Critical Illness Insurance
- Tips For Buying Critical Illness Insurance Protection
Obviously,l buy only as much protection as you comfortably can afford.
One of the best ideas we've heard is to multiply your monthly mortgage payment by 24 (2 years worth). Imagine the peace of mind of knowing you'll be mortgage-payment free while you recover and undergo treatment.
Finally, costs for coverage can vary from one insurer to another. Therefore it pays to work with a knowledgeable professional who has access to coverage from multiple insurers. he or she can make sure you get the best coverage for the lowest cost.
- How Much Will I Pay For Critical Illness Insurance?
Deciding how much critical illness insurance protection to buy is clearly a personal decision. A simple way to approach the matter is to multiply your monthly mortgage payment by 24 (2 years worth). Imagine the peace of mind of knowing you'll be mortgage-payment free while you recover and undergo treatment.
As an example, you'll see that a male age 40 (non-smoker) seeking a cash benefit payment of $10,000 would pay between $180 and $200-a-year for critical illness insurance. Smokers will pay about 50 percent more. A female age 50, purchasing $20,000 of coverage, will pay about $350 a year. Rates for smokers increase significantly after one reaches age 50.
A number of insurers will issue up to $50,000 or critical illness insurance coverage without a medical exam. Referred to as simplified issue, this is a good way to go for the vast majority of individuals. It is also the most affordable and a good place to start the processing of considering this highly important form of protection.
- Are There Different Forms Of Critical Illness Insurance?
Yes. We'll try to keep it simple.
There is Simplified Issue Individual Protection which typically is available in amounts up to $50,000. Generally insurers will only ask a few health questions with these policies. They tend to be affordable and available from individual insurance professionals.
There are Fully Underwritten Individual Plans which are available in higher amounts; up to $500,000. Medical information will be requested by the insurer. These plans are also available from individual insurance professionals.
There are plans available through employers which are generally offered on a voluntary basis (fully paid by the employee).
There are life insurance policies that offer a critical illness insurance benefit often available as a rider to your policy.
- Why Would I Need Critical Illness Insurance Benefits?
Cash to pay for medical treatments not covered by your health plan.
Cash to pay your mortgage while you are recovering.
Cash to pay bills - from car payments to insurance premiums.
Cash so you can travel for treatments not available locally.
Cash to pay for experimental treatments (not covered).
Cash to replace a spouse's income while caring for the insured.
We think you'll find a way to put the cash to good use.
- How Much Cash Can I Receive?
The cash payments which can range from $10,000 to as much as $1 million. They are paid as a single, lump sum payment as soon as the individual is diagnosed with a covered condition.
Some policies will actually provide multiple cash payments. Say you have cancer and survive; you get a cash payment. Three years later, you have a heart attack; another payment. But this varies from insurer to insurer, so be sure to ask if it applies.
- Why Was Critical Illness Insurance Created?
Here is the short answer: Critical illnesses cause financial devastation to millions of individuals and families (even those with health insurance). A product was created that would provide cash at a time it was needed most.
For those who want a lot more information. Consider the following: Medical problems contributed to over 60 percent of all bankruptcies in the United States and a 2008 Harvard University study found that more than three-quarters (77.9 percent) had health insurance at the start of the bankrupting illness. This study was performed prior to the current economic downturn and will likely understate the current burden of financial suffering.
Critical illnesses are striking more Americans every single year. Some 1.4 million Americans are diagnosed with cancer (American Cancer Society). An estimated 785,000 Americans will have a first heart attack and some 600,000 Americans will experience their first stroke (American Heart Association). The vast majority will survive.
The financial consequences of surviving a critical illness are something few people are prepared for. Most health insurance policies come with deductibles and co-pays that can be as much as $5,000 a year. Prescriptions are not just costly, they are rarely fully covered.
And, here is something you likely have not considered; while you are undergoing treatment or recovering for an extended period of time, you will still have to pay your health insurance premiums. You'll pay insurance, rent or mortgage, credit card bills, school tuition, real estate taxes, food and utilities.
According to the Harvard study, many families with health insurance found themselves under-insured and responsible for thousands of dollars in out-of-pocket costs. The average out-of-pocket cost was $17,749 for all medically bankrupt families. Because most health insurance is linked to employment, a medical event can trigger loss of coverage. For patients who initially had private coverage but lost it, the family's out-of-pocket expenses averaged $22,568.
