What About Medicare Rx

In 2003, Congress passed the Medicare Modernization Act. The primary purpose of this legislation was to add pharmacy Rx which was not part of original Medicare into the Medicare program. This is now Part D of Medicare, and private insurers market plans to Medicare enrollees with subsidies and tight regulation by CMS, the Centers for Medicare and Medicaid Services.

In 2009 the average cost of a prescription plan was $35 per month, going up to about $40 in 2010. All insurers must offer plans equal to or better than the basic plan designed for Medicare which has a deductible and coinsurance which goes up each year. In 2010 the deductible will be $310, and then after this medicare pays 75% of Rx cost until the enrollee is out of pocket $2830. The next $2000 some odd dollars include no coverage, and if the medicare enrollee does utilize enough Rx to reach the end of this coverage gap, fondly called the doughnut hole by Seniors, then Medicare pays 95% or more of all Rx costs. Medicaid eligibles, and people eligible for assistance have lower out of pocket costs, no out of pocket costs, and sometimes no premium.

The program is far from perfect, but until this was voted into law, there was no Rx coverage with Medicare, except during a hospitization. Plans most often write plans better than the basic Medicare plan.

Some Medicare Facts

Medicare has 4 parts. A, B, C & D. Parts A and B are original Medicare. Part A, paid for by payroll taxes, covers hospitalization for Medicare Beneficiaries. Part B, covers visits to physicians and outpatient care. Part B has a premium, $96.40 per month for most people, more for individuals earning over $85K per year. Part C is coverage for people joining HMO, PPO and PFFS plans, and Part D is the new outpatient prescription drug benefit of Medicare and Social Security. The average monthly premium for this is approximately $35 per month.

Long Term Care and the Federal budget

For those of you not familiar with Long Term Care, this is the type of care a person receives in a Nursing Home, or in many cases today, at home. Whether from an illness at any age, or due to ailments of old age, there are often many instances where people need assistance in what we would call simple things like being able to get dressed, or even eat. Sometimes illness prevents us from being able to do these things, and Long Term Care insurance pays to have someone other than a family member assist with these 'activities of daily living.'

Unfortunately, only about 10% of people buy private insurance, and most claims are still paid today by Medicaid. Approximately 40% of the entire Medicaid budget in the USA goes toward paying for Nursing Home care for the elderly. Unless more of the public begins to wake up and purchase private insurance, the federal budget will be more and more at risk for insolvency.

When Would You Like to Retire

By Len Harris of The Senior Insurance Center
ldh3008@comcast.net

Many people think they have the wherewithal to retire and enjoy their golden years. Travel, volunteer your time, visit family and friends-Surprise! Health care costs, never expected, are the biggest threat to retirement savings.

Yes, the government will provide some coverage and some employers will pay some retirement health costs, but the lion’s share will still come from the retiree. Deductibles and co-payments are not considered when putting money aside. These expenses can be huge, especially to people susceptible to illness just as they near retirement. It’s estimated that the onset of an illness could siphon approximately 20% of a household’s wealth. “You could easily burn close to $1 million of your nest egg with out-of-pocket expenses for a major illness,” according to George Ciccotello, director of Graduate Personal Finance at Georgia State University.

People think Medicare will cover it all. It doesn’t. Without a Medicare supplement, the average couple aged 65 will spend $200,000 to cover medical costs in the average retirement. That’s just for deductibles, the cost of Medicare, co-payments, non covered items and prescription drugs. That’s based on the husband living to 82 and the wife to 85 with no employer provided health insurance.

Unfortunately, one of the most overlooked forms of protection is Long Term Care Insurance (LTCi).

So many people say they’ll wait until they retire to look at or even think of purchasing a policy. A policy at age 50 might cost 40%-50% less than at age 65. In addition 40% of those needing long term care are between the ages of 18-64. Debilitating illnesses and serious injuries can strike anyone. People don’t plan for this, because “It can never happen to us”.

There are those agents who understand this and are making inroads at the worksite. Showing an employer how this coverage can reduce absenteeism allows the agent to either have the employer offer a “core” plan and let the employee enhance the program, or allow the agent to talk directly to the employees. Either way, LTCi helps both the employer and employee.

It is a fact, long term care insurance is the last thing people think of to protect their later years, but once purchased, there is a 97% retention rate. After they’ve seen the light, it’s kept for life.


