of joining.

If you had a Medigap policy before you joined, you may be able to get the same policy back if the company still sells it. If it isn’t available, you can buy another Medigap policy.

If you joined a Medicare Advantage Plan when you were first eligible for Medicare, you can choose from any Medigap policy within the first year of joining.

You may be able to join a Medicare Prescription Drug Plan. Some states provide additional special rights.

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MEDICARE ADVANTAGE PLANS (Part C Medicare) SUMMARY

Medicare Advantage is also known as Medicare Part C. They are technically a not a Medigap plan and work different than most Medigap or Medicare Supplement Plans. In a nutshell, Medicare Advantage is a form of private health insurance for seniors that provide the same coverage as Medicare Part A and Part B (original Medicare). They are an alternative way for seniors to obtain the same benefits of original Medicare and may include additional benefits like dental, vision and prescription drug coverage. People also refer to these plans as senior HMO's or Coordinated Care plans. On the negative side, when one is covered by a Medicare advantage plan, he may not be able to use the doctor he wants. Some plans require a gatekeeper primary doctor be visited before can go to a specialist. Others may allow direct visits as long as the doctor is within the MA's network. Medicare Advantage plans are widely used and growing in popularity because they cover everything that Medicare covers WITHOUT a 20% co-pay and WITHOUT needing to buy a Medicare Supplement (Medi-Gap) Plan and/or a Prescription Drug Plan (Part D Medicare). Most Medicare Advantage Plans combine all three without monthly premiums and without the complexity of monitoring three forms of coverage. Of course, the plan participant still pays his Medicare Part B premiums, just like he would if he had Original Medicare or Medicare plus a Supplement Plan. How Are Private Medicare Advantage Plans Reimbursed by the Government? Medicare Advantage (MA) plans are paid a flat monthly amount for each enrolled member to manage the health care of the enrollee by the Center for Medicare Services (CMS). The MA plans pay all the costs, nothing is billed to Medicare. However, Medicare will pay a higher monthly amount to the MA if the enrollee has more chronic health conditions. How much does the government pay a MA Plan to take care of a members healthcare? The amount differs based on the region of the country and can increase if a particular member has a chronic disease. In general, the Medicare system pays about $850 a month for each enrollee in 2018. Most MA plans cover Part D prescriptions costs and are reimbursed there as well. The national average is $85 per month in 2018. Private insurers usually submit a bid for monthly reimbursement to CMS.

SENIOR HEALTH

INSURANCE

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In 2017, 19 million people were enrolled in Medicare Advantage plans, according to the Kaiser Family Foundation (KFF).

IMPORTANT: While Medicare Parts A and B are accessible throughout the U.S., not all areas of the country offer Medicare Advantage Plans. In fact, the Kaiser Family Foundation has found 147 counties (mostly in the West) where residents have no available Advantage Plans. MEDICARE ADVANTAGE PLAN TYPES

The number of Medicare Advantage plans available to you will depend in part on where one lives and how many companies offer coverage in that area. There are 5 major types of Medicare Advantage plans:

Health Maintenance Organizations (HMOs) Preferred Provider Organizations (PPOs) Private Fee-for-Service (PFFS) plans Special Needs Plans (SNPs) Medical Savings Accounts (MSAs)

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Health Maintenance Organization (HMO) plans HMO plans offer low-cost coverage options but come with some network restrictions. Members are covered only for medical providers and hospitals within the HMO’s specific network, unless it’s emergency or urgent care. Going outside the network means the provider may not pay for the services. In most cases, HMOs require the member to pick a primary care physician who acts as a gatekeeper to refer additional specialists needed. Most HMO plans provide prescription drug coverage which eliminates the need to sign up for Medicare Part D. However, if an HMO does NOT offer a drug plan the member should switch to a plan offered by the provider or another provider in the area that does. If none can be found, the member can switch to Original Medicare and join a Medicare Prescription Drug Plan. Preferred Provider Organization (PPO) plans PPO Medicare Advantage plans offer coverage through a network of providers, but the member is allowed to access out-of-network care for covered services, usually for a higher cost. If the member goes to doctors and hospitals in the plan's network, he will generally pay less. With PPO Plans the member is not required to choose a primary care doctor (PCP) and he does not usually need a referral to see a specialist. Most PPO plans provide prescription drug coverage. However, if an PPO does NOT offer a drug plan the member should switch to a plan offered by the provider or another provider in the area that does. If none can be found, the member can switch to Original Medicare and join a Medicare Prescription Drug Plan. Private Fee-for-Service (PFFS) plans With PFFS plans, a member may go to any Medicare-approved doctor or health care facility that has accepted the plan's payment terms and agreed to treat members of his Medicare Advantage plan. Emergencies are treated even if the health care provider has not agreed to a plan’s terms. Some PFFS plans may use a provider network. Enrolling in one of these plans one can also see any of the network providers who’ve agreed to always treat plan members. If he chooses to visit an out-of-network provider who accepts the plan’s terms, he may face extra charges. A member does not need to choose a primary care doctor with PFFS plans, and he do not need a referral to see a specialist. Some PFFS plans offer prescription coverage. If a plan does not offer coverage, the member can join a Medicare Part D plan.

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Special Needs Plans (SNPs) SNPs are only available to Medicare beneficiaries with specific diseases or health conditions. The plans are structured to benefit their members according to their health needs. SNPs limit membership to those with chronic or disabling conditions like dementia and HIV/AIDS or those living in institutions such as nursing homes. The plans are tailored for these members to provide the most suitable benefits, providers, and drug formularies for the group. With an SNP, members need to visit in-network doctors and hospitals, unless he needs emergency or urgent care or in other limited situations. The plans usually require the member choose a primary care doctor or a care coordinator. In addition, you there will usually need to be a referral to see a specialist. All SNPs must provide prescription drug coverage. Medical Savings Accounts Medical Savings Accounts provide members a high-deductible health care plan and a bank account. Medicare will deposit money into the account and the member can use the money to pay for his health care services throughout the year. MSAs cover all of the required Medicare services and can provide additional benefits such as vision and dental coverage. MSAs do not include prescription drug coverage. Members can join a Medicare prescription drug plan. ELIGIBILITY & ENROLLMENT

There are 3 general eligibility requirements to qualify for Medicare Part C:

1) The participant must be enrolled in Original Medicare (Part A and Part B)

2) There must be a Medicare Advantage plan offered in the area where the participant resides

3) The participant cannot have End Stage Renal Disease (ESRD)

One MUST BE enrolled in Original Medicare before he can enroll in a Medicare Advantage plan. Likewise, one cannot sign up for Medicare Advantage and a Medicare Supplement Plan at the same time.

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Enrollment in a Medicare Advantage plan is handled through a private insurance company, not the government. When applicants can enroll is similar to Original Medicare as shown in the chart below:

MEDICARE ADVANTAGE ENROLLMENT PERIODS

Initial Enrollment Starts 3 months before applicant turns 65. Ends 3 months after applicant turns 65

Open Enrollment Starts October 15 Ends December 7

Medicare requires that you enroll in, dis-enroll from, or make changes to your Medicare Advantage plan only during pre-determined enrollment periods. There are also Special Enrollment Periods that may let an applicant join a plan outside of the main enrollment periods, depending on his circumstances. COVERAGE

Benefits Are The Same As Medicare In general, all Medicare Advantage plans must include the same standard benefits as Original Medicare. The member could pay MORE THAN Original Medicare for some services and/or LESS THAN Original Medicare for others. Services that are covered MUST BE deemed medically necessary which means that the services, supplies, drugs are needed for the prevention, diagnosis, or treatment of the patient's medical condition and meet accepted standards of medical practice. Some Medicare Advantage plans also provide extra benefits such as prescription drug, dental, and vision coverage. Additional benefits vary from plan to plan. Organization Determinations An enrollee can request to see if an item or service will be covered by the plan in advance. Sometimes you must do this for the service to be covered. This is called an “organization determination.” If your plan denies coverage, the plan must tell you in writing. You don’t have to pay more than the plan’s usual cost-sharing for a service or supply if a network provider didn’t get an organization determination and either of these is true:

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• The provider gave you or referred you for services or supplies that you reasonably thought would be covered. • The provider referred you to an out-of-network provider for plan-covered services. Network Restrictions Unlike Original Medicare, most Medicare Advantage plans, especially the ones with no premiums, restrict coverage to in-network health care providers in order to keep costs lower. This also generally means that there are "gatekeepers" or Primary Care Providers (PCP) who coordinate all covered services. A member would require their PCP to must issue written referrals or advanced authorizations to obtain medical services such as:

X-rays Lab tests Therapies Specialist care Hospital admission Follow-up care

PCP's are typically chosen by the member from a directory of available physicians. If one is not chosen within 30 days of enrolling in a plan, the plan will choose one for the member. Changing PCP's is typically allowable at any time. NOTE: Physician Changes Happen. PCPs or specialists may, from time-to-time, leave a Medicare Advantage plan to contract direct with Medicare or to join another advantage plan. While Medicare requires Medicare Advantage Plans to furnish uninterrupted access to qualified doctors and specialists, a member may lose his or her "favorite" doctor and be forced to choose another. If the patient is in the middle of some on-going procedure, the Plan may help to keep those services going, but there is no guarantee. NOTE: Do not assume that an insured on Original Medicare will always be able to see their own doctor or ANY doctor they wish. People who are critical of Medicare Advantage Plans say straight Medicare plus a Medicare Supplement Plan is superior because you can go to ANY doctor. However, not all doctors accept Medicare. Thanks to the federal program’s low reimbursement rates, stringent rules and grueling paperwork process, many doctors today are refusing to accept Medicare’s payment for services. Some studies show the percent of doctors taking Medicare has dropped to 60%, compared to 80% just 7 years ago (2012).

Why are more and more doctors turning down Medicare? Physicians feel that Medicare reimbursements haven't kept pace with inflation (especially the costs of running a medical practice), while the rules and regulations keep getting more onerous, as do penalties for not complying with them.

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Nothing is 100% in senior health care.

The Author's Experience The author is currently enrolled in a Medicare Advantage Plan. He has nothing but good things to report on plan coverage, doctor services and the overall level of care (finding the right primary doctor is the key to better service). The author's parents and in-laws (one now in her 90's) have been enrolled in Advantage Plans as far back as the mid 1980's. Again, great things to report even through some major events: back surgery, Alzheimer/Parkinson's and more. Medical Groups Medicare Advantage plans can be like other HMOs where administrative procedures are centralized. Thus, a PCP typically belongs to / contracts with a medical group. So it is likely that a member who chooses a PCP is also choosing a medical group. Referrals or advance authorizations to see a specialist will be issued by the medical group and usually referred to another specialist inside the same medical group. This does not have to be a bad thing. In fact, a PCP's medical group can actually help with additional resources that a single PCP might not have. NOTE: Choosing a medical group is very important. Just like there are differences between physicians, the quality of healthcare a member receives can vary from one medical group to another. Some can be very efficient. Others may be found to be more restrictive or can delay their referrals. It would be advantageous for an agent selling a Medicare Advantage plan to know about the plan's different approved medical groups in a given area. Researching reviews and procedures of specific groups can help the agent guide the member on making a choice. Out of Network Care A Medicare Advantage Plan may NOT cover out-of-network services except:

Emergency care or urgently needed services from an out-of-network provider

Medicare care covered by Medicare but not available in the network (prior authorization required).

Renal dialysis outside the network area when authorized in advance. A Medicare Advantage Plan medical emergency is when the patient or any prudent layperson with average knowledge of health and medicine believes medical symptoms require immediate medical

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attention to prevent loss of life, loss of limb or loss of function of a limb. Symptoms can include illness, injury, severe pain or a medical condition that is quickly getting worse. A patient who has had to use out-of-network services for an emergency should attempt to notify the Medicare Advantage Plan as soon as possible . . . usually within 48 hours. If a situation is later deemed a non-emergency, the Plan will typically still cover charges. However, any follow-up treatment must be through a network provider. Urgently needed services might be classed as non-emergencies that still require immediate medical attention. A patient should always attempt to contact an in-network provider. However, if this is not possible or practical, out-of-network services will probably be covered. In the case of a disaster, any provider can be utilized. Bills that result from the above out-of-network covered events can be sent to the Medicare Advantage Plan for payment or for their share of costs. Medicare Advantage Plans must follow Medicare’s rules Medicare pays a fixed amount for coverage each month to the companies offering Medicare Advantage Plans. These companies must follow rules set by Medicare. However, each Medicare Advantage Plan can charge different out-of-pocket costs and have different rules for how enrollees get services (like whether they need a referral to see a specialist or if you have to go to doctors, facilities, or suppliers that belong to the plan’s network for non-emergency or non-urgent care). These rules can change each year. The plan must notify enrollees about any changes before the start of the next enrollment year. Remember, enrollees have the option each year to keep their current plan, choose a different plan, or switch to Original Medicare. Clinical Study Care Special circumstances may require a patient to receive treatment through a clinical research program. If the program is Medicare approved, Original Medicare will pay for most of the services. The Med Advantage Plan may also pay a share. The patient continues to stay enrolled in the Med Advantage Plan and get the rest of his care (not related to the clinical study program) through network providers. Durable Medical Equipment Under Original Medicare, a patient who makes copayments for 13 months generally owns the equipment, e.g., oxygen equipment, wheelchairs, walkers, diabetic supplies, IV infusion pumps, hospital beds, etc. Med

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Advantage Plans, however, do not transfer ownership, no matter how long copayments are made. Preventive Services Any preventive services covered at no cost by Original Medicare are also covered by Medicare Advantage Plans. Here is a list of such care:

Abdominal aortic aneurysm screening Alcohol misuse screenings & counseling Bone mass measurements (bone density) Cardiovascular disease screenings Cardiovascular disease (behavioral therapy) Cervical & vaginal cancer screening Colorectal cancer screenings Depression screenings Diabetes screenings Diabetes self-management training Glaucoma tests Hepatitis B Virus (HBV) infection screening Hepatitis C screening test HIV screening Lung cancer screening Mammograms (screening) Nutrition therapy services Obesity screenings & counseling One-time “Welcome to Medicare” preventive visit Prostate cancer screenings Sexually transmitted infections screening & counseling Shots:

o Flu shots o Hepatitis B shots o Pneumococcal shots

Tobacco use cessation counseling Yearly "Wellness" visit

Prescription drug coverage Enrollees usually get prescription drug coverage (Part D) through most Medicare Advantage Plan. In certain types of plans that can’t offer drug coverage (like MSA plans) or choose not to offer drug coverage (like some PFFS plans), enrollees can join a separate Medicare Prescription Drug Plan. If an enrollee is in a Medicare Advantage HMO or PPO, and they join a separate Medicare Prescription Drug Plan, they’ll be disenrolled from their Medicare Advantage Plan and returned to Original Medicare.

