Individual Health & Group Health & Long Term Care
HIPAA, COBRA, Conversion & Types of Coverage
Many new developments have transpired regarding individual and group health coverage.
HIPAA (Health Insurance Portability Act)

Individuals, who are employed and have group health coverage through employer's sponsor plan, can now obtain group health coverage when terminating from one employer when obtaining employment from another employer "WITHOUT A PRE-EXISTING CONCERN AND IS GUARANTEED COVERAGE FOR HIM/HER AND DEPENDENTS!

This is applicable under HIPAA, only if the employee left his previous employer's group health plan, and he/she participated in coverage and did not have a break in coverage for more then sixty (60) days.

Employers can change carriers and apply for new coverage from other insurance companies. HIPAA allows for the anticipated new company who is evaluating the risk to increase premiums as high as 67% In Illinois. The group cannot be denied coverage, but the new considered insurance company can institute the maximum rate up, which is 67%, in Illinois.

COBRA is available for those employers who have an existing group health plan and employ at least twenty (20) people.

Cobra allows for a terminated employee who had group coverage who has yet to find employment, or for the death of the employee, of for a divorce from the individual who is or was employed in which he/she had group medical coverage.

COBRA allows for those individuals indicated above to extend current coverage for eighteen (18) months or thirty (30) six months, depending on the situation. COBRA premiums can be costly.

Usually those who apply under COBRA may have a health condition that could prevent them from obtaining individual health coverage (not group coverage See HIPA above) or a condition that would be excluded from coverage or a rated premium for that condition.

Conversions are available for those individuals who have group health coverage sponsored by their employer. Those employers may have less then twenty (20) employees and therefore do not fall under COBRA. (See COBRA section)

Conversions are usually available under group health plans but, benefits are reduced drastically and premiums are substantial. Those who apply for conversion benefits are those who usually have a medical condition that could prevent them from obtaining individual health coverage or a condition that would be rated or excluded.

PPO is a Preferred Provider Organization. This plan has doctors and hospitals contracted in a network. Under a PPO plan you can obtain physician co-pays, prescription drug card, annual physicals, all without a deductible, to name a few. Hospitalization would require you to satisfy a deductible and the plan is structured to limit your exposure.

If you obtain medical services from a physician and hospital that is in the network you will have less out of pocket expenses to you.

If you obtain services from a physician or hospital that is not part of the network, you will incur increase cost. THE PURPOSE OF A PPO PLAN IS TO ENCOURAGE YOU TO SEEK THE SERVICES OF THOSE WHO PARTICIPATE IN NETWORK TO MAINTAIN AFFORABLE PREMIUMS. PPO premiums are less then Traditional health plans.

It is not mandatory for you to seek medical attention to those who participate in network but naturally it is recommended. PPO directories are available to assist you in determining if a PPO plan is of interest.
HMO (Health Maintenance Organization)

These types of plans have premiums that are lower then the PPO and Traditional plans. HMO’s can restrict you from seeking medical services from any physician or hospital who is not contracted under a HMO plan.


Out patient services are usually covered at 100% but, if hospitalized you are required to obtain the services of the those contracted under HMO contracts in order for benefits to be paid.

Traditional coverage allows an individual to select any physician or medical facility. Participation in a network is irrelevant.

Traditional plans do not have physician co-pay. (Usually)

With Traditional coverage, all out patient services fall under a deductible and co-insurance. Co- insurance is the portion or percentage that you are responsible for. Exposure is limited predicated on the type of plan you select. Physician visits, Lab test X-Rays (unless hospitalized) charges do not apply towards deductible.

Traditional coverage is the most expensive health plan in today’s market place. Because Traditional coverage is not obligated to participate in any PPO or HMO contract, this freedom presents a greater cost to the consumer.
Individual Health Plans & Long Term Care

PPO, HMO, and Traditional. Individual health coverage is available under an individual health plan. Coverage is predicated on medical history. Individual health plans to do not fall under HIPAA (see HIPAA section).

Individual health coverage is difficult to obtain, especially if there is a medical condition or medical history. When applying for individual health coverage, the insurance company can either highly rate a plan premium, or exclude a condition, or flat out deny coverage!

Therefore it is recommended that all medical information be obtained prior to applying for coverage as indicated “In The How We Work Section”.

Long Term Care Insurance - What Intelligent Buyers Need to Know About Tax-Qualified Policies (Today’s Most Crucial, Technical Issues)

Is it smart to plan ahead and be prepared? We think so... In this day and age, few can deny the wisdom of owning long term care insurance protection to assure a carefree retirement. It only makes sense to hedge your bets. Few want to spend down assets prematurely for unexpected, prolonged care. Few want to be a burden on their family. People do not want to lose control of their money, and they don’t want to cut corners and jeopardize their future well-being. Period.