In the late 1990s, a new financial product was developed to help consumers cover expenses associated with critical illness. Appropriately, it's called Critical Illness Insurance. This specialized insurance provides a lump-sum, tax-free payment should a policyholder suffer from certain specific critical conditions.
Some 600,000 Americans now have this protection purchased on an individual basis or through a plan offered by their employer.
- What Is A Critical Illness?
For purposes of this explanation, we are going to list those illnesses that are covered by critical illness insurance policies.
The three primary are: cancer, heart attack and stroke.
Critical illness insurance policies may also cover such conditions as:
• Heart transplant
• Coronary bypass surgery
• Kidney (Renal) failure
• Major organ transplant
Fixed Indexed Annuities
- What is a Fixed Index Annuity?
A Fixed Indexed Annuity (FIA) is a fixed annuity that provides a guaranteed lifetime income and interest rate while preserving and protecting your premium. You do not pay taxes on your premium or interest until you take withdrawals or receive income. Unlike traditional fixed annuities, additional interest may be earned based on positive changes in commonly used financial indices such as the S&P 500 or the Dow Jones Industrial Average. Because the annuity you purchase is indexed, your premium and credited interest can never be lost due to an economic downturn.
- How do I know if a Fixed Indexed Annuity is for me?
As Mark Troyer always points out, there isn't a perfect investment tool. It is our belief that investors should be safer with their money as they grow older. Our average client is at or nearing the age of retirement and wants to preserve and protect their assets. If you want unlimited growth potential and are willing to assume the risk of unlimited loss, then a fixed indexed annuity is probably not the right choice for you. If you are concerned about protecting your principal and enjoying a reasonable rate of return on your investments, then we feel you should join the Never Lose Financial family.
- How do I know a Fixed Indexed Annuity is safe?
A Fixed Indexed Annuity is a contract between you and the insurance company that issues your policy. Fixed Indexed Annuities are monitored and regulated by the Department of Insurance of the state from which they are issued. The annuity is additionally protected by the financial strength and claims paying ability of the insurance carrier. Each state's insurance regulator maintains jurisdiction over the insurance carrier and determines the specific amount and level of protection to which the individual is entitled.
- Is diversification the key to safety?
Consumers have been told time and again that diversification is the key to safety. Although diversification may assist in reducing the risk of total loss, it is not a "foolproof" plan to safety. As Lisa Smith reports for msnbc's TODAY Money, diversification doesn't always work. Consumers are encouraged to appropriate at least a portion of their portfolio to annuities and other products that are not directly linked to the stock market.
Source: Plan carefully to make sure your 401(k) doesn't flounder
By: Lisa Smith
- Someone told me that my annuity has fees, is this true?
Current advisors will tell you that all annuities have fees. Variable annuities have fees that average 2.5% per year, but Fixed Indexed Annuities do not have any management or contract administration fees. The primary cost to a fixed annuity is committing the money for a period of time. The insurance company pays us and other advisors a commission which does not come from the client's money; the commission is paid from the earnings of the insurance company. As long as you do not select an income rider or take withdrawals in excess of the penalty-free withdrawal amount, you will own your annuity and not incur any fees.
- Where can I learn more about Fixed Index Annuities?
We strongly encourage you to visit the website of the National Association for Fixed Annuities (NAFA) at www.nafa.com
- Can I liquidate my annuity?
There are many options available for withdrawing your money. The annuities we offer allow you to withdraw up to 10% after the first year - without penalty. In the event of premature death, your beneficiaries can choose to receive your annuity's accumulated value as a monthly or lump sum payment.
- Are there really rate caps that limit the gains I can make?
FIAs are designed to provide an increased level of protection against prolonged market downturns. Although the rate of growth is limited, your principal and subsequent market gains are not at risk of loss due to bear markets or weak economic conditions. If the index upon which your annuity is based performs well, you will receive a percentage of that growth. Should the market take a nosedive, your principal and interest earned will not be lost.
- Aren't there other options with unlimited growth potential?
Aren't there other options with unlimited growth potential? Yes, there are; however, most of these options carry with them the corresponding potential for unlimited loss. Never Lose Financial has never had a client lose one penny of their annuity product. Also, in addition to being free of management and administrative fees, fixed indexed annuities have the potential to earn more interest than traditional fixed annuities and other safe money alternatives.