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No Balance Billing Medicare Advantage Providers are NOT allowed to "balance bill" members. In essence there will never be "additional charges" beyond the cost sharing (copays or coinsurance listed in the Plan's medical benefits chart) Here is a summary other benefits offered through a typical Medicare Advantage plans:

TYPICAL SUMMARY OF BENEFITS -- MEDICARE ADVANTAGE PLAN

PREMIUM OR BENEFIT PAYMENT OR COPAY NOTES

Monthly premium $0 Member must continue to pay Medicare Part B

Deductible $0 No deductible Maximum out-of-pocket (not including prescription drugs)

$6,700 annually (copayments/coinsurance)

The most the member will pay for Medicare-covered medical services annually

Inpatient hospital coverage $150 copay for days 1-10 $0 per day for days 11-90 and beyond

Unlimited days covered for inpatient hospital stay. NOTE: prior authorization rules may apply.

Outpatient hospital coverage Ambulatory surgical Outpatient hospital

$10-$100 copay per visit $10-$100 copay per visit

Prior authorization required for outpatient hospital services

Doctor Visits Primary Care Specialists

$5 copay per visit $10 copay per visit

Prior authorization required to see specialist.

Preventive Care $0 copay See Medicare approved list above. Prior authorization rules may apply.

Emergency Care $80 copay Worldwide emergencies are typically covered. The copay may be waived if the patient is immediately admitted to the hospital

Urgently Needed Care $35 copay Worldwide coverage are usually covered.

Diagnostic Services Lab Services Diagnostic tests &

procedures Outpatient x-rays Therapeutic radiology Diagnostic radiology

$0 copay $0 copay $0 copay 20% of total costs 20% of total costs

Prior authorization rules apply

Hearing Services Medicare covered

exams Non-Medicare covered

exams Non-Medicare Hearing

Aids

$10 copay per visit $0 copay (1 visit /year) $699 copay per year

Prior authorization and network rules applyrules

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Dental Services Medicare covered

services Non_Medicare covered

exams Non-Medicare routine

fillings Non-Medicare covered

dentures

$10 copay Not covered Not covered Not covered

Prior authroization required for Medicare-covered dental services Optional dental services available for an additional fee.

Dental Plan (Optional) Monthly premium Routine office visit Dental exam Routine cleaning Dental x-rays

$6 per month $8 per visit $0 per visit $5 per visit (2 visits /year) $0 (1 series every 6 mos)

Enhanced versions charge double or triple the monthly premium with little or no fees for items listed at left.

Vision Services Medicare covered

exams Medicare covered

glasses Non_Medicare covered

exams Non-Medicare covered

glasses Non-Medicare covered

routine vision coverage

$10 copay $10 copay $0 (1 visit /year) $0 per pair every 2 years Covered up to $225 for frames or contacts every 2 years

Prior authorization required for Medicare covered exams Routine vision services do not require authorization. Network rules apply.

Mental Health Services Inpatient visit Outpatient visit

(individual or group) Outpatient visit with

psychiatrist

$195 copay for days 1-8. $ 0 copay days 9-90 $20 copay per visit $10 copay per visit

Prior authorization required. Up to 90 days covered.

Skilled Nursing Facility

$0 per day for days 1-20 $10 copay per day for days 21-100

Prior authorization required. Covered for up to 100 days. No prior hospitalization required.

Physical Therapy $20 copay per visit Prior authorization required Ambulance $100 copay per one-way

trip Prior authorization rules apply for non-emergency trips

Transportation (Non-Medicare-covered routine)

$0 for up to 8 one-way trips per year

Prior authorization required. Must use network transporter. 75 mile one-way limit applies.

Medicare Part B Drugs 20% of total cost for chemotherapy and other Part B drugs

Prior authorization rules apply.

Outpatient Prescription Drugs Tier 1 generic Tier 2 generic Tier 3 preferred brand Tier 4 non-preferred drug Tier 5 specialty

Copay for Standard Retail Pharmacy $3 copay $10 copay $47 copay $100 copay 33% copay

After patient pays $3,750 out of pocket for the year, the copay for all tiers is $3 for Tier 1. Other tiers are 35% of negotiated price (brand name) and 44% of generic drugs. After $5,000 out of pocket insured pays 5% of the cost or $3.35 for generic and

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$8.35 copay for all other drugs.

Medical Equipment / Supplies

Durable medical equipment, e.g., wheelchairs, oxygen, etc

Prosthetics, e.g., braces, artificial limbs

Diabetic supplies

20% copay 20% copay $0

Prior authorization required

Wellness Program Health club membership

Covered by some plans Prior authorization required

Hospice Care Any Medi-care-certified hospice program

Paid by Original Medicare Drugs, short-term respite care and home care are covered.

Requires a doctor's terminal prognosis. Insured continues to stay enrolled in Medicare Advantage plan for services not related to the terminal prognosis.

MEDICARE ADVANTAGE PREMIUMS

Medicare Advantage plans may have NO PREMIUMS. However, this does not mean the member will not have expenses. Medicare Advantage Plan costs might include:

Original Medicare premiums Medicare Advantage plan premiums Out-of-pocket costs such as copayments, coinsurance, and deductibles

Actual out-of-pocket costs in a Medicare Advantage Plan (Part C) depend on:

Whether the plan charges a monthly premium . Some plans have no premium.

Whether the plan pays any of an insured's monthly Medicare Part B (Medical Insurance) premium. Some plans pay all or part of the Part B premium.

Whether the plan has a yearly deductible or any additional deductibles. How much the insured pays for each visit or service

( copayment or coinsurance ). For example, the plan may charge a copayment, like $10 or $20 every time the insured sees a doctor. These amounts can be different than those under Original Medicare .

The type of health care services needed and how often one gets them. Whether the insured goes to a doctor or supplier who

accepts assignment if: The insured is in a PPO, PFFS, or MSA plan. The insured goes out-of-network .

Whether the insured follows the plan's rules, like using network providers.

Whether the insured needs extra benefits and if the plan charges for it. The plan's yearly limit on out-of-pocket costs for all medical services.

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Whether the insured has Medicaid or gets help from his state.

Notice of Plan Changes

Enrollees in a Medicare Advantage Plan must be notified of changes through an “Annual Notice of Change” (ANOC) and “Evidence of Coverage” (EOC) each year:

• The ANOC: Includes any changes in coverage, costs, service area, and more that will be effective starting in January. Your plan will send you a printed copy by September 30.

• The EOC: Gives you details about what the plan covers, how much you pay, and more. Your plan will send you a notice (or printed copy) by October 15, which will include information

Medicare Advantage AND A Medicare Supplement Insurance (Medigap) policy?

Your clients can’t enroll in (and don’t need) a Medicare Supplement Insurance (Medigap) policy while they’re in a Medicare Advantage Plan. They can’t use it to pay for any expenses (copayments, deductibles, and premiums) they have under a Medicare Advantage Plan. If they already have a Medigap policy and join a Medicare Advantage Plan, they’ll probably want to drop their Medigap policy. NOTE: If they drop their Medigap policy, they may not be able to get it back

AGENT ALERT: MEDICARE ADVANTAGE UNDER ATTACK The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) passed by Congress and signed into law on April 16, 2015 created new guidelines to evaluate the effectiveness of Medicare Advantage. It’s no secret that the Obama administration felt these plans needed to be phased out on the basis they cost the government too much. Why? Because Medicare Advantage offers comprehensive coverage, members are visiting their doctors more often so the government is spending more per capital on members than straight Medicare. No one knows how long private insurers will continue to support Medicare Advantage Plans but things are looking better under the Trump administration as they favor the privatized element that Medicare Advantage introduces to the marketplace.

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What are the choices for Plan C enrollees if their Medicare Advantage Plan is closed? If you start with Medicare Advantage you could switch to any Medigap if it has been less than 6 month from your Part B effective date. If you have been on Medicare Advantage for more than 6 months but less than one year, you can switch to some Medigap plans automatically but Plan G would require you to answer Medical questions. No one knows for sure if enrollees who have been in Plan C Plans longer than one year may be subject to medical questions or medical underwriting if they are forced to switch back to a Medigap Plan G or some other supplement plan. Chances are, the government will make exceptions so as not to expose enrollees to a pre-existing condition problem. Will enrollees receive some warning is their Medicare Advantage plan is closing? Normally, Medicare Advantage plans voluntarily enter into 12-month contracts (January to December) with the Medicare program to serve Medicare enrollees. Each year, plans can choose whether or not to renew their contracts, and they generally must notify Medicare officials by July 1 if they are not going to renew for the following year. What notification might be required after 2020 is not known at this time. FAQs ON MEDICARE ADVANTAGE PLANS What do I pay? Your out-of-pocket costs in a Medicare Advantage Plan depend on:

Whether the plan charges a monthly premium. You pay this in addition to the Part B premium.

Whether the plan pays any of your monthly Medicare premiums. Some Medicare Advantage Plans will help pay all or part of your Part B premium. This benefit is sometimes called a “Medicare Part B premium reduction.”

Whether the plan has a yearly deductible or any additional deductibles for certain services.

How much you pay for each visit or service (copayments or coinsurance).

The type of health care services you need and how often you get them.

Whether you get services from a network provider or a provider that doesn’t contract with the plan.

Whether you go to a doctor or supplier who accepts assignment (if you’re in a Preferred Provider Organization, Private Fee-for-Service Plan, or Medical Savings Account Plan and you go out-of-network). See page 53 for more information about assignment.

Whether the plan offers extra benefits (in addition to Original Medicare benefits) and if you need to pay an extra premium for them.

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The plan’s yearly limit on your out-of-pocket costs for all medical services. Once you reach this limit, you’ll pay nothing for covered services.

Whether you have Medicaid or get help from your state. When can I join, switch, or drop a Medicare Advantage Plan?

When you first become eligible for Medicare, you can sign up during your Initial Enrollment Period.

If you have Part A coverage and you get Part B for the first time during the General Enrollment Period, you can also join a Medicare Advantage Plan at that time. Your coverage may not start until July 1.

Between October 15–December 7, anyone with Medicare can join, switch, or drop a Medicare Advantage Plan. Your coverage will begin on January 1, as long as the plan gets your request by December 7. If you drop a Medigap policy to join a Medicare Advantage Plan, you might not be able to get it back. Rules vary by state and your situation.

NOTE: Always advise your clients to review the materials their plan sends (like the “Annual Notice of Change” and “Evidence of Coverage”), to make sure their plan will still meet their needs for the following year. Can I make changes to my coverage after December 7? Starting in 2019, between January 1–March 31 each year, you can make changes during the Medicare Advantage Open Enrollment Period:

If you’re in a Medicare Advantage Plan (with or without drug coverage), you can switch to another Medicare Advantage Plan (with or without drug coverage).

You can disenroll from your Medicare Advantage Plan and return to Original Medicare. If you choose to do so, you’ll be able to join a Medicare Prescription Drug Plan.

If you enrolled in a Medicare Advantage Plan during your Initial Enrollment Period, you can change to another Medicare Advantage Plan (with or without drug coverage) or go back to Original Medicare (with or without drug coverage) within the first 3 months you have Medicare. During this period, you can’t:

Switch from Original Medicare to a Medicare Advantage Plan. Join a Medicare Prescription Drug Plan if you’re in Original Medicare. Switch from one Medicare Prescription Drug Plan to another if you’re in

Original Medicare. You can only make one change during this period, and any changes you make will be effective the first of the month after the plan gets your request.

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MEDICARE PRESCRIPTION DRUG PLAN (Medicare Part D)

Medicare Part D, also called the Medicare prescription drug benefit was originally proposed by President George W. Bush in 2003 and enacted as part of the Medicare Modernization Act of 2003 (which also made changes to the public Part C Medicare health plan program) and went into effect on January 1, 2006. WHAT IS MEDICARE PART D? Medicare prescription drug (Part D) coverage is an optional benefit. Medicare offers drug coverage to everyone with Medicare. Eligible candidates should consider joining a Medicare drug plan. If they decide not to join a Medicare drug plan when first eligible, and they don’t have other creditable prescription drug coverage (which means that a drug plan coverage is expected to pay on average as much as the standard Medicare Part D prescription drug coverage) or get Extra Help (discussed later), they will likely pay a late enrollment penalty if they join a plan later. HOW TO GET A PART D DRUG PLAN To get Medicare prescription drug coverage, enrollees must join a plan approved by Medicare that offers Medicare drug coverage. Each plan can vary in cost and specific drugs covered. Visit the Medicare Plan Finder at Medicare.gov/find-a-plan for more information about plans. There are 2 ways to get Medicare prescription drug coverage: 1. Medicare Prescription Drug Plans. These plans (sometimes called

“PDPs”) add drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private Fee-for-Service (PFFS) plans, and Medicare Medical Savings Account (MSA) plans. Candidates must have Part A and/or Part B to join a Medicare Prescription Drug Plan.

