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67 Cards in this Set
- Front
- Back
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Describe the role of the conservator and teh drawbacks of the conservator approach to dealing with incapacity? |
A conservator (sometimes calle da financial guardian) is a court-appointed fiduciary responsible for managing the property and financial affairs of a legally or mentally incapacitated person. There are two problems with the conservator approach to incapacity planning: the competency of the person in question must be determined through a court hearing and the court may require the posting of a security bond for the conservator and require detailed reports and accounting to the court. |
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Explain the terms and the implications for incapacity planning: a. general power of attorney b. durable power of attorney c. revocable living trust d. contingent (standby) trust |
a. written document executed by one person (the principal) that authorizes another person to act on his or her behalf. Power ceases when the principal dies or becomes incapacitated.
b. Doesn't ceas upon the incapacity of the principle.
c. Trust set up on behalf of a grantor. Assets are transferred into the trust before the grantor experiences any incapacity. It i soperative and managed from the time it is established.
d. Merely a legal shell. Funded when the grantor becomes incapacitated. This means that someone must have the leagal authority to transfer the grantor's assets to the trust and manage them on behalf of a grantor. This is a person with a durable power of attorney (sometimes with a "springing" power). |
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What is a living will, and what are its limitations? |
A living will allows a person to state in advance what life-sustaining medical measures should be taken by a health care providor if the maker of the living will is incapable of consenting to treatment, the situation is terminal, and death is imminent. |
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Explain how the durable power of attorney differs from the living will. |
A durable power of attorney for health care authorizes an agent to make health care decisions on behalf of the principal. Unlike the living will, which applies only to life-sustaining treatment in terminal situations, this medical proxy is not limited to terminal situations, but gives the agent decision-making authority for all health care situations in which th eprincipal is incapable of giving informed consent. |
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What are the eligibility requirements for receiving Medicare benefits?
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Medicare benefits are available to US citizens who are 65 years old and older, disabled (according to the SS Admin's stringent definition), or victims of permanent kidney failure. |
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Explain Medicare Part A and it's benefits |
Provides insurance for inpatient hospital care, posthospital skilled nursing care and home health care, hospice care for the terminally ill, psychiatric hospital care, and blood. Most of these benefits are limited. For example, inpatient hospital care will pay for up to 90 days of hispitalization per benefit period, with a 60-day lifetime reserve. |
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Explain Medicare Part B and it's benefits |
Provides supplemental medical insurance to help Medicare enrollees pay for physician services and other services not covered under Part A. For example, after the patient pays the first $147 of physician charges and outpatient hospital care, Part B will pay for 80% of subsequent charges. It also pays 100% of home health care costs. |
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Who receives benefits under parts A and B? |
The benefits of A are provided to most Medicare enrollees; there are some exceptions when the Medicare beneficiary must pay a premium for Part A. However, Part B benefits are only available to perople who pay regular monthly premiums. |
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For Medicare purposes, what is a benefit period and why i sit important? |
Benefit period is very important in part A coverage. It begins when the patient first enters a hospital or covered facility and ends when that patient has been out of that facility or another for 60 consecutive days. This period is important because each one involves a patient deductible. For example, if a patient is admitted to a hospital, goes home, but has a relapse 61 days after release, readmission to the hospital will initiate a new benefit period- and a new deductible for the patient. |
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What is meant by the term Medigap? |
Medigap describes the costs not covered by either Part A or Part B of Medicare. These costs include deductibles, the cost of hospital stays that exceed the number of day scovered by Part A, coinsurance payments, any costs that exceed Medicare-approved charges, the cost of most nonhospital prescription drugs and the cost of nursing homes. |
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What is the aim of Medigap insurance, and how is it categorized to help consumers compare policies? |
Medigap insurance aims to fill many of th egaps between the costs of health care and the coverage provided by Parts A and B. To help consumers make sense of a variety of competitng insurance plans---which cover some charges and not others---these policies fall into 14 standardized packages labeled A through N. |