- Why is my existing broker trying to talk me out of this?
Current advisors are not going to agree with our recommendations because, in doing so, they would have to admit that their recommendations were not appropriate. All financial firms have conservation units to try to conserve your business because, once the asset is transferred, the advisor and firm no longer generate any income from this asset. Most risk advisors cannot sell indexed annuities. These annuities are offered by insurance companies; therefore, they will not bring up these tools in client meetings.
Indexed Universal Life Insurance
- Won’t my money perform better in the stock market.
Yes you can absolutely have periods of superior performance investing your money in the stock market. But it is critical to understand that we do not offer IUL as a complete stock market alternative, we offer it as an alternative for safe investments. We do compare IUL performance to stock market performance because IUL historically performs within 1% to 1.5% of the market, and we typically use a 7.5% illustration rate for the IUL policies that we issue. The appropriate evaluation of IUL is not against stock market investments but rather today's current safe investments such as CDs, Money Market Funds, Municipal Bonds, US Savings bonds etc.
- I don’t really need all of this additional insurance do I?
The answer doesn't lie in whether or not you have enough insurance (and chances are you probably do not), but instead is found in every individual's retirement income expectations. We use IUL as a key element of our retirement income plans for our clients, and structure the IUL policies that we issue as a supplement to retirement income. This allows our clients to draw more aggressively from their stock market investments during retirement while relying on the death benefit in their IUL in the event of a premature death. If the policy never matures then the cash value provides our client with more retirement income and carries no tax liability.
Regarding whether or not you don't need the additional insurance consider that in late 2013 The Street reported that the average American is underinsured by an average of $1.2 million dollars. Consumers buy term insurance for its affordability but do not fund enough term insurance to cover 100% of their life time earning potential. Moreover every American keeps all of their major assets insured for their entire lives (homes, cars, businesses, etc.) but they terminate their life insurance when the term insurance bill increases.
- Isn’t it true that IUL insurance costs are high?
The short answer is yes. IUL insurance costs are considerably higher than term insurance. The comparison, however, should not be made between the cost of term insurance and the cost of maintaining the IUL death benefit. The comparison should be made between the cost of the insurance component of the IUL versus the myriad of taxes and fees that traditional stock market investments will include. Insurance costs on an IUL policy are absolutely considerable, especially in the first few years that one holds the policy. The IUL is being used for long term gains, and over time the insurance costs associated with an IUL policy will be far less than fees charged by advisors or loads required by some mutual funds. In addition the growth and access to the cash value of an IUL is completely tax free. The savings on taxes alone completely neutralizes the fees required for the benefit of the policy.
- Shouldn’t insurance just be insurance and not an investment?
This is absolutely true. Insurance is not the same as investing in a stock or mutual fund. Cash value insurance, such as IUL, is an asset that is wholly owned by the individual. Therefore insurance should not be considered an investment but rather the acquisition of an asset that will have guaranteed growth over a specific period of time. IUL cash value is an asset that grows at a significantly higher rate than any money market fund or CD. IUL, therefore, should be considered more of a real estate investment in an area where property value is protected from any loss. Ultimately an IUL performs like a high yielding savings account for the owner.
- Isn’t it true that dividends do not get credited to IUL cash value
It is true that dividends do not get credited to the IUL cash value. This is also true of any safe investment alternative suggested by most financial advisors. CDs, bonds, etc. do not offer a dividend payment. It is important to remember that IUL is used in the retirement income plan that we develop as a safe money alternative. It does not deliver a dividend, but is an asset that will deliver rates of return that have historically performed within 1% to 1.5% of major market indices.
- Isn’t it true that a life insurance company can change contract terms?
Yes it is true that the insurance company can change terms of the contract including the cap and floor rate, or the participation rate. It is important to understand how the insurance company sets policy caps and the economic factors that would have to exist for any change in policy cap to be enacted. One key element of IUL mechanics is interest rates. Lower rates typically yield lower policy caps and higher rates typically yield higher policy caps. This is not to suggest that if interest rates begin to increase that policy caps will immediately increase, but to underscore the fact that even with today's low interest rates most insurance carriers are offering competitive policy caps between 12% and 15%.