2. Medicare Advantage Plans (like HMOs or PPOs) or other Medicare

health plans that offer Medicare prescription drug coverage. Candidates get all of the Part A, Part B, and prescription drug coverage (Part D), through these plans. Medicare Advantage Plans with prescription drug coverage are sometimes called “MA-PDs.” Remember, the candidate must have Part A and Part B to join a Medicare Advantage Plan, and not all of these plans offer drug coverage.

SENIOR HEALTH

INSURANCE

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In either case, candidates must live in the service area of the Medicare drug plan they want to join. Both types of plans are called “Medicare drug plans” in this handbook. WHEN CAN A CANDIDATE BUY /SWITCH A PLAN D DRUG PLAN When a person first becomes eligible for Medicare, he can join a Plan D Drug Plan during the Initial Enrollment Period by buying directly or through a Medicare Advantage Plan. Enrollment Periods Candidates can also join, switch, or drop between October 15–December 7 each year. If enrolled in a Medicare Advantage Plan, candidates can join, switch, or drop a drug plan during the Medicare Advantage Open Enrollment Period, between January 1–March 31 each year. Also, if a candidate qualifies for a Special Enrollment Period (times when they can join, switch, or drop your Medicare drug coverage if certain requirements are met). NOTE: Enrollees don’t need to cancel their old Medicare drug plan. Coverage will end when the new drug plan coverage begins. Enrollees should get a letter from the new Medicare drug plan telling when coverage with the new plan begins. If an enrollee drops drug plan and wants to join another Medicare drug plan later, he have to wait for an enrollment period. He may have to pay a late enrollment penalty if he doesn't have creditable prescription drug coverage. IMPORTANT: If a Medicare Advantage Plan includes prescription drug coverage, and an enrollee uses an enrollment period to join a Medicare Prescription Drug Plan, he will be disenrolled from his Medicare Advantage Plan. The enrollee will also be returned to Original Medicare for coverage of health services. Generally an enrollee must stay enrolled in his chosen Medicare drug plan for the entire year, but can change your coverage mid-year if he qualifies for a Special Enrollment Period. Some examples are if:

Enrollee moves out of a plan’s service area. Enrollee loses other creditable prescription drug coverage. Enrollees live in an institution (like a nursing home). Enrollees have (or lose) Medicaid. Enrollees qualify for (or lose) Extra Help.

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Late Enrollment Candidates may owe a late enrollment penalty if at any time after their Initial Enrollment Period is over, there’s a period of 63 or more days in a row when they don’t have Part D or other creditable prescription drug coverage. This penalty will have to be paid for as long as they have Part D coverage. There are three ways to avoid paying a penalty: 1. Join a Medicare drug plan when first eligible. Even if a candidate doesn't take prescriptions now, he should consider joining a Medicare drug plan or a Medicare Advantage Plan that offers drug coverage to avoid a penalty. As mentioned, some plans have little to no monthly premiums. 2. Enroll in a Medicare drug plan if creditable coverage is lost. Creditable prescription drug coverage could include drug coverage from a current or former employer or union, TRICARE, Indian Health Service, the Department of Veterans Affairs, or individual health insurance coverage. A plan must tell an enrollee each year if his drug coverage is creditable coverage. If an enrollee goes 63 days or more in a row without a Medicare drug plan or other creditable prescription drug coverage, he may have to pay a penalty if he joins later. 3. Keep records showing creditable drug coverage, and tell the plan if they ask about it. Not having creditable prescription drug coverage, may result in a penalty for as long as the enrollee has Part D coverage. How much more will I pay? The cost of the late enrollment penalty depends on how long creditable prescription drug coverage was lacking. Currently, the late enrollment penalty is calculated by multiplying 1% of the “national base beneficiary premium” ($33.19 in 2019) by the number of full, uncovered months that the enrollee was eligible but didn’t join a Medicare drug plan and went without other creditable prescription drug coverage. The final amount is rounded to the nearest $.10 and added to monthly premiums. Since the “national base beneficiary premium” may increase each year, the penalty amount may also increase each year. After an enrollee joins a Medicare drug plan, the plan will tell him if you owe a penalty and what the premium will be. Late Enrollment Penalty Example: Mrs. Martin didn’t join when she was first eligible—by June 2016. She doesn’t have prescription drug coverage from any other source. She joined a Medicare drug plan during November 2018, and her coverage began on January 1, 2019. Since Mrs. Martin was without creditable prescription drug coverage from July 2016–December 2018, her penalty in 2019 is 30% (1% for each of the 30 months) of $33.19 (the national base beneficiary premium for 2019), which is $9.95. The final amount is rounded to the nearest $.10, so she'll be charged $10.00 each

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month in addition to her plan’s monthly premium in 2019. She’ll continue to pay a penalty for as long as she has Part D coverage, and the amount may go up each year. Here’s the math: .30 (30% penalty) × $33.19 (2019 base beneficiary premium) = $9.95 $10.00 = Mrs. Martin’s monthly late enrollment penalty for 2019 (rounded to the nearest $.10) Part D Drug Plan Evidence of Coverage / Annual Notice of Change An Evidence of Coverage (EOC) gives enrollees details about what the plan covers, how much he will pay, and more. The Annual Notice of Change (ANOC) includes any changes in coverage, costs, provider networks, service area, and more. Drug plan changes take effect on January 1 of the following year, as long as the plan gets a request to change before December 7. WHAT IS THE COST OF A PLAN D DRUG PLAN Actual drug plan costs will vary depending on:

The prescriptions used and whether they’re on your plan’s formulary (list of covered drugs) and depending on what “tier” the drug is in.

The phase of drug benefit that an enrollee is in (some examples include whether or not he has met his deductible, in the coverage gap, etc.)

The plan chosen (remember, plan costs can change each year.) Which pharmacy is used (whether it offers preferred or standard cost

sharing, is out-of-network, or is mail order). Out-of-pocket prescription drug costs may be less at a preferred

pharmacy because it has agreed with a plan to charge less. Whether the enrollee gets Extra Help paying his Part D costs (See

below) Most drug plans charge a monthly fee that varies by plan. This premium is paid in addition to the Part B premium. In a Medicare Advantage Plan (like an HMO or PPO) or a Medicare Cost Plan that includes Medicare prescription drug coverage, the monthly premium may include an amount for prescription drug coverage or there may be no premium. NOTE: Plan D premiums can be deducted from monthly Social Security or RRB payment. NOTE: Individuals with a higher income, might pay more for Part D coverage. If income is above a certain limit ($85,000 if filed individually or $170,000 if filed jointly), an extra amount is charged in addition to the plan premium (sometimes called “Part D-IRMAA”). This extra amount is also charged if a high income individual is enrolled in a Medicare Advantage Plan that includes drug coverage. Most people won’t have to pay a higher amount

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and if any is charged it can be deducted from the enrollees Social Security or Railroad Retirement Board check. Anyone who refuses to pay the extra amount could lose their Part D coverage. Deductibles This is the amount paid before a drug plan begins to pay its share of covered drugs. Some drug plans don’t have a deductible. Copayments or coinsurance These are the amounts you pay for your covered prescriptions after the deductible (if the plan has one). THE DONUT HOLE: Most plans with Medicare prescription drug coverage (Part D) have a coverage gap (called a "donut hole"), i.e., after the enrollee and his drug plan have spent a certain amount of money for covered drugs, enrollees are forced to pay all costs out-of-pocket for prescriptions up to a yearly limit. Once an enrollee has spent up to the yearly limit, his coverage gap ends and his drug plan helps pay for covered drugs again. Why is there a gap? The gap in the Part D coverage was originally created to get seniors’ help in keeping drug costs low. Having a coverage gap encourages individuals to ask for generic drugs whenever possible. This keeps costs down for both Medicare beneficiaries and the federal government. Gap Example: Bob is enrolled in Medicare. He pays his out-of-pocket premiums for his Part D prescription coverage all year. He also pays for all of his prescription costs until he meets the annual deductible ($405 for 2018). Once Medicare and Bob spend a total of $3,750, Bob reaches the donut hole. In 2018, the most Bob will pay in the donut hole is 35% of prescription drugs and 44% of generics. In 2020, the most he'll have to pay for both brand-name and generic drugs is 25% (The Donut Hole is closing). After Bob and Medicare have spent $5,000, Medicare coverage kicks back in and covers approximately 95% of the cost of drugs. Why Is The Medicare Doughnut Hole closing in 2019? The Part D coverage gap has often been a hardship on many, especially those using new medications on the market that are years away from their patent expiring. Some of these medications have no generic equivalent or alternatives. This has resulted in Medicare beneficiaries having to choose between medications that work but cost a fortune and less expensive medications that maybe don’t work quite as well. If people choose not to take their medications during the gap because they can’t afford them, this could potentially result in higher costs to Medicare down the road when subsequent further illness occurs.

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FORMULARIES Many Medicare drug plans place drugs into different “tiers” on their formularies. Drugs in each tier have a different cost. For example, a drug in a lower tier will generally cost less than a drug in a higher tier. In some cases, if a drug is in a higher tier and a prescriber (the doctor or other health care provider who’s legally allowed to write prescriptions) thinks the patient needs that drug instead of a similar drug in a lower tier, he or your prescriber can ask the plan for an exception to get a lower coinsurance or copayment for the drug in the higher tier. Formularies are subject to change and can be changed by the plan. A plan will notify enrollees of any formulary changes that affect drugs they’re taking. Contact the plan for its current formulary, or visit the plan’s website. EXPLANATION OF BENEFITS (EOB) Each month that an enrollee fills a prescription, their drug plan mails an “Explanation of Benefits” (EOB) notice. Plans may have these coverage rules such as:

Prior authorization: Enrollees and/or their prescriber must contact the drug plan before they can fill certain prescriptions. A prescriber may need to show that the drug is medically necessary for the plan to cover it.

Quantity limits: Limits on how much medication an enrollee can get at a time.

Step therapy: Enrollees must try one or more similar, lower-cost drugs before the plan will cover the prescribed drug.

Before prescriptions are filled, a Medicare drug plan will also perform additional safety checks, like checking for unsafe amounts of opioids and other frequently abused medications. Opioid pain medications (like oxycodone and hydrocodone) can help with certain types of pain, but have serious risks like addiction, overdose, and death. These risks are increased when opioids are taken with certain other medications, like benzodiazepines (commonly used for anxiety and sleep). Some Medicare drug plans will have a program in place to help enrollees use these medications safely. Getting opioids from multiple doctors or pharmacies, for example, may result in the plan talking with the doctors who prescribed the opioids, along with the doctor or doctors who prescribed other medications like benzodiazepines, to make sure they’re medically necessary and that enrollees are using them appropriately. Enrollees may be sent a letter in advance if it will limit coverage of opioid or benzodiazepine medications, or where an enrollee is required to get his opioid or benzodiazepine prescriptions from certain doctors or

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pharmacies. Enrollees and/or their doctors have the right to appeal these limitations if they disagree with the plan’s decision. Medication Therapy Management Plans with Medicare prescription drug coverage must offer additional Medication Therapy Management (MTM) services to plan members who meet certain requirements. Members who qualify can get these MTM services to help them understand how to manage their medications and use them safely. The MTM services offered may vary in some plans. MTM services are free and usually include a discussion with a pharmacist or health care provider to review an enrollee's medications. A pharmacist or health care provider may talk with an enrollee about:

How well medications are working Whether medications have side effects If there might be interactions between the drugs taken Whether costs can be lowered Other problems

INSURANCE AND PART D How do other insurance and programs work with Part D? Employer or Union Health Coverage An enrollee's or spouse former employer or union must notify enrollees each year to let them know if their prescription drug coverage is creditable. NOTE: A candidate who joins a Medicare drug plan, may lose his employer or union health coverage, although COBRA may allow him to temporarily keep employer or union health coverage after the employment ends or after coverage is lost. If COBRA is taken and it includes creditable prescription drug coverage, the enrollee will have a Special Enrollment Period to join a Medicare drug plan without paying a penalty when the COBRA coverage ends. Medicare Supplement Plans Medigap policies can no longer be sold with prescription drug coverage, but if enrollees have drug coverage under a current Medigap policy, they can keep it. If joining a Medicare drug plan, these same enrollees should tell their Medigap insurance company so they can remove the prescription drug coverage under their Medigap policy and adjust the premiums.