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Describe the role of employer health plans in Medigap coverage. |
In some cases, clients may be able to retain private group health insurance through their employers after retirement. Some of these plans include dental insurance, a benefit not specifically covered in any of the Medigap plans. |
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What is Medicaid and who is eligible for its benefits |
Medicaid is a joint federal and state program that picks up the deductible and copays ordinarily paid by Medicare enrollees. Eligibility in Medicaid is limited to certain individuals w/ low incomes. |
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Describe Medicare Advantage Plans |
The Balanced Budget Act of 1997 created Medicare Part C, or Medicare Advantage, which includes plans offered by Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and Provider Sponsored Organizations (PSOs). The Balanced Budget Act of 1997 also established a demonstration program under Medicare Advantage for up to 390,000 beneficiaries to establish a Medicare medical savings account. (Typically, the only Medicare Advantage Plans availible were managed care plans primarily offered by HMOs and some Private Fee-for-Service plans offered in a few states primarily within rual areas.) |
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Who is eligible to have a Medicare Advantage Plan? |
To be eligible for a Medicare Advantage Plan, an individual must have Medicare Part A and Part B, cannot have End-Stage Renal Disease (ESRD), and must live in a county or geographic area where a Medicare Advantage Plan is availible. |
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Describe the pros and cons of using a Medicare Advantage Plan |
Pros: -benefits not coverd by traditional FFS plans eg. drugs and eyeglasses -predicitble out o fpocket costs (w/ managed care plans) -there is no need forthe Medicare beneficary to have a Medigap policy -greater emphesis on preventative care
cons: -bens may be limited, or denied, if network providers ar enot used -When outside the service area, benefits may be limited to medically necessary and emergency care -HMOs can terminate programs |
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What is the difference between short-term and long-term disability coverage? |
ST provides benefits for disabilities for up to two years and may have a waiting period of zero to seven days; it is generally availible only as a group policy. Generally ST disability coverage provides benefits for six months.
LT disability coverage protects for longer periods of time, often until age 65 in the case of illness and for life in the event of an accident. Waiting period for LT poolicies are from 30 days to two years. The policies themselvs may be group or individual. |
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Discribe the term occupational classification and its role in disability policies |
The term OC refers to the categoery into which applicants for disability insurance are placed by insurance uws according to the nature of their work. The specturm of classification runs from blue-collar to professional. The cost, terms, anda vailability of disability insurance are greatly influenced by these calssifications. Generally, insures perceive the blue-collar group as more likely to file a claim (due to a greater incidence of injury or illness) and less likely to return quickly to work. Until recently, all professionals were seen as the least likely to file a claim and the most likely to return to work quickly. |
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Noncancelable vs. guaranteed renewable |
NC= guarantees the right to renew for a stated number of years or to a stated age with preimiums at a renewal guaranteed (but not necessarily level).
GR- a GR policy guarantees the right to renew, but it permeits the cmpany to andjust premiums for an entire calss of isnureds. |
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What is the any occupation definition of disability? |
The any occupation definition is th estrictest definition of disability. A policy with this definition will pay benefits only if the policy holder is incapable of engaging in any gainful occupation. Thus, as long as an injured brain surgeon was capable of working at a highway tollbooth, he or she would not be considered disabled in the definition of any occupation policy. |
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What is the modified any occupation definition of disability? |
The modified any occupation definition of disability includes "any gainful occupation for which the insured is reasonably fitted by education, training, experience and prior economic status |
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What is the own occupation definition of disability? |
own occupation isth emost liberal definition (from the insured pov). In this definition, the policyholder is considered disabled if he or she is unable to engage in the principal duties of his or her own occupation. Any illness or handicap limiting the insured from engaging in his or her present occupation is considered disabling. |
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What is the elimination period, and what is its purpose in a disability income policy? |
period of time after the disability occurs before benefit pmts begin. It acts like a deductible, forcing th einsured to bear part of the loss. The longer th eelimiation period, the lower the premiums. |
