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In the process of long-term care planning, knowing the limitations of coverage is essential to prevent misconceptions about who will pay for care in the future.
Eldercare Insurance” is a broad term used by many organizations to describe insurance specifically for seniors.
Therefore, it is helpful to review insurance benefits in terms that are relevant to the elderly and their care needs. As we examine the benefits of specific insurance policies, such as Medicare, we'll examine the following areas of coverage.
Medicare is a Federal Insurance program for people who are at least 65 years of age or any age with certain disabilities. Medicare Insurance is made up of parts, Part A, Part B, Part C, and Part D. Part A is hospital insurance, Part B is medical insurance, Part D is prescription drug insurance administered by private insurance companies, and Part C is a combination of Part A, Part B and Part D administered by private insurance companies. People are eligible for Medicare if they have worked in the United States for 40 quarters and paid Medicare Tax during those quarters. Medicare is not free: Part A has a per occurrence deductible, Part B has a premium, an annual deductible, and co-insurance.
Medicare Part C can have premiums, deductibles, co-pays, co-insurance, in and out-of-network benefits, and a maximum out-of-pocket. Medicare Part C can also include ancillary benefits such as dental, podiatry, vision, and hearing/hearing aid insurance for little or no additional premium. Medicare Part C insurance can be an HMO plan where the Medicare beneficiary must see a doctor who not only contracts with Medicare but also with the private insurance company administering the plan. If a Medicare Beneficiary goes outside the plan network of doctors, all costs will have to be paid by the beneficiary. Part C plans can be PPOs where the Medicare beneficiary can see a doctor who contracts with Medicare or a doctor that contracts with Medicare and the insurance company. The out-of-pocket rates vary depending on which doctor the beneficiary sees. There are other types of Part C plans, but most people choose HMOs and PPOs. Part C or Advantage plans can only be changed once a year or under particular circumstances.
Part D prescription drug insurance offers insurance on certain medications (formulary) at lower or no cost in return for you paying a premium, deductibles, co-pays and co-insurance. Depending on the set of medications taken by the Medicare Beneficiary, a particular plan by particular insurance may be better than others. Prescription Drug plans can only be changed once a year or under particular circumstances.
To cover the costs that Medicare Part A and Part B do not cover, private insurance companies offer Supplemental or Gap insurance for an additional premium. There are different types of Supplemental Plans which cover different costs of Medicare. If you were eligible for Medicare Prior to January 2020, you could choose any Supplemental or Gap Plan. For anyone who became eligible for Medicare on or after January 2020 then, there are only 3 plans that are available. Supplemental or Gap Plans can be changed once a month as long as the Medicare Beneficiary can be medically underwritten. Some states offer the ability to change plans without medical underwriting either all year round or at certain times during the year
Long Term Care insurance protects the insured if the insured needs to go to a nursing home or stay at home for end-of-life care. This insurance will pay when a certain number of activities of daily living (ADLs) cannot be performed as determined by a medical professional. The policy premium is determined by insured’s medical status, age, number of days covered, and the amount of costs per day. The premium is also determined by how the owner pays the premium: annual, semi-annual, quarterly, monthly, ten pay, or lump sum premium. Ten pay and lump sum premium guarantee no rate increases on premiums.
There are other insurances available such as Final Expense, Cancer, and Hospital Indemnity, which may or may not be included in an Eldercare Plan.