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Note: Advise clients to Keep any creditable prescription drug coverage information they get. They may need it if they decide to join a Medicare drug plan later. Don’t send creditable coverage letters or certificates to Medicare. Other Insurance Programs and Part D Federal Employee Health Benefits (FEHB) Program: This is health coverage for current and retired federal employees and covered family members. FEHB plans usually include prescription drug coverage, so these enrollees don’t need to join a Medicare drug plan. However, if they decide to join a Medicare drug plan, they can keep their FEHB plan, and in most cases, the Medicare plan will pay first. Veterans’ benefits: This is health coverage for veterans and people who have served in the U.S. military. Vets may be able to get prescription drug coverage through the U.S. Department of Veterans Affairs (VA) program. Or, they may join a Medicare drug plan, but if they do, they can’t use both types of coverage for the same prescription at the same time. TRICARE (military health benefits): This is a health care plan for active-duty service members, military retirees, and their families. Most people with TRICARE who are entitled to Part A must have Part B to keep TRICARE prescription drug benefits. If your client has TRICARE, they don’t need to join a Medicare Prescription Drug Plan. However, if they do, their Medicare drug plan pays first, and TRICARE pays second. Extra Help: Clients with limited income and resources, may qualify for help to pay for some health care and prescription drug costs. Candidates qualify for Extra Help if their yearly income and resources are below these limits in 2018: Yearly income Other resources Single person less than $18,210 per year resources less than $14,100 per year Married person living with a spouse and no other dependents less than $24,690 less than $28,150 per year These amounts may change in 2019. Resources include money in a checking or savings account, stocks, bonds, mutual funds, and Individual Retirement Accounts (IRAs). Resources don’t include your home, car, household items, burial plot, up to $1,500 for burial expenses (per person), or life insurance policies. Candidates who qualify for Extra Help and join a Medicare drug plan:

Get help paying Medicare drug plan’s costs. Have no coverage gap. Have no late enrollment penalty.

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LONG TERM CARE WHAT IS LONG TERM CARE Essentially, it is the inability to care for oneself due to a chronic (long-term) medical condition. Every day more than 5,000 people in this country turn 65. More than 2.5

million are 85 or older. And the likelihood of chronic illness increases with age. The chance of a person currently age 65 being confined to a nursing home at some time in the future is now one in three. According to the U.S. Census Bureau, the over-85 population is the fastest growing segment of the U.S. population, and one out of four people in that age group today lives in a nursing home. Approximately 75 percent of nursing home residents are women. The programs that many believe cover chronic long-term care events are not necessarily designed to do so. Medicare and Medicare Supplements primarily pay for the costs associated with acute (as opposed to chronic or long term) medical conditions. And, while Medi-Cal (Medicaid) does provide long-term care benefits for many senior citizens, they must first exhaust most of their income and assets to qualify. It is no secret that many seniors are paying a growing proportion of their income in out-of-pocket costs for health care and long-term care services at home due to limited or no insurance coverage. Every day people move into Medi-Cal/Medicaid facilities because they have run out of money from paying these out-of-pocket expenses for home health care or assisted living facility care. Defining Long Term Care Clinically speaking, long-term care is the kind of help you need if you are unable to care for yourself because of a chronic illness or disability. Section 7702B of HIPAA 1996 defines a chronically ill individual as someone unable to perform at least two activities of daily living for a period of at least 90 days and/or someone who requires substantial supervision, or continual supervision, to protect themselves from threats to health and safety due to severe cognitive impairment. California statute (10232.8) declares that a chronically ill insured will qualify for long term care benefits if he is impaired in two out of six activities of daily living and /or impaired by cognitive ability (tax qualified policies). Where differences arise between California and federal policy requirements, the Commissioner may declare an emergency regulation to add applicable benefit eligibility. Long term care services can range from help with daily activities of living, such as bathing, shopping or dressing, to skilled nursing care in a nursing

SENIOR HEALTH

INSURANCE

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home. Care can be provided by friends and family, local home care agencies, adult day care programs, nursing homes, and residential and retirement facilities. This is a good time to clarify that the term long term care is a reference to a condition. Long term care insurance, on the other hand, is how people pay for their long term care services. Besides long term care insurance policies there are a host of alternative ways that people cover all or a portion of their long term care expenses, such as: Private pay (out-of-pocket, HMOs, reverse mortgages, viatical settlements, Medicare Supplement policies, Medicare, Medi-Cal. Keep in mind there is not one method of paying for long term care that is foolproof. Government programs, to the extent they may be available to your clients, may pay a portion. Private pay may be required to carry the balance or the entire amount if the client is Medi-Cal ineligible. More on this later. As there are many ways to pay for long term care costs, there just as many long term care insurance policies. By definition, a traditional long-term care insurance policy is any accident and health insurance policy or rider advertised, marketed offered or designed to provide coverage for not less than 12 consecutive months for each covered person on an expense incurred, indemnity, prepaid or other basis for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services, provided in a setting other than acute care unit of a hospital. Agents should know that many policy restrictions and exclusions exist which may result in long term care policies paying only a portion of your client’s long term care expenses. Likewise, policies may only pay these costs for a limited period of time. Chronic Illness Evolution From the discussion above it should become clear that there is an evolution for chronically ill patients, i.e., there is a need for different levels of health care at different times. For example, a chronically ill person may start out needing only “chore services” such as grocery delivery, lawn mowing, etc in the early stages. This might be progress to the need for home visitors (meals on wheels), periodic adult day care, then home health care. As the illness advances, there might be a need for rehabilitation programs to provide physical therapy leading to a more monitored environment in a retirement home and eventually skilled nursing care. As you can see, the delivery of care and services to your long term care insureds is constantly changing . . . it’s an evolution or continuum. At times, an insured’s long term care needs may be progressing (his condition or illness is getting worse). Likewise, his condition may rebound and the need for services goes back to a previous level or none at all.

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Policy Evolution Just as long term care services evolve, so must the policies you sell. There are many providers and methods of receiving long term care services. The process of choosing a facility or provider is individual to the need and where he is at in the evolution of his illness. Policy evolution is the process of understanding the changing needs of clients in order to better advise them on new policies and benefits. The most important concept to remember is that acute care is given for a patient to get better. Once health care progress stops, it is termed chronic. The policies you provide can make a difference in the level of care policy holders receive. Hopefully, your advice leads to a policy that covers the benefits needed or replaces one that did not. Older policies, for example, may exclude home care coverage or require only skilled home health workers; even though many home care services can be more cost effectively provided by unskilled aides. New policies also demonstrate a willingness by insurers to expand policy benefits and definitions. Just a while ago, for example, adult day care coverage, was only available in connection with institutional care. Likewise, services like residential care facilities were not even addressed in older policies. Additional new policy benefit changes include benefits for cognitive disorders of many types, expanded nonforfeiture options, tax qualified deductions, tax free benefits, inflation protection and much more. The point is, agents should review old policies to uncover restrictive eligibility and gaps in benefits. Next, agents need to explain these options to policyholders to identify material improvement and why a policy should or should not be replaced or why a “first time” applicant should buy coverage and what kind he needs. For example, if a chronically ill client has no family support network to help with home care, he has less need for a comprehensive policy with a huge home care benefit. Why? Because the home care he would receive under most policies would need to be supplemented by family or friends. He would be better off in a nursing facility or RCFE. Of course, you need to disclose all these facts and let your client make the decision. WHY IS LONG TERM HEALTH CARE IMPORTANT Long-term care insurance is important because of the likelihood of needing the types of services covered by the insurance and the cost of paying for those services. We frequently think about long-term care services being focused on older people like retirees or our parents. It is important to remember that about 40% of the individuals needing long-term care services are of working age. About one-third of stroke victims are under age 65. The Society of Actuaries reported that:

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· The odds of having a house fire with damages of $3,400 — one in 200 · The odds of having a car accident with $3,000 in damages — one in 14 · The odds at age 65 of spending 2.5 years in a nursing home — one in 3 Overall there is a likelihood that one half of the population will need long-term care services during their lifetime. And long-term care services are very expensive. Nationally the average cost of nursing home services runs between $45,000 and $50,000 per year. Long-term care services provided in the home costs about $26,000 per year. Most employees cannot afford that level of expense even for short periods. Many workers simply have no savings. Even among pre-retirees, most employees have less than $100,000 in savings. The limited functional ability of a family member has an impact on the family members that care for that loved one. This in turn affects the lifestyle of all family members and could jeopardize the family’s financial security. Informal support systems of family and friends may not be available particularly in today’s world where families are spread out and live great distances from each other. Additionally, a majority of caregivers are women and about 2/3 of them already work outside the home. Over half of the caregivers report missing at least one day of work and other attendance issues. One in five caregivers report leaving their jobs either temporarily or permanently. THE LTC CONTINUUM Agents need to understand that long term care demands a range of services and facilities. Care needs of the chronically ill can span from highly skilled personnel (nurses, physical therapists, nutritionists, etc) to a lower level of care such as an unskilled personal care attendant. Care can be at home or in a specialized facility like adult day care or a nursing home. Likewise, long term care is in a constant flux as it responds to new terms, new legislation, coverage limitations, medical breakthroughs and other market-driven demands. Similarly, long term care policies, both old and new, must be placed in the context of continuum changes. adult day care, for example, is increasingly covered in today’s newer policies. Earlier policies restricted these benefit payments or failed to address them at all. Another example is policies that have evolved to cover home care. Without it, an insured would be limited to care in an institution. LONG TERM CARE SERVICES Long term care services are typically offered through three broad levels of care: skilled, intermediate or custodial. Skilled Care: Skilled nursing care is care that can only be performed by, or under the supervision of licensed nursing personnel or physician. Skilled nursing facilities must provide twenty-four (24) hour nursing service and

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must require that the medical care of every resident/patient be provided under supervision of a physician. Intermediate Care: Intermediate care is that type of care that is not as demanding as skilled care but requires more attention than custodial care. Because the patient’s condition is not as demanding as a skilled care patient the twenty-four (24) hour nursing program is not required. Because of their mental or physical conditions, patients in intermediate care facilities require care and services above room and board that can be provided through institutional facilities. Custodial Care: An individual in need of custodial care typically would be in some need of help in personal needs such as dressing, bathing etc. Certainly, this type of care is no where close to the demanding needs required in a skilled care situation. HOW ARE LONG TERM CARE SERVICES FUNDED Home and Community Care. Long-term care, often associated with institutional care, is provided in many different settings. But, most long-term care is actually provided at home – either in the home of the person receiving care or at a family member's home. It’s estimated that individuals currently turning 65 may need 3 years of long-term care in their lifetime, with almost 2 years of that care provided at home. The majority of that care that provided at home . . . some or all without pay. There is also an increasing amount of long-term care available in the community through programs such as adult day service centers, transportation services, and home care agencies that often supplement care at home or provide respite for family caregivers.

For people who cannot stay at home, but who do not need the level of care provided in a nursing home, there are a variety of residential care settings, such as assisted living, board and care homes, and Continuing Care Retirement Communities (CCRCs). Nursing homes provide long-term care to people who need more extensive care, particularly those whose needs include nursing care or 24-hour supervision in addition to their personal care needs.

Informal Care. A caregiver is a family member, partner, friend, or neighbor who helps care for an elderly individual or person with a disability who lives at home. In 2004, there were more than 44 million caregivers age 18 or older in the United States - about 21% of the adult population – providing care for an adult family member or friend. Approximately 60% of caregivers are women. Thirteen percent (13%) of caregivers caring for older adults are themselves aged 65 or over. The typical caregiver is a 46-year-old

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woman who is married and employed, and is caring for her widowed mother who does not live with her. 1

Caregivers provide a vast array of emotional, financial, nursing, social, homemaking, and other services on a daily or intermittent basis. A 2006 study of caregivers found that on average caregivers spend 21 hours a week giving care. Half of them have intensive caregiving responsibilities, performing at least one activity of daily living, such as bathing and feeding, for their care recipients. Twenty-six percent (26%) perform three or more of these activities. Eighty percent (80%) of caregivers perform activities like fixing meals, doing housework, and providing transportation to medical appointments. 2

Community Based Care. Community-based services describe a range of personal, support, and health services provided in communities to help people stay at home and live as independently as possible. Examples are shown below. Most people who receive long-term care at home generally require additional help either from family or friends to supplement services from paid providers. This is because so much of the care needed is personal care: help with activities such as bathing and dressing, help managing medications, or supervision for someone with a condition such as Alzheimer's disease.

Private LTC Insurance. Due to the popularity in home health and community care, legislation has surfaced regulating long term care policies. Section 10232.9 of the California Insurance Code, for example, states that every long-term care policy or certificate that purports to provide benefits of home care or community-based services, shall provide at least the following: (1) Home health care. (2) Adult day care. (3) Personal care. (4) Homemaker services. (5) Hospice services. (6) Respite care. Whereas many of these services were only options to policyholders of the past they are now mandated. Of course this is an upgrade for insureds and additional costs to carriers. Further, community-based services and facilities also need to respond by providing more services and brick and mortar facilities to accommodate these requirements.

1 Department of Health and Human Services, Clearinghouse for Long Term Information Website 8/10 2 Department of Health & Human Services, Clearinghouse for Long Term Care Information Website 8/10

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Additional aspects detail that home care benefits in California long term care policies shall not be limited or excluded by any of the following: Requiring a need for care in a nursing home if home care services are not

provided. Requiring that skilled nursing or therapeutic services be used before or

with unskilled services. Requiring the existence of an acute condition. Limiting benefits to services provided by Medicare-certified providers or

agencies. Limiting benefits to those provided by licensed or skilled personnel when

other providers could provide the service, except where prior certification or licensure is required by state law.

Defining an eligible provider in a manner that is more restrictive than that used to license that provider by the state where the service is provided.