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What is the probation period, what's its purpose in disabilty policy? |
period of time the policy mus tbe in froce before it covers the insured for specified perils. This prodtects the insurance co from having to cover preexisting conditions if an individual wishes to purchase a policy while ill or recovering froma n illness. |
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What is the maxium benefit that a high-income applicant is likely to be offered in a disability policy? |
Generally the max disability benefit offered to high-income applicants is two thirds of gross income. This normally does not cover income from bonuses, stock options, etc. |
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Define partial disability |
The same as total disability, except that the insured need only be unable to engage in one or more of the major duties or functions of an occupation, whether it be "own" or "any". Benfits are usually half of the total disability benefit, the max pmt period is usually limited (eg 3-6 months), and an initial period of total disability may be required. |
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Residual disability, define |
Residual disability benefits make up income lost when the insured is unable to work at full-income capacity. Residual disability pays benefits that are proportionate to the income lost and often requires an initial period of total disability. |
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What ar ethe key policy features to consider in selecting an LTC policy? |
-elimination period before bens are paid -max benefit period (eg. 5 years) -daily benefit (100/day) -inflation protection
The ltc policy has a unique provision: "providers of care." Some policies will pay benefits only if the person enters a nursing home; others stipulate that they will provide benefits for home care only; still others will pay for either. |
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What is the role of medicare in LTC? |
Doesn't provide much coverage for LTC. At the most, it will cover some of the cost of staying in a skilled nursing facility or at-home care thaqt follows the release from a covered hospital stay. Even in these cases, the number of covered nursing home days and hours-per-day of at-home care are limited
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What are ADL's and what is theri implication for receiving LTC benefits? |
ADLs are activities of daily living:
-dressing, bathing, toileting, continence, transferring (move form bed to chari etc) and eating. |
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Whats a health savings account HSA? |
Tax-exempt trust or custodial acct established by an individual or employer with a US financial institution (such as a bank or insurance company) for the purpose of paying qualified medical expenses of th eaccount owner (participant), his or her spouce, or dependants. |
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ID 4 important advantages of a HSA for an individual |
1. An individual may claim an income tax deduction for cash contributions made to an HSA, even if such person does not itemize deductions on his or her income tax return. In contrast, medical expenses must exceed 7.5% of adjusted gross income before they may be deducted by an individual as itemized expenses on his or her income tax return.
2. Interst and earnings on amounts held an HSA accumulate tax free
3. ER contribs to an HSA on behalf of an Ee-act owner do not result in taxible income
4. Distributions from an HSA to an account owner are tax free as long as they are used to pay for qualified medical expenses. |
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ID 4 important pros of a HSA for an ER? |
1. ER contribs to an HSA are deductible for IT purposes
2. ER contribs to an EE-acct owner's HSA are not subject to payroll taxes
3. EE salary reduction contributions may be made to the HSA feature that is part of an ER-sponsored cafeteria plan. Salary reduction contribs made to an HSA are not subject to payroll taxes.
4. ERs may be able to redesign their existing health plans to take advantage of the HSA rules. For example, an employer might be able to reduce the premiums paid for an existing health plan by increasing th edeductible and/or out-of-pocket costs. The reduction in premium costs could be used to fund separate HSAs established for EE-participants of the health plan |
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3. A living will dictates how property will be distributed at the death of the maker. tf |
False A living will states what life-sustaining measures may be taken if the maker is incapable of consenting to treatment. |
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1. Participation in parts A and B of Medicare is compulsory. tf |
False Participation in Part A (hospital insurance) of Medicare is compulsory, but participation in Part B (supplemental medical insurance) is voluntary. Part A is primarily funded by a tax on earnings. Part B is funded by participant premiums and the federal government. |
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2. Medicare Part B covers a. inpatient hospital expenses b. psychiatric inpatient care c. the cost of outpatient hosptial care |
c the cost of outpatient hospital care. Medicare Part B covers doctor bills, the cost of outpatient hospital care, and the cost of certain other medical services not covered by Part A.