Two additional factors should be considered. The first is that insurance companies must operate in a competitive marketplace. While they retain the right to decrease caps or floors they must do so in the context of the overall marketplace. This competitive pressure demands that any movement in policy terms be cautiously considered and conservatively enacted. Large swings in policy terms that negatively affect the policy owners are extraordinarily rare.
Lastly it is important that policy changes also protect the owner. If rising interest rates do allow the carrier to raise caps they do so in order to allow policyholders to benefit from more favorable economic conditions.
- Isn’t it true that my policy illustration assumes I will stick to the assumptions under my control?
Yes it is true that the elements used in the illustration must remain true for the duration of the policy. If an individual is unsure of whether or not they will be able to fund the policy in a manner that was used in the illustration then IUL may not be the best alternative for them. Using IUL as a key retirement income strategy requires discipline, and if the individual is not prepared to leverage the appropriate amount of long term savings discipline required by IUL another option should be considered.
- I was considering an annuity. Is it true that annuities are not liquid?
Annuities should be established with funds not earmarked for emergencies, but for savings. Ideally, you'll want your deposits to accumulate interest, safely and undisturbed, for at least ten or more years. The longer, the better. However, newer annuities do allow surrender-free withdrawals at yearly intervals. Find out the details of this before you commit to any annuity.
- Is my insurance tax-deductible?
Depends on how you structure it. Ask your accountant, or tax advisor.
- I was recently turned down for coverage, but my doctor says I’m fine. What should I do?
You may feel fine, and your doctor may say you're fine, but insurance carriers look for things that are likely to occur later on. For example, your cholesterol or blood sugar may be fine for your medical history, but higher than the carrier's guideline. You may also be on a combination of medications which have, or may create, abnormal reactions. If you've ever been turned down for coverage, the best way to combat this, and get a good policy, is to openly discuss any and all medical concerns with your insurance advisor. If they know in advance what your situation is, they can direct you to special carriers which may accept you at reasonable rates.
- Should I buy term or permanent insurance?
Term, if you only want coverage for a temporary period. Permanent, if you want coverage until you die. Remember, permanent also builds cash value and can supply additional retirement income. Discuss all options with an insurance advisor.
- I just bought a home, and I already have life insurance. Should I consider mortgage insurance, as well?
First, if your mortgage is much more than the coverage on your existing policy, see if it's practical to raise your coverage. If that doesn't work, and you definitely want to pay off your mortgage when you die, do consider a term policy for the full amount of the new mortgage, or at least to make up the difference.
- What happens if I cancel my insurance policy, later?
Certain types of permanent insurance policies may carry a penalty, like a CD, so find out about this before you commit to it.
If you have a simple term policy, you may cancel at any time without penalty.
- How do I know I can trust an insurance company?
Each carrier has a rating, usually A – F. Make sure your carrier has at least an A+ rating, which means it has excellent financial strength and claims paying ability.
- What will affect the rates I get?
Everything – including your age, the amount and length of coverage, your health, smoking, the carrier and a host of other factors. This is where an insurance advisor can help.
- What about the rates I see on television and in newspapers?
Be careful with these. Many people believe they'll get these rates, but discover later they either don't qualify for them or that they offer limited benefits.
Read the fine print carefully, and you'll know exactly what those rates represent.
- Are rates the same for each age group?
It varies from carrier to carrier, plus any special health conditions one might have.
- What should I budget for my policy?
Again, it depends on what you want to accomplish. For example, if you're buying insurance to protect a home loan, plan on budgeting at least 5% of your loan payments for premiums. For college savings and retirement income, 10% or more would be ideal. Try not to dwell on the added expenditure, since what you're actually doing is securing your capital investments.
- What’s the best way to purchase an insurance policy?
By carefully determining what your goals are. Insurance can be about cash-replacement due to unforeseen circumstances, but can also serve many other needs. Ideally, you'll want to discuss this with a trusted advisor, who has experience with insurance planning.
- Why should I do an annual policy review?
It's like changing your motor oil every 3000 miles. If you don't do it, you may discover your car no longer works when you need it most. Most people forget to do this until it's too late. Your situation often changes throughout the course of life ... especially in these times. A new home, car, job, family member, or the lose of any one of those, can change your entire financial position. It's best to be on top of those issues than be a victim of them. Further, you may be paying too much or own an older policy that is about to expire. With that in mind, new, more comprehensive options are developed by insurers several times a year. In some cases, it may be wise to replace a current strategy with one that makes more sense for your current goals.
