[34763] The Need for Life Insurance, Medicare & Cafeteria Plans” Exam***

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Why The Needs Aproach (page 7)

1. The “needs” approach to selling consists of developing the skills and knowledge you will need to provide your prospects and clients with the life insurance program that BESTSUITS THEIR INDIVIDUAL NEEDS!

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Permanent Insurance – (Pg.16)

While the mortgage balance is decreasing, the face amount of permanent insurance remains level, which means that as the years go by, the death benefit will exceed the mortgage balance by a larger and larger amount.

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Social Security | FICA (Page 10)

As long as an individual has paid Social Security taxes through most of his or her working life, Social Security benefits will be paid.

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Beneficiary – Irrevocable (Page 49)

A named beneficiary whose status as beneficiary can-not be changed without his or her permission.

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Life Insurance For College Students – Term Life Cost – Pg. 19

Purchasing term insurance allows prospects to obtain a substantial amount of protection today at an extremely low cost.

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Life Insurance for Children – Pg. 20

Juvenile Insurance |Another basic life insurance need that should not be overlooked is life insurance written on the life of a child. These policies are generally referred to as juvenile insurance,

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YOUR SKILLS AND KNOWLEDGE – Pg. 8

Knowledge about the various types of life insurance policies and an understanding of individual needs for life insurance are essential elements in insurance planning. The key ingredient to a successful future in insurance planning is your ability to use this knowledge to develop life insurance recommendations for EACH of your clients.

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HOW do you finance the plan – Pg. 66
The maximum earnings base (the maximum amount of annual earnings subject to tax)is unlimited as of 1997. (The maximum earnings base for Old-Age, Survivors, and Disability Insurance (OASDI) taxes is unlimited as of 1997.)

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WHAT Inpatient Benefits are Paid by Medicare?

Medicare pays for hospital care if the patient meets the following four conditions:

(1) a doctor prescribes inpatient hospital care for treatment of the illness or injury,

(2) the patient requires the kind of care that can only be provided in a hospital,

(3) the hospital is participating in Medicare, and

(4) the Utilization Review Committee or a Peer Review Organization (PRO) does not disapprove of the stay

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How is HOSPICE Care Covered? – Pg. 72

The benefit period consists of two 90-day periods and one 30-day period. The hospice benefit may be extended beyond the 210-day limit if the beneficiary is recertified as terminally ill by the medical director or the physician member of the interdisciplinary group of the hospice program.

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GRACE PERIOD – Pg. 48.

A period of time after the premium due date during which a policy remains in force without penalty even though the premium due has not been paid. Commonly 30 or 31 days in life insurance policies; seven, 10, or 31 days in various health insurance policies

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WHO Finances supplemental Medical Insurance – Pg. 82

Persons covered will have the premiums deducted from their Social Security,

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Medicare Benefits
What Hospital Insurance does MediCARE Provide – Pg. 54

A person entitled to social security monthly benefits, or a qualified railroad retirement beneficiary is AUTOMATICALLY entitled to Hospital Insurance protection beginning with the first day of the month of attainment of age 65.

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WILL THE DEDUCTIBLE & COINSURANCE REMAIN THE SAME? – Pg. 78

= Medicare Part-A Hospitalization.

The initial deductible for inpatient hospital care for the current year is based on the1966-68 figure of $40 and increases in average per diem inpatient hospital cost since1966 (and also some legislative changes) and, beginning with the 1987 determination on increases in average national hospital costs, based on a hospital-cost “market basket” index.

The daily coinsurance amounts are based on this per diem rate. The daily coinsurance for inpatient hospital care for the 61st through 90th days in a benefit period is 25% of the current year’s deductible. The daily coinsurance for post-hospital extended care after 20 days is 1/8 of the current year’s deductible. The lifetime reserve days’ coinsurance is 50% of the current year’s deductible

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Part-A | Who is Eligible? – Pg. 61

A Social Security disability beneficiary is covered under Medicare after entitlement to disability benefits for 24 months or more. . Those covered include disabled workers at any age, disabled widows and widowers age 50 or over, beneficiaries age 18 or older who receive benefits because of disability beginning before age 22, and disabled qualified railroad retirement annuitants.