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3. Applicants for Social Security retirement benefits, if they are age 65, must also apply for Medicare. tf |
True Social Security beneficiaries must now indicate if they want traditional Medicare or Part C (Medicare Advantage). In the past, individuals applying for retirement benefits did not need to make separate application for Medicare Part A coverage. |
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5. Part B Medicare coverage has a maximum annual benefit of $50,000 per illnesss tf |
False Part B Medicare coverage generally has no maximum benefit amounts. |
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2. Employer-provided retiree health insurance is often appropriate to fill Medigaps. tf |
True Group health insurance, provided by a former employer, is an appropriate tool to fill Medigaps (often at favorable rates). It may also provide better benefits than any of the A through N plans. |
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4. Federal law requires that all Medigap plans be offered in all states. tf |
False There are fourteen Medigap plans (A through N); however, not all plans are available in some states. |
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2. Unless covered under a Medical Savings Account or Health Savings Account, persons covered under a Medicare Advantage plan a. also need to purchase a Medicare supplement plan b. will have at least the same coverage as provided under the origional or traditional medicare c. have a plan that is guaranteed renewable |
b will have at least the same coverage as provided under the original or traditional Medicare. With the exception of the Medicare MSAs or HSAs, Medicare Part C provides the same coverage as provided under the original or traditional Medicare program. |
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3. The Balanced Budget Act of 1997 created Medicare Part C. One of the objectives of Medicare Part C was to increase the use of managed care within Medicare. tf |
True The objectives of Medicare Part C include increasing the use of managed care, saving the Medicare trust fund, and providing beneficiaries with more health care options. |
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4. A downside to Medicare Advantage HMO plans is the high cost to Social Security beneficiaries. tf |
False Medicare Advantage HMO plans provide Medicare Parts A and B at a minimal cost to beneficiaries. Usually, the primary cost to individuals is a copayment for office visits and prescriptions. |
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1. Disability income insurance may be purchased in any of the following ways except a. as addtnl covg on a group benefits policy b. as a stand alone grou benefit c. as an individual product d. as a substitue for medical covg |
as a substitute for medical coverage. A disability policy does not replace a medical policy, although it can be purchased as an addendum. |
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2. Children under age 18 are eligible for Social Security disability benefits. tf |
True Children under age 18 (19 if in high school) are eligible for 50% of the disabled worker’s benefit (subject to the family maximum). |
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3. Financial planners and clients usually should spend considerable time discussing how much disability coverage the client should have. tf |
False In nearly every case, clients need all the coverage their insurers will issue. Normally, coverage is available up to 60% to 70% of a client’s income. |
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6. “Own occupation” (own occ) disability policies are more available than they were ten years ago. tf |
False Own occ policy provisions are less available than they were even a few years ago. People with own occ policies are less likely to return to work than they were in the past. |
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9. The term “noncancellable” means that the insured has the right to renew a policy for a stated number of years or to a stated age, with premiums at renewal guaranteed (but not necessarily level). tf |
True Noncancellable guarantees the insured the right to renew the policy for a stated number of years or to a stated age, with premiums at renewal guaranteed (but not necessarily level if the increase was structured and in place when the policy was initially written). |
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1. A health plan will fail to qualify as a high deductible health plan (HDHP) if it does not require a deductible to be paid for preventive care. tf |
False A health plan does not fail to qualify as an HDHP merely because it does not have a deductible for preventive care. |
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2. A 60-year-old account owner who pledges his or her Health Savings Account as security for a loan is exempt from the additional 10% tax imposed on deemed distributions resulting from a prohibited transaction. tf |
False A 60-year-old account owner who pledges his or her Health Savings Account as security for a loan is subject to the additional 10% tax imposed on deemed distributions resulting from a prohibited transaction. However, account owners age 65 or older are exempt from the additional 10% tax imposed on deemed distributions resulting from a prohibited transaction. |
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3. Which of the following is true regarding Medicare Part A? a. it pays doctor bills b. it covers outpatient hospital care c. it costs approximately $426 per month for most individuals d. it helps pay for care in a skilled nursing facility |
d It helps pay for care in a skilled nursing facility. Within certain parameters, Medicare Part A helps pay for care in a skilled nursing facility. |
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Which of the following are acceptable strategies for filling gaps between actual costs and Medicare coverage? 1. Purchasing Medigap policies from private vendors2. Enrolling in Medicare Advantage and purchasing a coordinating Medigap policy 3. Maintaining coverage through an employer-provided health plan 4. For low-income seniors, qualifying for Medicaid |
I, III, and IV only Purchasing Medigap insurance, maintaining coverage through an employer-provided health plan, and qualifying for Medicaid are all plausible strategies to fill gaps between actual costs and Medicare coverage. |
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8. Which of the following is not true regarding Social Security disability coverage? a. 5 month elim period b. bens are not adequate in the majority of situations c. SS has a very libearal definition of disability d. SS disability bens should be used to supplement an andivdiual policy |
c Social Security has a very liberal definition of disability. Social Security has a very strict “any occ” definition of disability that results in few people qualifying. |
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9. Which of the following is not a requirement to be eligible for Social Security disability benefits? a. individual must be younger than the SS normal retiremtn age b. the disability must be terminal or expected to last at least 12 months c. after age 31, the worker must have worked in SS employment for at least five fo the last ten years d. Individual must have had avg annual earnings of at least 15k during 5/last 10 years |
d The individual must have had average annual earnings of at least $15,000 during five of the last ten years. This stipulation does not exist. |
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14. Which of the following is not true regarding the tax-deductibility of qualified long-term care insurance (QLTCI) premiums? a Individuals and couples filing jointly can deduct medical expenses that exceed 7.5% of adjusted gross income (AGI). QLTCI premiums qualify as medical expenses. b Self-employed individuals can deduct QLTCI premiums as a business expense. c Partners can deduct QLTCI premiums as a business expense. d QLTCI premiums are deductible for this year only, after which they are no longer deductible.