- Why use an insurance adviser or broker?
An insurance adviser or broker is essentially your trusted liaison to a variety of financial products and services. They are usually the ones on the front line, asking you the important, often never-thought-of questions, providing you with accurate answers and deciphering the often overwhelming stream of information and options. A broker must also gather the information you give him or her, then go out and find the perfect solutions to suit your particular goals and review them with you. Without one, you are often taking a uneducated risk with hard-earned savings.
Long Term Care Insurance
- Are there professionals who can help me find the right kind of long-term care?
It can be difficult to find the right kind of long-term care services, but there are sources you can turn to for help with this task. For example, geriatric care managers are professionals, usually nurses or social workers, who help people with their long-term care needs. They can assess a person's needs, develop a plan of care, and identify and coordinate whatever services are needed. Contact the Eldercare Locator at 800-677-1116 or visit http://www.eldercare.gov for more information.
- Who can help me create the documents I need for long-term care planning?
You should first discuss what you want with family members. These discussions can be hard, but telling others your wishes ahead of time answers questions they might have later and takes the burden off your family. After that, lawyers and other professionals can help you create legal documents, or advance directives. These experts understand State laws and how changes, such as a divorce, move from your home, or death in the family, affect the way documents are prepared and maintained.
- What if something happens to me and I can't talk with a health care provider to make my wishes known?
Planning ahead can ensure that your wishes for medical care in an emergency and at the end of life are expressed. If you haven't already, you should create certain legal documents, often referred to as advance directives.
Health care power of attorney -- This document names the person who will make medical decisions for you if you cannot make them yourself.
Living will -- This document records your wishes for medical treatment near the end of life. It spells out what life-sustaining treatment you do or do not want if you are terminally ill, permanently unconscious, or in the final stage of a fatal illness.
Do-not-resuscitate (DNR) order, if desired --This document tells health care providers not to perform cardiopulmonary resuscitation (CPR) or other life-support procedures if your heart stops or if you stop breathing.
- Is long-term care insurance a good option for me? I've heard it's expensive.
Long-term care insurance pays for many types of long-term care. The exact coverage depends on the type of policy. Some policies cover only nursing homes. Others cover a variety of services.
The cost of long-term care insurance does go up for people who are older, have health problems, or want more benefits. However, it can be a good choice for younger, relatively healthy people at low risk of needing long-term care.
- I'm perfectly healthy. Why should I think about long-term care?
Maybe you will never need long-term care. But an unexpected accident, illness, or injury can change your needs, sometimes suddenly. The best time to think about long-term care is before you need it. Planning for the possibility of long-term care gives you time to learn about services in your community and what they cost. It also allows you to make important decisions while you are still able.
- What long-term care costs does Medicaid cover?
Medicaid pays for health care services for people with limited income, and it is an important source of payment for long-term care services. Personal care, home health care, adult day care, and nursing home care are examples of the types of Medicaid-covered services used by older adults. However, Medicaid is not available to everyone. To be eligible, you must meet certain financial and health requirements. People with financial resources above a certain limit will most likely not qualify unless they first use up their own resources to pay for care, which is called "spending down." Who is eligible and what services are covered vary from state to state. (For more information about Medicaid coverage, see http://www.cms.gov/MedicaidGenInfo.)
- Doesn't Medicare cover most long-term care costs?
No. Contrary to what many people think, Medicare does not cover most long-term care costs. It does pay for some part-time services for people who are homebound and for short-term skilled nursing care, but it does not cover ongoing personal care at home, like help with bathing. It may cover part of the first 100 days in a nursing home. (For more information about Medicare coverage, see "Continuing Care Options" in the Medicare Basics for Caregivers topic at http://nihseniorhealth.gov/medicareandcontinuingcare/continuingcareoptions/01.html).
- My wife needs part-time help at home. Will Medicare pay for that?