The latest research statistics reveal an unprotected retired couple stands a nearly 75% chance of a substantial long term care loss - especially healthy individuals, due to their extended longevity. That’s why Americans are planning ahead to protect themselves in advance. The most popular solution is long-term care insurance covering visiting nurses, at-home helpers & companions, assisted living homes, and skilled nursing homes. Forgive the slang, but the street-wise tip of the savvy, financial advisor is this: "Regarding long term care insurance - Get it, or sweat it”.

Long Term Care Insurance - A Closer Look

For now, however, let’s set aside the statistics and all the scenarios demonstrating how care costs can disrupt your plans. Let’s assume that we’re actively investigating your options that you are actually in the market for coverage.

Long-term care insurance policies are complicated at best, and the consumer is often overwhelmed in the insurance decision process. It’s important to have intelligent guidelines to follow. Today’s point is simply this - If you are GOING TO BUY LONG TERM CARE INSURANCE coverage, then BUY SMART! If you agree, please read on.

Long Term Care Insurance Policy Features Revealed

Several features exist by which to distinguish a truly competitive long-term care insurance policy in the 1998 marketplace. (Note: These features are in addition to the typical policy features such as guaranteed renewablilty, no prior hospitalization required, bathing included as ADL, care coordination, inflation protection, visiting nurses/aides/chores/companions covered, etc.)

Long Term Care Insurance Feature # 1 - High Ratings

1) The long term care insurance carrier should have a rating of no less than A- by A.M. Best, the industry rating service. Nothing less will do. There are a couple of major players in the long term care insurance market that have lesser ratings, but the giant, quality, long term care insurance carriers are rated A- or above, e.g. major carriers are Fortis, GE Capital, Transamerica and The Travelers (among others). - You may not yet recognize all of their names, but in time you will, as these are the multi-billion dollar, financial monoliths with committed presence at the forefront of the long term care insurance market, and they are here to stay. (Of course, if a person is impaired by health or advanced age, a lesser-known long term care insurance carrier may be considered, if they are to be approved for coverage.)

Long Term Care Insurance & Name Recognition

NOTE: In long term care insurance; "Name Recognition" and "High Visibility" are not necessarily indications of the highest quality policy. The financial ratings and actual legal wording of each carrier’s contract must be analyzed objectively to determine exactly what the carrier is allowing itself to be liable for. A more highly recognized company may actually get away with a less competitive offer by virtue of the "goodwill and professional reputation" associated with its name, so be very careful. In addition, one cannot make a general assumption on how a carrier will behave based solely on past claims administration. It is no longer enough to base the current purchasing decision on past claims behavior. The new tax-qualified contracts are a different product entirely, and must be scrutinized as carefully as they have been by the carrier’s own legal staff. Each contract clearly states the conditions under which the company will pay. Long term care insurance carriers do not stay in business by giving money away indiscriminately. This is certainly no place for fuzzy, emotional, sloppy, or wishful thinking on your part. It may be wise for you to confer with an objective, long-term care insurance specialist.

Several financially sound, yet less well-known, companies are willing to offer a more competitive product in order to gain market share. These contracts may offer more substance for less cost - simple market logic. An independent broker/consultant who handles the entire spectrum of companies can help you make informed choices.)

#2 - Experience Necessary

2) Another feature is that the long term care insurance carrier should have five or more years experience in the long-term care insurance market. Major long-term care insurance carriers all have this experience.

Watch Out! Avoid the Nursing Home

3) A third feature is that the long-term care insurance coverage must bind the carrier to pay out not only for skilled nursing facilities (SNFs), but also for assisted living facilities (ALFs). Why? Because an SNF (usually called a "nursing home") is the setting of last resort - no one wants to go prematurely into a SNF environment, so they will make every effort to remain at home or with family as long as possible. When that is not practical or possible, one will typically want to live in an assisted living facility (ALF) for as long as that is humanly possible (ALFs go by several names: Adult Care Home, Residential Care Home, Christian Science Facility, Alzheimer’s Unit, Domiciliary Care Facility, Adult Congregate Living, Community-Based Residential Facilities, Board & Care Home, etc.). Some long-term care insurance policies limit benefit payments for ALFs. No good, as this financial situation may encourage the family decision makers to place the client into a SNF prematurely - an emotionally difficult and now unnecessary burden. This is an area where a long-term care insurance carrier may assume less risk through clever policy wording. Watch out.

Look for Liberal Long Term Care Insurance Policy Wording

Committed long-term care insurance carriers take a higher road. It may seem a small point, but good policy wording will be very clear about paying full benefits for ANY level of facility, whether ALF or SNF. The better long-term care insurance contract will contain a clearly broad definition of ALFs, which will hold the long-term care insurance carrier liable to pay for ANY state-licensed care facility. Otherwise the long term care insurance carrier may only pay benefits if one is in a SNF, which is the very last place the person will want to live, making it less likely that the carrier will have a claim, as long term care insurance policy holder may pass away before ever entering the SNF.