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d QLTCI premiums are deductible for this year only, after which they are no longer deductible. The deductibility of QLTCI premiums does not expire after the current year. There are no known plans for such an expiration date. |
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15. Which of the following is true regarding Medicare coverage of long-term care (LTC) expenses? a Medicare will cover expenses for individuals who move into LTC facilities without being hospitalized. b Medicare covers expenses for up to five years of LTC. c A doctor must certify the need for skilled nursing care or else Medicare will not pay expenses. d Medicare will cover LTC expenses in any facility of the individual’s choosing.
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c A doctor must certify the need for skilled nursing care or else Medicare will not pay expenses. Medicare will not pay expenses unless a doctor has certified the need for skilled nursing care. |
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16. Which one of the following is not considered to be a qualified medical expense for purposes of the Health Savings Account rules? a. prem pmts for part A b. prem pmts for part B c. prem pmts for LTC d. prem pmts for a medigap policy |
d premium payments for a Medigap policy Premium payments for a Medigap policy are not considered qualified medical expenses for purposes of the Health Savings Account rules. |
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17. An individual who is covered by dental care insurance in addition to coverage under a high deductible health plan is ineligible for a health savings account. tf |
False An individual with coverage for dental care in addition to coverage under a high deductible health plan is still eligible for a health savings account. Coverage (whether provided through insurance or otherwise) for dental care and certain other types of care is permitted and will not prevent an individual from participating in a health savings account. |
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20. Which is the most liberal definition of disability? own, any, modified? |
own The most liberal definition of disability is own occ, which means that claimants are considered disabled if they cannot perform the duties of their own occupations.
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21. All of the following are true regarding Medicare Advantage plans except a. to qualify, the bene must be covered by Medicare Part A. Covg for part B is optinal. b. Individuals with End stage renal disease aren't eligible c. Bene's must live in the service area of a health plan |
a to qualify, the beneficiary normally must be covered by Medicare Part A. Coverage for Part B is optional. To qualify, beneficiaries normally must be covered by parts A and B of Medicare. |
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22. A standardized Medigap plan is designed to cover a. ltc expenses when treatment lasts longer than 100 days b. Medicare-approved charges that are not paid by Medicare c. charges that are consdiered nonmedical and are not covered by medicare |
b. Medicare-approved charges that are not paid by Medicare. Medigap insurance is designed to supplement Medicare’s benefits by filling in some of what Medicare does not cover. |
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23. Federal law dictates that physicians must accept Medicare assignment. tf |
False Health care providers are free to decline Medicare assignment, but they cannot charge more than 115% of Medicare-approved charges. |
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24. Coverage under Part A of Medicare includes all except a. psychiatric hospital care b. physician servicies c. inpatient hospital care d. hospice care |
b physician services. Physician services are covered by Part B of Medicare. |
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26. One key disadvantage of a power of attorney is that a. more complicated than a trust doc b. competency hearing would be necessary c. some financial institiutions mya be hesitant to rec the agent's authoryt |
c some financial institutions may be hesitant to recognize the agent’s authority. Some financial institutions may be hesitant to recognize the agent’s authority, especially if the power of attorney was executed a long time before its use. |
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27. Benefits paid by qualified long-term policies are generally excluded from taxable income. tf |
True Qualified long-term care insurance policy benefits are, like accident and personal injury benefits, excludible from taxable income. |
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28. Short-term disability insurance policies generally pay benefits for up to five years.
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False Short-term disability policies generally pay benefits for anywhere from six months up to a maximum of two years. Long-term policies pay benefits for longer periods. |
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30. With a contingent trust, most funding occurs after the grantor becomes incapacitated. tf |
True Prior to the grantor’s incapacity, the contingent trust is only a shell into which assets can be transferred later. |