It depends on what kind of help your wife needs. Medicare covers some part-time services for people who are homebound, meaning that leaving home is a major effort. These services include skilled nursing care for a short time after a hospital stay; physical, occupational, and speech therapy; and medical social services. Medicare will also pay for medical supplies and medical equipment, such as walkers. However, Medicare will not pay for ongoing personal care. Medicare payment for services requires a doctor's order, and services must be given by a Medicare-approved provider.
- What kinds of options are available to pay for long-term care?
Most people don't have enough money to pay for all long-term care costs on their own, especially ongoing or expensive services like a nursing home. Often, they rely on a combination of resources to pay for care. These may include
• personal funds
• government health insurance programs, such as Medicare and Medicaid
• private health insurance plans
• private financing options, such as long-term care insurance, life insurance policies, and reverse mortgages.
- What does "out of pocket" mean?
"Out of pocket" means using personal funds. In the case of long-term care, many services are paid for out of pocket, at least in the beginning. Personal funds may include personal savings, a pension or other retirement fund, income from stocks and bonds, or proceeds from the sale of a home.
- Is long-term care expensive?
It can be. Americans spend billions of dollars a year on various services. How much an individual pays depends on the type and amount of services provided, where he or she lives, whether family and friends can provide care, and which paid providers are used.
- My father's Parkinson's disease is getting worse, and he can no longer live at home. What kind of facility is right for him?
Many people like your father, who require help full time, move to a residential facility to get all of the long-term care services they need. Some facilities have only housing and housekeeping, but many also provide personal care and medical services. Possibilities include adult foster care, board and care homes, assisted living facilities, nursing homes, and continuing care retirement communities.
Which kind of facility is best for your father depends on his exact needs and financial situation. To get more information about facilities in your area, contact Eldercare Locator at 800-677-1116 or http://www.eldercare.gov. You can also call your local Area Agency on Aging, Aging and Disability Resource Center, department of human services or aging, or a social service agency.
- My mother has a disability and I care for her in my home, but I'm about to start a new job. Who will take care of her now?
Your mother may be able to attend an adult day service program, which provides health, social, and other services in a safe place, generally on weekdays. Such programs are designed for adults with mental or physical impairments. Some programs provide rides to and from their locations.
- I don't drive anymore. How can I get to doctors' appointments and the grocery store?
Community-based transportation services can help you get around. Some senior housing complexes and community groups offer transportation services. Many public transit agencies have services for people with disabilities. Some services are free. Others charge a fee. Call Eldercare Locator at 800-677-1116 or visit http://www.eldercare.gov to find a program in your community.
- How do emergency response systems work?
Emergency response systems automatically respond to medical and other emergencies via electronic monitors. The user wears a necklace or bracelet with a button to push in an emergency. Pushing the button summons emergency help to the home. This type of service is especially useful for people who live alone or are at risk of falling.
- What kind of help can I get while I recover from surgery at home?
You can get home health care -- part-time medical services ordered by a physician for a specific condition. These services may include nursing care as well as physical, occupational, or speech therapy. You can also get personal care, such as help with bathing and dressing, plus help with meal preparation and household chores. These services are available through unpaid family members and friends, paid caregivers found informally, and home health care agencies.
- Who provides long-term care in the home?
It depends on a person's exact needs. Most home--based care is personal care, such as help with bathing, dressing, and taking medications. Unpaid family members, partners, friends, and neighbors provide most of this type of care. Other types of home-based care, such as skilled nursing care after surgery, are provided by paid professionals, including nurses, home health care aides, therapists, and homemakers.
- How can I tell if I will need long-term care?
It is difficult to predict how much or what type of long-term care you might need. Several things increase your risk of needing long-term care.
• Age -- The risk generally increases as you get older.
• Gender -- Women are at higher risk than men, primarily because they often live longer.
• Marital status -- Single people are more likely than married people to need care from a paid provider.
• Lifestyle -- Poor diet and exercise habits can increase your risk.
• Health and family history -- These factors also affect risk.
- How common is the need for long-term care among older people?
About 70 percent of people over age 65 need some type of long-term care during their lifetime. More than 40 percent need care in a nursing home for some period of time.
- How long does long-term care last?
Long-term care can last a short time or a long time. Short-term care lasts several weeks or a few months while someone is recovering from a sudden illness or injury. For example, a person may get short-term rehabilitation therapy at a nursing facility after hip surgery, then go home.