Requiring "medical necessity" or similar standard as a criteria for benefits. This opens many new doors to home and community-based services and facilities for the long term care insured that did not exist a few years ago. Section 10232.9 goes on to provide that where a long term care policy covers both institutional and home care benefits, the home care benefit in a long term care policy shall be at least 50 percent of the maximum benefit payment for institutional care, and in no event shall home care benefits be paid at a rate less than fifty dollars ($50) per day. (Insurance products approved for residents in continuing care retirement communities are exempt from this provision.) Time limits for benefits granted for institutional coverage in a long term care policy must also be matched for home care benefits. The thrust of provisions such as these focus on the importance that home care plays in the long term care continuum. While not yet on an equal footing with institutional care, the cost of home care is at least partially covered under policies providing home care benefits. Section 10232.92 also upgrades and improves an insured’s chances of receiving care. Residential care facilities, for example, must now receive a benefit amount payable for care at no less than 70 percent of the benefit amount payable for institutional confinement. In addition, all expenses incurred by the insured while confined in a residential care facility, for long-term care services that are necessary diagnostic, preventative, therapeutic, curing, treating, mitigating, and rehabilitative services, and maintenance or personal care services, needed to assist the insured with the disabling conditions that cause the insured to be a chronically ill individual as authorized by Public Law 104-191 and regulations adopted pursuant thereto, shall be covered and payable, up to but not to exceed the maximum daily residential care facility benefit of the policy or certificate.

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Aggressive Medigap plans extend coverage to “at-home recovery” (short term assistance with activities of daily living) and skilled care may provide for items like IV’s, bedsore care and physical therapy. But once health progress stops, the condition is termed chronic and no longer covered. That is why someone like an Alzheimer’s patient is considered under these plans to need little or no skilled care. He is not covered by Medicare or a supplement plan yet cognitive impairment may limit his abilities to perform simple activities such as bathing or eating. Patients like this move through the evolution process . . . from acute to chronic conditions leading to the need for nursing home care or advanced home health assistance. The Health Care Administration estimates that Medicare and private insurance like Medicare supplement plans provide only 12 percent of the nation’s total nursing home care expenses. While this legislation still does not place residential care at par with institutional care it closes the gap and opens many more long term care options to insureds than those that existed just a few years ago. And, with added competition, costs are likely to be lower than when fewer facilities and service options existed. WHAT'S COVERED BY MEDICARE & OTHERS We have already pointed out that costs for long term care are high and there is no single method that pays for everything. In fact, it is likely that your clients will find that their care is financed from multiple sources, including long term care insurance. First, we need to dispel some widespread beliefs surrounding who pays for what in the long term care continuum. Please look at this chart provided by the U.S. Department of Health and Human Services. We have replaced references to Medicaid with the California version Medi-Cal. Long-Term Care Service

Medicare Private Medigap Insurance

Medi-Cal You Pay on Your Own or use LTC Insurance

Nursing Home Care

Pays in full for days 0-20 if you are in a Skilled Nursing Facility following a recent hospital stay. If your need for skilled care continues, may pay for the difference between the totals daily cost and your

May cover the $137.50/day co-payment if your nursing home stay meets all other Medicare requirements.

May pay for care in a Medi-Cal certified nursing home if you meet functional and financial eligibility criteria.

If you need only personal or supervisory care in a nursing home and/or have not had a prior hospital stay, or if you choose a nursing home that does not participate in

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co-payment of $137.50/day for days 21-100. After day 100 does not pay.

Medicaid or is not Medicare-certified.

Assisted Living Facility (and similar facility options)

Does not pay Does not pay May pay care-related costs, but not room and board

You pay on your own except as noted under Medicaid if eligible.

Continuing Care Retirement Community

Does not pay Does not pay Does not pay

You pay on your own

Adult Day Services

Not covered Not Covered Varies by financial and functional eligibility required

You pay on your own [except as noted under Medicaid if eligible.]

Home Health Care

Limited to reasonable, necessary part-time or intermittent skilled nursing care and home health aide services, and some therapies that are ordered by your doctor and provided by Medicare-certified home health agency. Does not pay for on-going personal care or custodial care needs only (help with activities of daily living).

Not covered Option to limit some services, such as therapy

You pay on your own for personal or custodial care, except as noted under Medi-Cal, if you are eligible.

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Medi-Cal vs. Medicare It is clear from this chart that Medicare and Medigap does little to finance long term care costs. If one is eligible for Medi-Cal, more services can be provided but some feel it is substandard care. For many this leaves the majority of costs to be self-financed or covered by a long term care insurance policy. Because the terms are so similar, most people and many insurance agents confuse the two. Medicare covers medical expenses as opposed to custodial care. Medicare is not a financially need-based program, and, therefore, it pays for medical treatment regardless of the recipient’s financial status. By comparison, Medi-Cal (the California version of Medicaid) is needs based. It provides benefits only to those who demonstrate financial need. Furthermore, since California is a “share of cost” state, a person who applies to Medi-Cal cannot have more than a limited amount of cash or other available assets. And, any costs paid on behalf of a recipient can be recovered from his estate (see Medi-Cal recovery). Medicare is a federal health care program funded by federal tax dollars. Because it is related to the Social Security Program, eligibility is based on a person’s work history or relationship with another individual with a work history (i.e., spouse or dependent child). Medicare was designed to pay for physician and hospital care for people who are elderly or disabled. As described in “Taking Care of Tomorrow, A Consumer’s Guide to Long Term Care”, produced by the California Department of Aging: “Most long term care is furnished in nursing homes to people which chronic, long-term illnesses or disabilities. The care they receive is personal care, often called custodial care. Medicare does not pay for custodial care. Medicare pays less than 10% of all nursing home costs. To qualify for the Medicare nursing home benefit, you must spend three full days in acute care hospital within 30 days of your admission to a nursing home. You must also need skilled nursing care seven days a week, and/or rehabilitation services at least five days a week. Medicare will not pay for your stay if you need skilled nursing or rehabilitation therapy only once a week. The longest nursing home stay that Medicare will pay for completely is 20 days. After the first 20 days, if you still require skilled care, Medicare will pay only a part of the nursing home bill. You will have to pay a copayment for each day of the next 80 days if Medicare continues to pay for your stay. Will Medicare Pay if I Need Care in My Home? “Taking Care of Tomorrow” answers: “Yes, but only if you meet certain requirements of the Medicare program …… You must be homebound and require skilled nursing or rehabilitation services. The services you receive must be from a home health care agency that participates in Medicare. You may also receive some personal care services along with the skilled services.

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However, Medicare does not pay for general household services such as laundry, shopping or other home care services that are primarily needed to assist people in meeting their personal care needs…..” Medi-Cal, as originally intended, was created to help the “medically needy”, aged, blind and disabled citizens who lacked access to the health care system. Unfortunately, the system has inadvertently fostered generation after generation of poverty level families who use the system to pay for their health care. Seniors may also end up on Medi-Cal after spending many productive years paying taxes and contributing to society. Combine this dependence expanding elderly population and you understand why the system has . . . and will . . . have trouble supporting long-term care. Medi-Cal, is funded by both federal and state tax dollars and provides health care coverage for approximately 6 million eligible beneficiaries. Medi-Cal is designed to provide services for people with low income and few assets. The program provides health care services to people on public assistance and to others who cannot afford to pay for their health care. Medi-Cal pays for hospital, medical, prescription drug, and “medically necessary” nursing home care. California does not consider a person’s impairment in their ability to perform Activities of Daily Living in determining eligibility for Medi-Cal’s nursing home benefit. PRIVATE INSURANCE PRODUCTS WITH LONG TERM CARE BENEFITS Stand Alone Long Term Care Policies

While purchasing a stand alone long term care policy seems to be a simple and effective solution, there are some inherent risks: They can be expensive, they acquire no cash value, the premiums may increase, and the underwriting can be time-consuming.

For pure long term care protection, however, a stand alone policy is hard to beat. On the other hand, if people drop this protection because premiums increase they will have no protection. Further risk of termination can occur where people pay LTC premiums for years and years, then drop it because they “don’t use their long term care protection”.

For these reasons, alternatives to stand alone policies have been developed.

Annuity Contracts For years, the insurance industry has designed annuity contracts that appeal to the liquidity needs of seniors and other market groups. Most new generation annuity policies, for example, offer free withdrawals that allow the owner to withdraw 10 percent or 15 percent of the account value every year. These withdrawals can be used for any purpose including medical costs and long term care.

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More significant are the nursing home and terminal illness waivers found in many competitive annuity products. Now the contract owner can withdraw . . . penalty free . . .large portions of the account value (usually up to 50 percent) without penalty or surrender charges so long as the proceeds are used for nursing care or terminal illness expenses. Drawbacks to both long term care riders and annuity coverage should be noted: Benefits paid may be less than the standard long term care policy, particularly in areas such as home health care and assisted living. Similarly, the duration of payments will most certainly be limited. And, without inflation protection, the proceeds may do little to cover actual LTC costs. “Pot of money” approaches will most likely be exhausted in a matter of years or sooner and few, if any, can be expected to provide lifetime benefits. Then again, such long term benefit durations in stand alone long term care insurance, while available, are very costly leading to few takers anyway. Accelerated Death Benefits Life policies and annuities that provides accelerated death benefits to pay medical expenses first came on the scene in 1988. Since then, they have been very popular. More companies are modifying existing policies to add actual long term care riders. Typically, the basic premium cost will be increased by 5-to-15 percent to pay for the rider, although some riders can increase the cost of a basic policy by as much as 33 percent. The problems with funding long term care coverage through an old generation accelerated death benefit policy are obvious: Benefits may be slower than a stand alone policy, benefit triggers can be tricky and there is typically no inflation protection other than by expensive inflation riders. Furthermore, the death benefits that could have gone to an insured’s estate are usually “eaten-up” in long term care costs thus defeating the purpose of buying a life insurance policy. However, this is changing. See our section on Long Term Care Combo Plans. It is significant to note that the tax treatment of accelerated death benefits has changed as a result of HIPAA (Health insurance Portability and Accountability Act) and the Pension Protection Act of 2006. Both provide for tax free treatment of accelerated death benefits for terminal and chronically ill people paid directly by insurance companies. This should serve as another reason for the seriously ill to take a look at accelerated provisions in their life policies for current “living benefits”, including long term care riders where permitted. Caution must be advised, however, in how one defines terminal or chronic illness to the satisfaction of the Internal Revenue Service. A recent private letter ruling indicated the definition shall comply with HIPAA.

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Other Catastrophic Benefits

A new breed of linked benefit products combine catastrophic long term care with traditional products like an annuity or life insurance. Long Term Care Insurance Linked to an Annuity

An example of these combination long term care health insurance policies links long term care benefits to a single premium deferred annuity. This product begins as an annuity with either a lump sum deposit or structured deposits made over time. If no care is needed, the annuity gains interest functioning like any other fixed annuity. But if the owner/annuitant needs care in a nursing home or elsewhere, a formula will be used to determine the amount of the monthly benefit available to the client. Taking the example used earlier, a healthy 65 year old woman who deposited $150,000 into this account would have the advantages of tax-deferred, safe growth in the annuity and approximately $4,700 a month of long term care benefits for 36 months. At an additional cost, a benefit rider added to this policy would provide the $4,700 monthly benefit for her lifetime. On these types of policies, the additional benefit rider is usually a wise purchase in order to obtain maximum guarantees.

Another linked benefit product is the long term care annuity. This product also functions exactly like a fixed annuity, but has a long term care multiplier built into the policy. There is no premium rider attached to this medically underwritten annuity policy. Instead, a portion of the internal return in the contract is used to pay for the long term care benefit. Long term care coverage is calculated based on the amount of coverage selected when the policy is purchased. The insurance company offers a payout of 200% or 300% of the aggregate policy value over two or three years after the annuity account value is depleted. For example, a policyholder with a $100,000 annuity who had selected and aggregate benefit limit of 300% and a two year benefit factor would have an additional $200,000 available for long term care expenses after the initial $100,000 policy value was depleted. The policy owner would spend down the $100,000 annuity value over a two year period and then receive the additional $200,000 over a four year period or longer. In this example the contract pays $50,000 a year for a minimum of six years, but care will last longer if less benefit is needed. Again, if long term care is never needed the annuity value would be paid out lump sum to any named beneficiary.

TYPES OF LONG TERM CARE POLICIES

Long term care insurance comes in many “flavors” . . . and the menu is expanding as carriers become more creative and competitive. Let’s explore the options by benefits, type and provisions.

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Benefit Types

There are three traditional benefit policy styles:

Home Care ONLY Nursing Home & Residential Care Facility ONLY (Institutional Care) Comprehensive

Home Care ONLY policies only cover care in the home or community setting, but NOT in assisted living facility or nursing home. These policies may include benefits for home health, adult day care, hospice, respite care, personal care, hospice, respite care and homemaker services. Providers vary from private companies to hospice services for the terminally ill.

Some older policies caused many problems for policyholders where clear definitions were not specified. Here is one such example:

Karen. bought a long-term care insurance policy in 1990 that only pays for care at home and has no other benefits. She did however have the foresight to purchase an 8 percent compounded inflation protection benefit, a very rare benefit to be offered or purchased in 1990 which illustrates the seriousness with which she attempted to plan for her future care. Despite Karen’s prudent planning her claim for benefits has been denied. Now 84 years old, Karen has dementia and is living in a state licensed assisted living home in California that is also licensed to provide specialized services to residents with dementia. Karen is getting the same personal care services she could receive if she were living in her single family home, but in this home she has round the clock supervision, specialized activities for people with dementia, and socialization with other people who have the same condition. This assisted living home is not licensed to provide skilled nursing care nor is it a skilled nursing facility.