7/06

The New Generation of Insurance Scams

Yesterday my Dad called me about an offer he received. Dad is 85, soon to be 86 in March. He is in great health for his age. He goes to the GYM 2 times a week. This man who he sees there a lot, is an insurance agent. He told him about a great deal. He’s going to get him (my Dad) a $1 million Life Insurance policy, and then pay him something like $100k or more. What a deal!

In fact last year, we had an 85th birthday party when Dad turned 85, and one of his friends brought up a similar sounding idea to me that I should investigate. If you have read my bio, you should notice that I too am an insurance agent. Well, this sounded awfully too good to be true to me, so I blocked out even thinking about this until hearing about this again yesterday. So tonight I went on the internet to investigate, and the alarm bells have now begun to go off.

I mean, can you imagine someone purchasing life insurance on an elderly person and then paying the premiums, and also paying the insured? We all know that expression about something being too good to be true. So here is how it works. Let me know what you think. Remember, I have nothing against people making money through legitimate means, or even making lots of it. I want to be one of those making lots of money, but my moral code says to do it honestly and morally.

This is called Stranger Owned Life Insurance or SOLI. Someone buys Life Insurance on someone else’s life, and then pays the premium and pays them for signing up. If approved, the insured must keep the policy for at least two years. After that they can sell it or sign it over to the people who got them involved in this in the first place. Now I am simplifying this, and here is where the potential illegalities lie. First of all, when Life Insurance is bought, the beneficiaries are supposed to have an insurable interest. Like your wife or kids, or now in the modern era, your significant other, if you know what I mean. Or even a business partner. So a total stranger has an insurable interest? Then how about the upfront money? The agent may not tell you, but the proceeds more than likely come from his commission. In most states, this is rebating, and illegal in the insurance business. Two no-no’s. The insurable interest problem is something that can be explained away, because often life insurance is owned for many years, and the people you bought it for to protect may be gone from your life, and after two years, judicial review (previous lawsuit history) has said policies are no longer contestable by the insurance co’s in most situations, and this is one of them.

Now tomorrow I’ll be at a Life Association meeting to discuss this with my peers. I write mostly health insurance, but have a history in the life end of the business too. Sooo, what d’ya think? Let me know. Please also take a look at my insurance blog. Insurancemaven.blogspot.com. I have this article posted there, but have some other items there too.

Long Term Care Insurance 2006

Q)Is there a Long Term Care crisis in America?

A)If it’s not here now it will be soon. The Baby Boom generation begins to turn age 65 in 2011. As it is, Long Term Care is very expensive, and the number one payor, the government, wants ‘out’ as much as possible. As of now 40% of Medicaid payments go towards Nursing Home stays. Prominent Republicans, and now Democrats recognize the importance of having the private sector to pay for the cost of Long Term Care via insurance. Organizations such as the National Association of Health Underwriters, www.nahu.org, have been pursuing the overturning of an amendment by Henry Waxman (D, Ca) that began the prohibition of the Long Term Care Partnership Insurance plans. With the partnership program, if an individual purchases Long Term Care Insurance, and exhausts the benefits of the policy, then they do not have to spend down their assets as they do today. Individuals can maintain on a dollar for dollar basis the amount of assets in their name that the policy was worth. For example, if the policy paid $100k in claims as a maximum benefit, the policy owner could then obtain Medicaid and still have up to 100k in assets to qualify. Democrats did not want this type of program fearing that it would benefit the rich, but now with a looming Long Term Care crisis, they are beginning to recognize the value of this program. Many states now have a partnership program in place in anticipation of federal approval. Even Hilary recognizes this program and has placed her name as a sponsor. After this is passed, the next goal will be approval of an above the line deduction for individual Long Term Care Insurance policies.

HSA's

Q) Rick, what's all this I'm hearing about HSA's? What is it?

A) HSA is the acronym for Health Savings Account. This concept is a part of the Medicare Modernization Act, known mostly as the new Part D of Medicare adding a prescription benefit.
A Health Savings Account works similar to an Individual Retirement Account (IRA) where $$ deposited into the account receive an above the line tax deduction. The money in the account earns interest tax free and is usable for Health Insurance expenses, or even health related expenses that might not be covered by the plan. Examples such as dental and vision. The money in this account is to be utilized to pay the deductible expenses of the plan. In order to qualify as an HSA plan, the minimum deductible allowed is $1000. No office visit copayments, or copayments for Rx is allowed. All medical expenses are out of pocket until the deductible is met, and at that time, the plan either pays 100% or 80% of expenses thereafter.