Long-term care can also be ongoing, as with someone who is severely disabled from a stroke or who has Alzheimer's disease. Many people can remain at home if they have help from family and friends or paid services. But some people move permanently to a nursing home or other type of facility if their needs can no longer be met at home.
- What is the most common type of long-term care?
The most common type of long-term care is personal care -- help with everyday activities, also called "activities of daily living." These activities include bathing, dressing, grooming, using the toilet, eating, and moving around -- for example, getting out of bed and into a chair.
- Why do people need long-term care?
People often need long-term care when they have a serious, ongoing health condition or disability. The need for long-term care can arise suddenly, such as after a heart attack or stroke. Most often, however, it usually develops gradually, as people get older and frailer or as an illness or disability gets worse.
- What types of services does long-term care provide?
Long-term services can include• home-based services -- home health care, homemaker services, friendly visitor/companion services, and emergencyresponse systems• community-based services -- adult day service programs, senior centers, transportation services, meals programs,and respite care• facility-based care -- adult foster care, board and care homes, assisted living facilities, nursing homes, and continuingcare retirement communities
- What is long-term care?
Long-term care involves a variety of services designed to meet a person's health or personal care needs during a short or long period of time. These services help people live as independently and safely as possible when they can no longer perform many everyday activities on their own.
- Can I get any of Medicare Part D's costs waived?
Low-income Medicare beneficiaries may qualify for a subsidy to help pay costs associated with Part D plans. This subsidy is called Extra Help. Also, under certain circumstances, the copayment for prescriptions may be waived or reduced.
You may qualify for a low-income Part D subsidy if:
you are eligible for Medicaid, or
your income is less than 150% of the federal poverty level (see Nolo's article on the federal poverty level) and your assets, not including your own home, are less than $13,440 ($26,860 for a married couple).
In addition to low-income subsidies, circumstances exist in which a Part D plan enrollee may not have to pay the normal copayment for a covered drug.
People who live in a long-term care nursing facility, and who are enrolled in both Medicare Part D and Medicaid, have no copayments.
Some plans waive or reduce copayments for certain drugs, particularly generic versions, to coax people to join that particular plan. But the plan can change this copayment waiver at any time.
Pharmacies may waive copayments for any enrollee with a low-income subsidy, for any drug. But the waiver is not automatic; you have to ask for it.
- How much does Medicare Part D cost?
There are four types of costs associated with Medicare Part D prescription drug coverage: premiums, deductibles, copayments, and a coverage gap during which period you must pay the full cost of your medications. People with low incomes may apply for a subsidy from the Social Security Administration to reduce these costs.
In 2013, Part D premiums range from $0-$50 per month (depending on the plans available in your town and on the particular plan you choose). The deductible -- the amount you must pay out-of-pocket before Medicare will contribute to your prescription costs -- for most plans in 2013 is $325. After you meet the deductible, Medicare will pay roughly 75% of your prescription costs.
After you and your plan together pay a certain amount for covered prescription drugs ($2,970 in 2013), your plan stops paying and you must pay the full cost of the prescription. The plan begins to pay again -- and pays 95% of all further costs -- when total expenditures reach a "catastrophic" level ($4,750 in 2013).
However, you will receive a discount on the cost of your medications while you are in the coverage gap.
- Who is eligible for Medicare Part D coverage?
Anyone entitled to Medicare Part A (whether actually enrolled or not) or who is currently enrolled in Medicare Part B may join Medicare Part D to get help paying prescription drug costs. Enrollment is voluntary except for people who also receive benefits from Medicaid (Medi-Cal in California). If you qualify for Medicaid, the government automatically enrolls you in a Medicare Part D plan through which you will receive your prescription drug coverage.
- How much of my bill will Medicare Part B pay?
When all of your medical bills are added up, you will see that Medicare pays, on average, only about half the total. There are three major reasons why it pays so little.
First, Medicare does not cover a number of major medical expenses, such as glasses, hearing aids, dental work, dentures, and a number of other costly medical services.
Second, Medicare pays only a portion of what it decides is the proper amount -- called the approved charges -- for medical services. When Medicare decides that a particular service is covered, it determines the approved charges for it. Part B medical insurance then usually pays only 80% of those approved charges; you are responsible for the remaining 20%.