Still, the company refuses to pay her home care benefits arguing that this assisted living home meets the definition in the policy of a licensed skilled nursing facility and is therefore excluded as a place of care, and that the personal care services described in the policy which Karen is getting are not being provided by a licensed home health agency as required by the policy but instead are provided by the staff of the assisted living home. However, nowhere in the policy is a person’s home defined, nor is there a definition of where policy benefits will be paid.

Nursing Home & Residential Care Facility ONLY policies only cover care in a nursing home or a place licensed as a Residential Care Facility for the Elderly (RCFE) that provides assisted living care. The benefits of these policies include the cost of all LTC services you receive in the facility . . . not just charge for room and board . . . up to the policy’s maximum daily benefit amount.

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Comprehensive long term care policies cover care in a nursing home, assisted living facility, home care and community care (such as adult day care) under the same rules as the two policy types above. At least 50% of the benefit payment for institutional care (nursing homes, etc), must be available for home care services. Policies cannot restrict services to only licensed or skilled vendors if the same services can be provided by unskilled workers (other than where a license to administer services is required by state law).

Stand Alone LTC Products

Stand-alone policies represent the bulk of plans sold to date. They are usually purchased with monthly, quarterly, semiannual or annual premiums which are paid for the life of the insured. While stand alone LTCI provides the most comprehensive benefits, the marketplace is changing. LTCI consumers market has complained vigorously about the cost and “use it or lose it” aspects of stand alone policies. Sure, they are assured tax qualified status, with tax-free benefits and deductible premiums, and benefits are generally more generous. But, for the market to survive an alternative is needed.

Products With Long Term Care Riders

These types of products are gaining. Some carriers are reporting as much as 30% of their total sales in products with LTC riders. A variety of choices exist:

Life Insurance Riders: LTC insurance is as an "either/or" feature in life insurance. When the insured dies, a death benefit results. If the insured needs long-term care before death, stipulated benefits are paid instead of life insurance. If all benefits are paid before death, the policy expires. Any benefits not used result in a reduced pay-out at death. These policies can be purchased with periodic premiums for the life of the insured or with a single premium of $50,000 or more. These policies offer the advantage that the insured is guaranteed a benefit since everyone eventually dies. A disadvantage is that many people who purchase LTC insurance don't need life insurance, but because the policy needs to cover the mortality risk of death as well as the morbidity risk of LTC, premiums are much higher than an equivalent stand-alone LTC policy. Another disadvantage is that underwriting standards for life insurance are more strict than standards for LTC insurance. Many who qualify for LTC insurance would be denied coverage for life insurance.

Annuity Riders: Typically, this usually requires a lump sum of $50,000 or more. Part of annuity earnings pay for the morbidity risk of the LTC insurance. Thus an annuity that would normally yield 6% might only yield 4% when combined with LTC insurance. One advantage of this arrangement is that LTC premiums are paid with tax deferred earnings but since they are

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expensed inside the policy, premiums become tax free. Another advantage is the perception that no money is lost to an LTC policy that may never be used. In fact the lump sum even grows larger. A major disadvantage is that the money is tied up. Removing money will kill the LTC coverage, yet few people have $50,000 lying around that they're willing to tie up and never use. In most cases it's better to fund a stand-alone LTC policy with earnings from a separate investment account. This leaves the account unencumbered. Pending federal legislation will also make investment income used for LTC insurance premiums tax free.

Disability Insurance: The most common misconception is that long-term care insurance is strictly for seniors and disability insurance is for everyone else. Essentially, disability insurance is a product that protects your ability to earn an income — arguably your most valuable asset. If you were to become disabled due to sickness or injury — meaning that you couldn’t perform the duties of your occupation — then the insurance company would pay you a percentage of your income (approximately 50%-70%) tax-free until you are no longer disabled or for a certain time period. LTC insurance is a product that also protects you from major financial loss due to sickness or injury. LTC insurance does not replace income; it pays towards the cost of receiving care.

Critical Illness Insurance: Critical illness insurance provides a lump sum benefit when a critical illness occurs. It is based on the premise that an expensive critical illness, even when covered by good, comprehensive health insurance, can financially disable you or a loved one. Whereas long-term care insurance is designed for the mature audience and long-term disability insurance is designed for the actively working audience, critical illness insurance is designed for younger members and their dependents. It has nothing to do with an inability to perform activities of daily living or the activities of one’s occupation. It is not related to the expenses of long-term care or occupational income. In fact, the benefit has no direct relationship at all to the expenses of the qualifying illness. It pays a scheduled lump sum at the first diagnosis of a variety of expensive health conditions that often occur, such as a heart attack, cancer or stroke.

Accelerated Benefits: Accelerated Death Benefits are a popular feature of many modern life policies. Accelerated death pays part of the death benefit for terminal illness or doctor-certified, terminal, long-term care confinement while the insured is alive. Since very little long-term care could be certified as terminal, this policy feature might be considered “bare bones” long-term care coverage.

Other Products: As carriers and consumers demand, the industry will respond with new products and approaches.

Hybrid / Combo Long Term Care Policies: First generation hybrid / combo plans have been around for as long as 15 years. These early

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generation products typically linked long term care coverage, in the form of a rider, to life or annuity contracts. The problem? They provided fewer LTC benefits and their tax deductibility was questionable. In addition, some insurers underestimated benefit payouts leading to financial problems and even takeovers.

Indications are that many consumers are intrigued by the concept of an insurance vehicle that can provide protection against the risk of long-term care, and also provide cash values even in the event that no long-term care services are ever needed. This overcomes one of the major concerns of consumers regarding standalone LTCI, the fear of a "use-it-or-lose-it" proposition.

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MEDI-CAL & HOSPICE WHAT IS MEDI-CAL The objective of the Medi-Cal program is to provide essential medical care and services to preserve health, alleviate sickness, and mitigate handicapping

conditions for individuals or families on public assistance, or whose income is not sufficient to meet their individual needs. The covered services are generally recognized as standard medical services required in the treatment or prevention of diseases, disability, infirmity or impairment. These services are comprehensive and provide care in the major disciplines of health care. Medi-Cal, California’s medical assistance Medicaid program, became effective in March 1966. In July 1965, two major amendments to the Social Security Act greatly expanded the scope of medical coverage available to various segments of the population. Title XVIII established the Medicare program, and Title XIX established the State-option medical assistance program known as Medicaid that provided Federal matching funds to states implementing a single comprehensive medical care program.

MEDI-CAL SERVICES Federal law and regulations specify a list of basic services that must be included in any state Medicaid program. Those services include: Inpatient hospital services Outpatient hospital services, including ambulance services offered and

included in the state’s Medicaid plan. Physician services furnished in the physician’s office, patient’s home,

hospital, skilled nursing facility, or elsewhere. Also, medical and surgical services furnished by a dentist where state law permits either physicians or dentists to perform such services.

Laboratory and x-ray services Skilled nursing facility services for individuals 21 and over. Coverage does

not include services in an institution for mental diseases or tuberculosis, but does include early and periodic screening, diagnosis, and treatment of individuals under age 21 for physical and mental defect.

Home health care for persons eligible for skilled nursing facility services. Family planning services and supplies. Rural health clinic services, including ambulance services offered and

included in the state’s Medicaid plan. Federally qualified health center services. Services of certified pediatric or family nurse practitioners.

SENIOR HEALTH

INSURANCE

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Early and periodic screening diagnostic and treatment services for children under 21

People approved for Medi-Cal, typically get health coverage through a managed care program. There are different managed care programs in each county operated by insurance companies and local non-profits. Having Medi-Cal through a managed care program means that the enrollee has a primary care physician who is seen for most health needs. Referrals are needed to see a specialist or have a test done. With managed care programs, there are limited options for which specialists and hospitals can visited, but for emergencies, enrollees can go to any hospital. MEDI-CAL ELIGIBILITY Think of Medi-Cal as a single program that you can qualify for in many different ways. These different ways are called eligibility categories. For example, SSI-Linked Medi-Cal is an eligibility category that allows people who qualify for SSI to automatically get Medi-Cal. There are over 90 eligibility categories, each with its own rules and requirements. Once you meet the requirements of an eligibility category, you are eligible for either full or partial-scope Medi-Cal. Following describes the most common eligibility categories: A family has income at or below 138% of the Federal Poverty

Level (FPL) (266% of FPL if a child), may be eligible for Income-Based Medi-Cal

People who qualify for SSI (Supplemental Security Income), are automatically eligible for SSI-Linked Medi-Cal

People who are aged or disabled, may be eligible for Aged & Disabled Federal Poverty Level Medi-Cal

Disabled and working folks, you may be eligible for California’s Working Disabled Program. They will have to pay a small premium for Medi-Cal coverage, but they can have countable income up to 250% of FPL

The aged, blind, or disabled, who have incomes is too high for other Medi-Cal programs, may be eligible for Aged, Blind, and Disabled – Medically Needy Medi-Cal. For this program, enrollees need to spend a certain amount of their own money before Medi-Cal begins to pay for medical services. This payment is called a share of cost.

Though each case is individual, there are some additional basic requirements that are important to know: The county will look at how much the applicant and each member of their

family has in monthly income (wages, dividends), property (real and

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personal), and assets (money market and CD accounts, investments, jewelry).

If the monthly income is below the limit set by Medi-Cal, they most likely will qualify for Medi-Cal. If they have more income than the limit for the month, the applicant will be denied Medi-Cal coverage for that month or the applicant will be required to provide a “share-of-cost” toward any treatment received during that month.

The home they live (own) in, furnishings, personal items, and one vehicle are not counted as assets and are considered “exempt” for eligibility purposes only.

THERE ARE SPECIAL INCOME AND ASSET RULES WHEN ONE SPOUSE REQUIRES NURSING HOME SERVICES.

If one spouse (husband or wife) needs to go into a nursing home or is already residing in a nursing home, and the remaining spouse is still living at home, the spouse at home may keep $109.560 (2010 figures) in assets (not including home and other exempt assets) while the spouse in the facility can keep $2,000.

The spouse remaining at home is allowed a minimum income of $2,730 per month (2010), while the institutionalized spouse is allowed just $35 per month for personal needs.

When one spouse is in a nursing home and the remaining spouse also has income, each spouse’s income is considered separately. This allows the healthy spouse to keep their own income. Problems can occur when the bulk of the household income is being received by the institutionalized spouse. The name on the check (e.g., income, IRA, retirement) is the spouse credited with the income. If the check is made out in both names, the income is considered 50/50 for each of them.

Income and eligibility requirement may change. Limits on income and exempt assets are adjusted annually.

Understand, if an individual has property (e.g., house, car, etc) and/or assets, that were exempt during the eligibility process the property or assets are protected during estate recovery. Upon their death, the State Department of Health Services, Medi-Cal Recovery Unit can place a lien and/or claim against the entire estate of the deceased for the expenses incurred by the Medi-Cal program to recover those costs paid by the state. If the individual was married, a lien would not be placed until the remaining spouse dies or sells the property.

If single, a claim would be made directly against the estate of the deceased.

This last but extremely important issue relates to applicants transferring assets to qualify for Medi-Cal service. The Health Insurance Portability and Accountability Act of 1996 established criminal penalties for whoever knowingly and willfully assists in disposing of assets in order for an individual to become eligible for Medi-Cal services. This demonstrates how committed the government is on issue of Med-Cal transfers. Lack of an amendment in the 1996 Health Care Act eased these rules so “granny won’t go to jail”. However, the Balanced Budget Bill, signed by President Clinton on 8/5/97, still targets advisors. Thus, any financial planner,

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agent, lawyer, etc involved in illegal Medi-Cal planning transfers can risk jail time. Citizens involved in the scam will NOT go to jail, but could face extended periods of ineligibility for their improper transfers. Current law also states that a “statement, representation, concealment, failure or conversion by such a person in connection with the furnishing (by that person) of items or services for which payment is or may be made under the program, be guilty of a felony, and upon conviction thereof, fined not more than $25,000 or imprisoned for not more than 5 years.” As you can see, this is a very serious issue, so be sure you listen very carefully when discussing income and assets with your applicants.

There are also asset eligibility requirements.

What Defines “Assets” For married couples, as of 2019, the community spouse (the non-applicant spouse) can retain up to a maximum of $126,420 of the couple’s joint assets. This, in Medicaid speak, is referred to as the Community Spouse Resource Allowance (CSRA).Countable assets include cash, stocks, bonds, investments, credit union, savings, and checking accounts, and real estate in which one does not reside. However, for Medicaid eligibility, there are many assets that are considered exempt (non-countable). Exemptions include personal belongings, household furnishings, an automobile, irrevocable burial trusts, and one’s primary home, given the Medicaid applicant or their spouse lives in the home (California does not have a maximum home equity value limit like most states). One should be aware that California has a Medicaid Look-Back Period, which is a period of 30 months that dates back from one’s Medicaid application date (most states have a 60-month look-back). Therefore, during an application review, Medicaid checks to ensure no assets were sold or given away under fair market value for the 30 months preceding the application date. If one is found to be in violation of the look-back period, a period of Medicaid ineligibility may ensue. More on this below. The Medi-Cal program has many rules and regulations and is very complex. It is best that you do not try to describe the whole program to an applicant but to at least familiarize yourself with the basic information so you can explain the risk involved based on the applicant’s financial status. Also, make certain that you keep current on the property/asset and income allowances. You can get these updated figures each December for the following year from the local county Department of Social Services or the Departments of Health Services Eligibility Branch in Sacramento. Should an applicant have any additional questions, refer them to their local county Department of Social Services.