Long Term Care Insurance - Go for the Tax Breaks

4) Until there is further clarification from the IRS on tax treatment of non-qualified long term care insurance policies, to be safe the wise consumer should only consider purchase of a tax-qualified policy rather than one that is non-qualified. It is not so much the possible deductibility of premiums that is important. It is that the benefits from qualified plans are guaranteed not to be considered as taxable income, and that could be a big deal for your family.

The IRS has not yet ruled on taxability of benefits received under a non-qualified plan. So there is a legislative risk that one would have to pay taxes on everything received under a non-qualified contract.

By law, all tax-qualified policies must conform to federal guidelines: A) There can be no "medical necessity" trigger for benefits B) For benefits to begin, it must be certified that one’s condition will last for at least ninety days C) One must either have a "cognitive impairment" or require "substantial" assistance with activities of daily living.

Long Term Care Insurance - The Crux of the Matter

5) This is the hottest 1997 topic among long-term care insurance professionals: A competitive contract must have a specific, liberal policy definition of the phrase "substantial" assistance. Background: In order to receive tax-qualified status, a policy must state that in order to trigger benefits, one policy trigger must be a certification that the insured need "substantial" assistance with 2 of 6 ADLs (Activities of Daily Living - typically defined as eating, bathing, toileting, transferring, continence, dressing, etc. NOTE: It is essential that Bathing be included as an ADL, as bathing is the activity that one will likely need help with first - a policy that excludes Bathing as an ADL is NOT competitive in today’s market).

Long Term Care Insurance -
Don’t Settle for a "Hand’s On" Contract

Where long-term care insurance policies differ most widely is in their definitions of the word "substantial". A conservative interpretation would mean personal, one-on-one, "hands-on" help from another human being. This wording may not allow benefits until much later on, when one is "on their last legs”. A more desirable interpretation of "substantial" includes "directional" assistance ("Mr. Smith, now it’s time to eat. Pick up your spoon now."). Another desirable phrase is "stand-by’ assistance (which means that a human being is nearby to monitor, observe and help if needed). Each of these desirable phrases should be included in any policy under consideration!! Specific, liberal, policy wording is definitely in the consumer’s interest, as the policy may pay benefits weeks, month or even years before the restrictive, "hands-on" policy - saving one untold thousands of dollars.

Again, beware of restrictive or vague definitions of "assistance". Think about it: A long-term care insurance carrier may be sold, or it may get new management. Specific legal wording is crucial, because it is all that is enforceable. Vague wording is always vulnerable to unfavorable "interpretation” by whoever is in charge at claims time. Restrictive or vague definitions could leave a policyholder out in the cold when they can least handle it, costing them untold thousands. That’s NOT why we took out the coverage! A knowledgeable, objective long-term care insurance broker can help select a competitively worded policy.

Long Term Care Insurance -
Crucial "Reverse Switch" Feature

6) One other consideration: Most long term care insurance companies offer conversion from their non-qualified plan to their qualified plan during the first policy year. That’s nothing new, but only one company we know of is offering a REVERSE conversion, allowing purchasers to switch from qualified to non-qualified, if it is in their best interest. This may be desirable, depending on how the IRS rules on the taxability of benefits received from a non-qualified plan. If non-qualified benefits are NOT taxable, then one may be better off switching to the more liberal non-qualified plan, thereby eliminating restrictive technical wording inherent in the qualified plans (the 90+ day certification clause, the lack of a "medical necessity" trigger, the "substantial assistance’ clause, etc). If the IRS gives tax breaks to non-qualified policies, then you want the option of switching.

Long Term Care Insurance - Do Your Duty & Be Prepared

Every financial professional now has a moral, if not fiduciary, duty to recommend that each client consider long term care insurance protection - no matter what the client’s age or net worth. Failure to do so may be grounds for a malpractice suit, as was aptly pointed out in Trusts & Estates Magazine’s July 1994 article, "The Case For Nursing Home Insurance". In addition, no person who is aware of the long term care insurance dilemma wants to allow their own family to continue to be exposed to this serious risk.

Long Term Care Insurance - Now It’s Up to You

The message from Washington is clear: With regard to long term care insurance, don’t count on Uncle Sam. With lawmakers virtually subsidizing private long term care insurance through tax breaks and scaling down entitlement programs such as Medicaid/AHCCCS, certainly now is the time to plan.

To obtain an “accurate” quote please provide me with the following information:

· Applying individually or with spouse

· Date of birth (include spouse’s date of birth if applying jointly)

· Medical history for each individual, including all, dosage medication

· Smoking status on each individual

· Height & weight

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