Third, the approved amount may seem reasonable to Medicare, but it is often considerably less than what doctors actually charge. If your doctor or other medical provider does not accept assignment of the Medicare charges, you are personally responsible for the difference, up to a certain maximum.
Note that there are now several types of treatments and medical providers for which Medicare Part B pays 100% of the approved charges rather than the usual 80%. These categories of care include home health care, clinical laboratory services, and flu and pneumonia vaccines.
- What kinds of costs does Medicare Part B cover?
Part B medical insurance is intended to cover basic medical services provided by doctors, clinics, and laboratories. However, the lists of services specifically covered and not covered are long, and do not always make a lot of sense.
Making the effort to learn what is and is not covered can be important, because you may get the most benefits by fitting your medical treatments into the covered categories whenever possible.
Part B insurance pays for:
doctor services (including surgery) provided at a hospital, a doctor's office, or your home
mammograms, pelvic exams, bone density tests, and PAP smears for women
an annual flu shot
a one-time physical exam (called a "wellness exam") done within six months of when you enroll in Medicare Part B
medical services provided by nurses, surgical assistants, or laboratory or X-ray technicians
outpatient hospital treatment, such as emergency room or clinic charges, X-rays, injections, and lab work
an ambulance, if required for a trip to or from a hospital or skilled nursing facility
drugs or other medicine administered to you at a hospital or doctor's office (for prescription drug benefits, consider enrolling in Medicare Part D, discussed below)
medical equipment and supplies, such as splints, casts, prosthetic devices, body braces, heart pacemakers, corrective lenses after a cataractoperation, glucose monitoring equipment, and therapeutic shoes for diabetics, and equipment such as ventilators, wheelchairs, and hospital beds
some kinds of oral surgery
some of the cost of outpatient physical and speech therapy
a limited number of services by podiatrists and optometrists
some care and counseling by psychologists, social workers, and daycare personnel
some preventative screening exams, such as for cancer, glaucoma, and osteoporosis; as well as diabetes and heart disease, but only if your doctor says you're at risk for them
manual manipulation of out-of-place vertebrae by a chiropractor
scientifically proven obesity therapies and treatments, and
part-time skilled nursing care, physical therapy, and speech therapy provided in your home.
- Who is eligible for Medicare Part B coverage?
The rules of eligibility for Part B medical insurance are simpler than for Part A: If you are age 65 or over and are either a U.S. citizen or a permanent resident who has been here lawfully for five consecutive years, you are eligible to enroll in Medicare Part B medical insurance. This is true whether or not you are eligible for Part A hospital insurance.
- How much of my bill will Medicare Part A pay?
All rules about how much Medicare Part A pays depend on how many days of inpatient care you have during what is called a "benefit period," or spell of illness. The benefit period begins the day you enter the hospital or skilled nursing facility as an inpatient and continues until you have been out for 60 consecutive days. If you are in and out of the hospital or nursing facility several times but have not stayed out completely for 60 consecutive days, all of your inpatient bills for that time will be figured as part of the same benefit period.
Medicare Part A pays only certain amounts of a hospital bill for any one benefit period -- and the rules are slightly different depending on whether the care facility is a hospital, psychiatric hospital, or skilled nursing facility, or whether care is received at home or through a hospice.
All people covered by Medicare Part A must pay an initial amount before Medicare will pay anything. This is called the hospital insurance deductible. The deductible is increased every January 1.
- Who is eligible for Medicare Part A coverage?
Anyone age 65 or over is eligible for Medicare. Most people age 65 and over are covered under Medicare Part A for free, based on their work records or on their spouse's work records.
People over 65 who are not eligible for free Medicare Part A coverage can enroll in it and pay a monthly fee for the same coverage. The premium base rate depends on the number of work credits you've earned. If you pay for Part A hospital insurance, you must also enroll in Part B medical insurance, for which you pay an additional monthly premium. Note that the Medicare Part A premium increases by 10% for each year after your 65th birthday that you wait to enroll.
- What is Medicare?
Part A is called hospital insurance and covers most hospital stay costs, as well as some follow-up costs.
Part B, medical insurance, pays some doctor and outpatient medical care costs.
Part C is also called Medicare Advantage. It is run by private insurers and Medicare Managed Care plans (such as an HMO that provides Medicare-covered services as well as other coverage).
Part D covers some prescription drug costs.