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LONG TERM CARE Unlike Medicare, Medi-Cal includes long-term nursing home care for those who qualify. Medi-Cal, therefore, can be considered both a companion and competitor of private long-term health care policies. Unlike, Medicare, Medi-Cal is jointly funded and administered by the state and the federal government. Because each state administers the Medicaid program and is free to tailor its Medicaid rules within federal guidelines, the Medicaid program varies considerably from state to state. NOTE: While controversial, there is discussion among many that Medi-Cal patients do not receive the same level of care as private pay since the long term care facility ahs been forced to take lower amount for services. ALSO IMPORTANT: AGENTS NEED TO BE AWARE THAT THE PURCHASE OF A LONG TERM CARE POLICY WILL NOT NECESSARILY ENSURE THAT SOMEONE WILL AVOID MEDI-CAL WHEN THEY NEED LONG TERM CARE. Medi-Cal pays for hospital, medical, prescription drug and “medically necessary” nursing home care. California does not consider a person’s impairment in their ability to perform Activities of Daily Living in determining eligibility for Medi-Cal’s nursing home benefit. The Medi-Cal system was originally intended to be a “safety net”. It was established to assist families in crisis and help the medically needy who lacked access to medical care. Above all, it was deigned as a short-term solution for health care. Use of the system, however, has been far different than was intended. The program now has the stigma of a social welfare program providing current, on-going and long-term health care for families and seniors alike. Combined with our rapidly aging population and the high costs associated with long-term care, it is easy to see why there is great concern. Unlike Medicare, Medi-Cal is a needs based program. Medi-Cal provides benefits only to those who demonstrate a financial need. This means that a patient cannot have more than a limited amount of cash or other available assets, i.e. California is a Share the Cost state. Of course, there are exemptions and methods for these families to restructure their assets to qualify for Medi-Cal benefits. This process is called spendown. It is a complicated area, but essential to the understanding of Medi-Cal and long term care. A Long Term Care Dilemma Twenty-five percent of people going into a nursing home become impoverished and will need to apply for Medi-Cal to pay for the cost of their care.

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What may surprise most people (agents take note) is that the impoverished person we are speaking about is kindly Mrs. Jones who lived next door or Mr. Smith on the corner. Your automatic response would be, “no way!. Mr. Smith worked for the school district for 42 years! He isn’t poor or impoverished.”. You even know that Mr. Smith gets $1500 per month in retirement and was proud of a small savings and some investment he had. It just does not sound right, does it? But you also know they had to put Mr. Smith in a nursing home over a year ago. You have never thought much about how he has been paying for it. You know now, because of this training, that Medicare and health insurance pays nothing toward custodial care. Sadly, Mr. Smith did not know it either. Well, Mr. Smith is paying for it out of his retirement, savings and investments. The nursing home runs $3,600 per month. With $2,100 per month being paid in a co-pay, it is not going to last long. What will happen to Mr. Smith when he does not have the extra money to supplement his retirement to pay for the nursing home? Another scenario that could have landed Mr. Smith in this frustrating situation is one where he purchased a $50 a day without inflation protection, long term care insurance policy 10 years ago. At that time the cost of care was around $65-70 a day. Mr. Smith thought he could manage the other $15-20 a day and still have money left at the end of the month for personal items. The cost today is $120 a day. Mr. Smith has to co-pay $70 a day or $2,100 per month. Remember, Mr. Smith only gets $1,500 per month. Mr. Smith will have to spend all his assets and “impoverish” himself. When this happens to Mr. Smith, he falls into the category of “medically needy”. Who would have thought this possible? You have no idea how often this situation happens. It can play out in a variety of ways but it happens more than we would like to see and to people we never would have expected. Good planning can keep it from happening and that is part of what you are here to learn. Except for the very wealthy, those who did not know to plan, did not choose to plan or purchased inadequate long term care coverage, have to rely on the Medi-Cal program to pay for their long term care. This is done by the applicant or their legal representative contacting their local county Department of Social Services. Eligibility for Medi-Cal is not automatic. Frequently Asked Questions About Medi-Cal & Long Term Care Will Medi-Cal pay if I need Long Term Care Services in My Home? Medi-Cal provides choreworker and personal care services (assistance with activities of daily living and personal safety) at home through the Personal Care Services Program (PCSP). The counties through their In-Home Supportive Services program administrator PCSP based on guidelines issued

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by the State. Timely access to these services varies widely from county to county. What are the Eligibility Requirements for Medi-Cal? Determining eligibility for Medi-Cal is the responsibility of the county Departments of Social Services. The county eligibility worker will look at how much the applicant and each member of the family has in monthly income (wages, dividends), property (real and personal), and assets (savings and CD accounts, investments). The home the applicant lives in, its furnishings, personal items, a limited amount of jewelry, and one eligible vehicle are not counted as assets and are considered “exempt” for determining eligibility. Eligibility rules are different for single individuals than for married couples. ALERT: WHILE NURSING HOME RESIDENTS DO NOT HAVE TO SELL THEIR HOME IN ORDER TO QUALIFY FOR MEDI-CAL THERE IS A HOME EQUITY LIMIT OF $750,000, I.E., AN APPLICANT WITH MORE THAN $750,000 HOME EQUITY WILL BE DISQUALIFED FROM MEDI-CAL. HOME VALUES AE DETERMINED BY THE LESSER OF THE TAX ASSESSEMENT VALUE OR BY APPRAISAL. (Welfare and Institutions Code 14006.15(c)). What is Eligibility For Married Couples? The Minimum Monthly Maintenance Income Allowance (MMMNA) is the amount of community income ($2,898 per month) the ‘community spouse” (the well-spouse) is entitled to receive. The well-spouse at home may keep all of the income received in his or her name, regardless of the amount. If the amount is below the MMMNA, the institutionalized spouse may allocate income to bring the at-home spouse’s income up to the MMMNA limit. If one spouse will enter long term care and the other will remain at home, together they may keep a total of $115,920 (2013) in liquid assets (not including home and other exempt assets). Example: Bob enters into a nursing home paid for by Medi-Cal and has monthly income from Social Security. His wife, Joan receives $800 a month from Social Security. Joan is under the MMMNA limit. Joe can now allocate a portion of his income to Joan to bring her to the MMMNA limit and deduct it from his share of costs. Note: Income and asset limits for Medi-Cal eligibility are subject to change each year.

More Problems with Medi-Cal Once someone qualifies as a Medi-Cal nursing home resident, the worries

don’t end. All of a sudden, the Medi-Cal resident, loses his or her ability to choosing a nursing home.

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Not all nursing homes accept Medi-Cal residents. Many facilities are for private pay residents only. One school of thought provides the rationale: If Medi-Cal doesn’t reimburse for the full cost of care (in California it doesn’t), then private pay residents subsidize Medi-Cal residents. A private pay facility can provide care at a lower cost because the residents there are not subsidizing the expense of providing care to other residents. Not all nursing homes have room for a Medi-Cal resident. Most facilities allocate a certain number of beds for Medi-Cal, and private pay residents. In theory, a nursing home administrator may want a private pay bed to remain empty while a waiting list exists for Medi-Cal residents. If a Medi-Cal bed is not available at the time someone needs one, there will be a search for a Medi-Cal available bed. One could open up down the block from someone’s favorite facility or it may be on the other side of town or even in the next county. People may have to wait at home or the hospital until a Medi-Cal bed becomes available. Let’s assume everything works out as the attorney said it would—money is hidden, Medi-Cal is paying the bills, and the resident is in a great facility. What happens when this person must enter a hospital to recover from a heart attack, stroke, or broken hip? Medi-Cal will pay the nursing home to hold the bed for only a week or two. After that time, the recovering Medi-Cal patient, who left the facility of choice, again starts looking for a facility. A Medi-Cal resident will find it harder to get into the better facilities than a private pay resident. Once someone else pays the bills, the nursing home resident is at the mercy of the payer. Thus, it is not always desirable when Medi-Cal pays the bills and, as we discussed at the very beginning f this course, anyone interested in the quality of LTC system should not rely on the welfare support system alone.

MEDI-CAL ABUSE Both MediCal and Medicaid have become public assistance programs . . . welfare . . . that combined pay for almost two-thirds of all nursing home patient days in the United States. Some states are spending more money on Medicaid than on education prompting national debate on how to finance long-term care. The program has a dismal reputation for access, quality, reimbursement, discrimination and institutional bias. Nevertheless, citizens, private attorneys and even public entities such as state Long-Term Care Partnerships encourage middle class people to virtually impoverish themselves in order to gain access. This process is referred to as Medicaid or Medi-Cal Planning. The government wants to stop the practice of transferring assets and other abuses of the Medi-Cal system. That is why legislation created tax incentives

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for citizens to buy their own, private long-term care insurance. Additionally, rules have been established that make it a crime to transfer assets to avoid paying for long-term care expenses. On the industry side of the scales, nursing homes that accept Medi-Cal, are now required to notify new residents who pay with private funds at entry that they might have to move if they eventually run out of money and need to rely on Medi-Cal. Up to now, nursing homes took private payers, and kept them when they could no longer pay, shifting them to Medi-Cal. They felt it was “bad public relations” to kick these patients out. Nursing home giant Vencor tried this a couple years ago and suffered a huge scandal, together with falling share values. The new law may furnish nursing homes with yet another incentive to leave the Medicaid/ Medi-Cal program and another argument convincing prospects for long-term care that if they want quality care, they must insure it on their own. Medi-Cal Spendown & Asset Transfers To be eligible for Medi-Cal, a person can only have a certain amount of assets or “resources”. In essence, the system is designed to “impoverish” an individual before benefits can be allowed. It is no wonder, then, why people have turned, in record numbers, to lawyers and financial advisors to find loopholes -- ways to divest themselves of income and assets in order to qualify. This process is know as the spendown. In fact, an entire industry has grown around strategies for spendown called Medi-Cal Planning. Before we get to specific spendown rules, let’s look at basic eligibility tests – the starting point for anyone considering Medi-Cal assistance:

In short, the advice to anyone considering the purchase of an annuity to shield their assets from Medicaid is: Let the buyer beware!

Consider this example. Bill wants to reside in a nursing home that costs $3,500 per month. In order to pass Medi-Cal qualification tests, he uses a significant portion of his assets to purchase an immediate fixed annuity that pays $1,200 per month for life. Bill’s only other income, from Social Security, is $950, making the monthly income total $2,150. However, in order to qualify for Medicaid, his monthly income must be less than the federal limit of $2,050 According to the Medi-Cal eligibility rules, Bill now has too much money coming in. In the process of "ridding" himself of much of his assets, he has established a guaranteed income that is too high and that he has no way of reducing. Even worse, this amount of income very likely won’t be sufficient to cover the cost of his current medical expenses. In short, not only has Bill

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failed to qualify for Medicaid coverage, he has also locked himself into a situation in which his current income is not enough to meet the medical expenses that he alone is obligated to pay.

Medi-Cal Estate Recovery Federal law requires each state to recover the costs of nursing facility and other medical services from the estates of Medi-Cal recipients. This means the state of California is federally mandated to recover from Medi-Cal recipients who receive services at the age of 55 or older, or in a nursing home, in order to help pay Medi-Cal covered expenses for the increasing number of individuals needing medical care. Example: Mr. Roberts, a widower, left his only property, a house valued at $175,000, to his son. At the time of his death, Medical had provided $24,000 for his nursing home care. In addition to this claim, there was a total of $10,000 in funeral bills and costs for probating his estate. Mr. Roberts’ son received $141,000 ($175,000 - $24,000 - $10,000 = $141,000) after all the claims were paid. Recoveries from a deceased recipient’s estate will include all medical expenses paid by Medi-Cal These expenses include: Health insurance premiums (including Medicare), Nursing home services, Home and community based services, Hospital services, Prescription drug services, and All other Medicaid covered services.

Food stamps, emergency assistance and cash grants are not Medicaid costs, and will not be recovered under this process How do clients know when Medi-Cal intends to try to recover from their estate? Medi-Cal should provide notice that the Estate Recovery Program exists when they first apply for Medi-Cal. When Medi-Cal is actually trying to get recovery, it must notify the legally authorized representative of your estate. If there is no representative, they must try to notify known family members or heirs. Before 1993, Medi-Cal could only recover from your estate if it discovered that you had owned assets during the period in which you received benefits and that those assets would have made you ineligible for Medicaid. In 1993. Recovery powers were greatly expanded for people who receive Medicaid after October 1, 1993 and who die after that date. Medi-Cal can now try to recover after a client’s death in these additional situations:

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If the client is 55 years old or older when they receive Medi-Cal; or If the client received Medi-Cal under a provision that disregards certain

assets because they have purchased a long-term care insurance policy, e.g., The California Partnership for Long-Term Care.

Frequently Asked Medi-Cal Recovery Questions What portions of your client’s estate are protected from recovery by Medi-Cal? If they own a joint tenancy in real estate with someone else, that real estate cannot be recovered by Medi-Cal. If they have sold or transferred property to someone without keeping any interest in that property for themselves, that property is also protected for recovery purposes. NOTE: If clients transfer any property for less than its fair market value, they could have trouble getting Medi-Cal for nursing home or other long term care for three years after transferring the property. If clients own any personal property , such as a car or a bank account, in joint tenancy with someone other than their spouse, a blind or disabled child, or a child under 21, Medi-Cal may try to recover against that property. It is not clear whether DHS can recover personal property held in joint tenancy. Can Medi-Cal recover from a spouse's estate? No. What are the so-called “lookback” provisions? OBRA established a 30 month “look-back”. Assets given away within 30 months of applying for Medi-Cal are assumed to be transferred to avoid payment of medical expenses. The Deficit Reduction Act of 2005 increased the lookback to 5 years. The look-back is also 60 months for transfers of income or principal to an irrevocable trust. The penalty for either is a period of ineligibility equal to the amount of the “illegal” transfer. What is the treatment of property transfers made during the Medi-Cal “lookback” period? If the transfer in means an outright gift or sale at less than “fair market value”, Medi-Cal will calculate the period of ineligibility for nursing facility level of care.. It will be the number of months resulting when the ‘net fair market value” of the transferred is divided by the monthly average private nursing facility costs (ADPPR). In 2010, the average cost used to calculate the period length is $5,698 per month. Are “exempt assets” protected against Medi-Cal Estate Recovery? No, even the home, if it has not been previously transferred, is part of the estate against which Medi-Cal has the right to recover the cost of Medi-Cal benefits received after the recipient is age 55. Such recovery will not occur until after the death of the community spouse and/or there are no more dependents.

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Are there any other protections? Yes. If a client dies leaving a "dependent," Medi-Cal will not file a claim against their estate. A dependent is a surviving spouse, a child under the age of 21, or a child who is blind or permanently or totally disabled. If clients leave an estate that will be probated , any claim for recovery from their estate must be filed within four months after death . If, at the end of that four-month period, a surviving spouse or disabled child is still living, or if there is still a child under 21, Medi-Cal will not try to recover from the probated estate. If an estate will not be probated , Medi-Cal will not try to recover from it if, two years after death , the surviving spouse or disabled child are still living, or if there is still a child under 21. A client’s estate can also be protected if MediCal’s actions will create an "undue hardship" on someone who survives him or her. Medi-Cal will look at the following circumstances to decide whether undue hardship exists for the survivor: Whether the property was the primary residence of the person claiming

undue hardship; Whether that person used personal resources to maintain the property,

pay taxes, etc.; Whether that person lived on the property and provided significant care so

that you could remain at home for a longer period of time; Whether that person had entered into a contract with you in which the

residence was held as security or in which the residence was supposed to be transferred to that person for value already received by you;

Whether you had promised that the residence would belong to that person after your death and the person had relied on that promise and would be harmed if the promise were not met;

Whether that person is a resident and co-owner of the property; or Whether the property produces income necessary for that person's

support. Medi-Cal Liens Liens against the real property of a recipient may be filed when the Department of Social Services determines that the recipient cannot reasonably be expected to return home. The purpose of the lien is to recover any payments made by the State of California on behalf of the Medi-Cal recipient. A lien does not change property ownership. However, it does represent a debt that must be satisfied when the property is sold, transferred, or the recipient dies. Written notice will be provided ninety (90) days prior to filing a lien. Medi-Cal recipients or their personal representatives will have an opportunity to present any objections during a hearing process.

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Automatic statutory liens are also imposed against judgments, awards and settlements in lawsuits when the state has provided medical assistance to a recipient for which a third party is responsible. MEDI-CAL CONCLUSIONS The U.S still lacks a universal system for medical and long term care and Medicaid and Medi-Cal is NOT it! Medicaid programs pauperizes families who must use it, and encourage the non-poor to try methods (some now considered a crime) to transfer assets to qualify. Medi-Cal was created as a public welfare program for the indigent funded by Federal, state and local governments. Some of the benefits go to families and dependent children but a huge and growing portion is for the aged, blind and disabled. One private study indicates that over 25 percent of Medicaid funds were for nursing home costs alone. The problem is obvious. A huge portion of our senior population has been caught “off-guard”. Their longevity combined with escalating costs of long term care has created a need to try and capture the benefits of Medi-Cal. If they don’t, a reasonable stay in a nursing home could impoverish their entire estate. It is a small wonder, then, why these people have turned in record numbers to lawyers and financial advisers to find Medi-Cal loopholes -- ways to divest themselves of income and assets in order to qualify for Medi-Cal. Privately funded long term care insurance is seen as a substitute for some form of national long term health plan. But it may come too late for anyone who has accumulated a modest nest egg. They may not be able to afford the premiums and they can’t go it alone. Finding a way to qualify under Medi-Cal is, for them, a viable option. As discussed, Medicaid programs can vary from state to state. Therefore, the insurance professional, when marketing long-term care insurance in more than one state, must become familiar with the Medicaid programs in each of those states It is recommended that any Medicaid or Medi-Cal plan should be reviewed at least every two years to see if it is the best plan in light of current state law. Make sure you are aware of the planning options available and seek the necessary advice in carrying out the “best plan for your client”. This will be well worth the time and expense and it can be thought of as a part of the cost of “health care insurance”. A Word of Caution The Medi-Cal system is basically a form of welfare. The rules can and do change frequently. Consequently, advising persons about Medi-Cal carries

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with it a certain amount of risk. “Grandfathering” of an existing situation under which one may qualify for Medi-Cal when the rules change is uncertain. When consulting with a client on Medi-Cal, the professional is urged to disclose to the client the risks, and to continually keep abreast of changes in the law. Because the Medi-Cal program varies and constantly changes, the information contained within this chapter is intended to be illustrative in nature. Extreme caution should be exercised; the advisor is warned not to rely on these materials as a sole source of authority

Referral to HICAP In California, the Department of Aging offers counseling services to all parties interested in locating long term care providers. Known as Health Insurance Counseling and Advocacy Program or HICAP, they help seniors and others review life insurance policies, file medical claims, advise on long term care services and counsel on other consumer health concerns. They also provide follow-up to ensure that these services were received. A complete list of HICAP offices is provided at on the Department of Aging Website -- www.aging.state.ca.us As an agent, you are responsible to know the name, address and telephone number (not older than six months) of the local HICAP program in the area in which you are selling. Be sure to visit the Department of Aging website to fulfill this requirement. HOSPICE Hospice is a form of health care funded by Medicare. Hospice is a program of care and support for people who are terminally ill (with a life expectancy of 6 months or less, if the illness runs its normal course) and their families. Here are some important facts about hospice:

Hospice helps people who are terminally ill live comfortably. Hospice isn’t only for people with cancer. The focus is on comfort (palliative care), not on curing an illness. A specially trained team of professionals and caregivers (doctors,

nurses, social workers, pharmacists, therapists and volunteers) provide care for the “whole person,” including physical, emotional, social, and spiritual needs.

Services typically include physical care, counseling, drugs, equipment, and supplies for the terminal illness and related conditions.

Care is generally given in the home. Family caregivers can get support.

Palliative care is the part of hospice care that focuses on helping people who are terminally ill and their families maintain their quality of life. If

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you’re terminally ill, palliative care can address your physical, intellectual, emotional, social, and spiritual needs. Palliative care supports your independence, access to information, and ability to make choices about your health care. Note: Only your hospice doctor and your regular doctor (if you have one) can certify that you’re terminally ill and have 6 months or less to live. Once you start getting hospice care, Original Medicare will cover everything you need related to your terminal illness, even if you choose to remain in a Medicare Advantage Plan or other Medicare health plan. If you were in a Medicare Advantage Plan before starting hospice care, you can stay in that plan, as long as you pay your plan’s premiums. You can choose to get covered services for any health problems not related to your terminal illness from either your plan or Original Medicare. If you have a Medigap policy, it will cover your hospice costs for drugs and respite care. Your Medigap policy also will help cover health care costs for problems that aren’t part of your terminal illness and related conditions. There is no deductible for hospice care. The enrollee pays:

Monthly Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) premiums.

A copayment of up to $5 per prescription for outpatient prescription drugs for pain and symptom management. In the rare case your drug isn’t covered by the hospice benefit, your hospice provider should contact your Medicare drug plan (if you have one) to see if it’s covered by Medicare prescription drug coverage (Part D).

5% of the Medicare-approved amount for inpatient respite care. For example, if Medicare approves $100 per day for inpatient respite care, you’ll pay $5 per day and Medicare will pay $95 per day.

Important: Once your hospice benefit starts, Original Medicare will cover everything you need related to your terminal illness. Original Medicare will also pay for covered services for any health problems that aren’t part of your terminal illness and related conditions. Note: If you need to get inpatient care at a hospital for your terminal illness and/or related conditions, your hospice provider must make the arrangements. The cost of your inpatient hospital care is covered by your hospice benefit, but paid to your hospice provider. They have a contract with the hospital and they work out the payment between them. If you live longer than 6 months, you can still get hospice care, as long as the hospice medical director or other hospice doctor recertifies that you’re terminally ill. Hospice care is given in benefit periods. You can get hospice care for two 90-day benefit periods followed by an unlimited number of 60-

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day benefit periods. At the start of the first 90-day benefit period, your hospice doctor and your regular doctor (if you have one) must certify that you’re terminally ill (with a life expectancy of 6 months or less). Important: At the start of each benefit period after the first 90-day benefit period, the hospice medical director or other hospice doctor must recertify that you’re terminally ill, so you can continue to get hospice care. A benefit period starts the day you begin to get hospice care and it ends when your 90-day or 60-day benefit period ends. Note: You have the right to change your hospice provider once during each benefit period. Stopping hospice care If your health improves or your illness goes into remission, you may no longer need hospice care. You always have the right to stop hospice care at any time. If you choose to stop hospice care, you’ll be asked to sign a form that includes the date your care will end. If you were in a Medicare Advantage Plan (like an HMO or PPO) when you started hospice, you can stay in that plan by continuing to pay your plan’s premiums. If you stop your hospice care, you’re still a member of your plan and can get Medicare coverage from your plan after you stop hospice care.

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PULLING IT ALL TOGETHER Hopefully, you now have a better idea of senior health care choices. If you’re still trying to figure out what may work best for your client, you might start by considering the

different factors that are important to them.

WHAT'S IMPORTANT

For example, do they travel frequently and prefer to not have to worry about provider networks? Under Original Medicare, you can get health-care services from almost any doctor or provider who accepts Medicare assignment. For travelers, some Medicare Supplement plans may help cover emergency medical services when a client is out of the country (generally covering 80% for approved services, up to plan limits). Medicare Advantage plans may not be so accommodating.

Do you have a client with a lot of doctor visits and high out-of-pocket costs? Original Medicare with a Medicare Supplement plan may have the edge.

Then there are clients who might be interested in coverage beyond Original Medicare, such as routine vision coverage or wellness programs. In that case, there may be Medigap Plans or a Medicare Advantage plan that can work well.

Looking for the lowest cost plan and don't mind the primary doctor "gatekeeper" idea? You won't beat Medicare Advantage Plans.

Against the backdrop of senior health, the discussion of long term care needs must be discussed. The best America can provide in Medicare benefits still do not cover most long term care health care coverage. Your clients may be on their own to fund a long term care event.

Also, there will be times where your advice will lead to no commission, but it is the right thing to do. A client without means to pay for senior health care may be counseled to seek Medi-Cal benefits for both health and long term care needs.

IS IT SUITABLE? In issuing and marketing health and long term care insurance, agents must be informed about suitability standards for their clients. It is probable that your company has additional criteria on suitability which you must understand and follow. One important fact to remember about any suitability guideline is that a determination that some products, such as long

SENIOR HEALTH

INSURANCE

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term care, certain Medigap Plans, etc, may not not be applicable for a particular client. It is critical to conform your product recommendations to the applicant’s goals or needs. Court cases against agents are growing daily where suitability issues were ignored, leading to unnecessary or inappropriate coverage and possible bad faith litigation. Another basic concept in assessing suitability is the determination that the policy sold improved the insured’s position. It would be hard to defend a pattern of selling where policies resulted in client’s receiving fewer benefits or the same benefits at an increase in premium.

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INDEX Agent responsibilities 11Agent visits to a senior's home 13Aggressive Medigap Plans 79All forms of communication 14Annual notice of change of plan, Plan D 67Clinically speaking, long term care 72Communications 14Consumer protection issues 12Creditable prescription drug coverage 64Donut hole 68Home care benefits, long term care 78Home health care, not covered by Medicare 26Hospice 102Illegal to sell Medigap Policy 48Initial enrollment period, Medicare 16Long term care 72Long term care & Medicare 79Long term care funding 76Long term care insurance 82Long term care policies types 84Long term care services 75Long term care, clinically speaking 72Medi-Cal & Hospice 89Medi-Cal & long term care 93Medi-Cal abuse 96Medi-Cal eligibility 90Medical emergency, Medicare Advantage 55Medi-Cal services 89Medi-Cal v. Medicare 81Medi-Cal, needs based 93Medicare Advantage coverage 53Medicare Advantage enrollment 52Medicare Advantage FAQs 62Medicare Advantage Plan costs 60Medicare Advantage Plans 49Medicare Advantage Plans must include 53Medicare Advantage premiums 60Medicare assignment 35Medicare changes 7Medicare covers medical expenses 81Medicare FAQs 35Medicare Future 33

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Medicare Gaps 32Medicare out of pocket 18Medicare Part A benefits 21Medicare Part A Coverage 19Medicare Part B Coverage 27Medicare Part B, not covered 29Medicare Part D 64Medicare Plan D benefits 69Medicare Plan D costs 67Medicare premiums 18Medicare Prescription Drug Plan 64Medicare Summary Notices 35Medicare Supplement Plans 38Medicare Terms 15Medicare, Original 15Medigap coverage 41Medigap enrollment 40Medigap FAQs 47Medigap plan costs 46Medigap Plans 38No balance billing 58Open enrollment, Medicare 17Original Medicare covers 5Original Medicare coverage gaps 15Palliative care 102Pulling it all together 105Selling health insurance to seniors 11Senior health care crisis 4Senior health insurance options 4Twisting 13