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IS MEDICARE A SECONDARY PAYOR? – Pg. 63

1. IF SO, WHEN? Employers must offer employees age 65 or older the same health benefits offered to younger employees. Medicare will become the secondary payor for these employees age 65 or older. (This requirement does not apply to employers with less than 20employees.) Medicare benefits are also secondary to benefits payable under employer health benefit plans for spouses age 65 or older of employed individuals of any age. Regulations issued by the Health Care Financing Administration state that Medicare is the secondary payor even if the employer health plan expressly stipulates that its benefits are secondary to Medicare.

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At what time do Medicare Benefits become Available  – Pg. 58

Medicare benefits become available at the beginning of the month in which the individual reaches age 65. This is true even if the individual is still working. Medicare benefits are also available after the individual has been receiving Social Security disability benefits for two years or if the individual has chronic kidney disease. Every Medicare patient must be under the care of a physician.

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WHAT INPATIENT BENEFITS ARE PAID? – Pg. 67

1. Except for the “deductible” and “coinsurance” amounts which must be paid by the patient, Medicare helps pay for inpatient hospital service for up to 90 days in each “benefit period.”

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WHAT IS PAID FOR PSYCHIATRIC OUTPATIENTTREATMENT? – Pg. 89

1. Supplementary Medical Insurance will pay the cost of psychiatric treatment outside a hospital for mental, psychoneurotic or personality disorders, but with 50% coinsurance instead of the usual 20% (except that 20% coinsurance applies if services are provided on a hospital-outpatient basis if, in the absence thereof, hospitalization would have been required.

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Account Balance Forfeitures – Pg. 117

1. The ZEBRA plans failed to gain approval by the IRS because the account balances at year’s end were recirculated at the start of the new year. This gave rise to the question of constructive receipt. In 1984, the IRS issued regulations on the now famous “use it or lose it” rule. Basically, all account balances must be down to zero by the end of the taxable year. If not, the balance is forfeited to the company. A forfeiture could result because an account is “overbudgeted”, hence the need for conservatism. It can also result because the expected expenditure did not materialize

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Who is Eligible to Participate?  – Pg. 102

1. This rule is easy to understand. A cafeteria plan may not discriminate in towards highly compensated employees regarding eligibility, contribution to the plan, or benefits.

1. There is only one rule for eligibility; No one can be required to complete more than three years of employment in order to be eligible to participate in a cafeteria plan. Anyone meeting the eligibility rule must be allowed to participate no later than the first day of the first plan year beginning after they have satisfied the employment requirement.

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Regarding Anti-discrimination – Pg. 102

1. This rule is easy to understand. A cafeteria plan may not discriminate in towards highly compensated employees regarding eligibility, contribution to the plan, or benefits.

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LOOK BACK IN TIME – Pg. 94

1. Cafeteria plans are anything but new. Actually, they were developed during the early1970’s and at that time they were known as ZEBRAs. This stood for Zero Balance Reimbursement Account.

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The Alternative Test – Pg. 103

1. As the title implies, the alternative test can be used as an alternative to the eligibility test mentioned earlier. The alternative test requires that at least 80 percent of the non-highly compensated employees must be covered at all times during the plan year. In addition, the plan must not contain any eligibility provision that discriminates in favor of highly compensated employees.

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WHAT IS A PPS? – Pg. 65

1. Beginning October 1, 1983, Medicare began basing most hospital payments on the patient’s diagnosis at the time of admission rather than the costs the hospital incurred prior to discharging the patient.

This system of Medicare reimbursement is called the Prospective Payment System (PPS).Each patient is assigned to a diagnosis related group (DRG), and the hospital receives a corresponding flat-rate payment regardless of the number of days stayed or services received. If the actual cost of a hospital stay is less than the DRG payment, the hospital keeps the difference; if the cost is greater, the hospital may lose the difference.

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WHAT IS A PPS? – Pg. 65

1. Beginning October 1,1983, Medicare began basing most hospital payments on the patient’s diagnosis at the time of admission rather than the costs the hospital incurred prior to discharging the patient.

This system of Medicare reimbursement is called the Prospective Payment System (PPS).Each patient is assigned to a diagnosis related group (DRG), and the hospital receives a corresponding flat-rate payment regardless of the number of days stayed or services received. If the actual cost of a hospital stay is less than the DRG payment, the hospital keeps the difference; if the cost is greater, the hospital may lose the difference.

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WHAT SERVICES ARE PROVIDED? – Pg. 67

1. The cost of post hospital long term care in a skilled nursing facility for up to 100 days in each benefit period. The first 20 days are paid at 100%. The patient then pays $a day from the 21stto the 100thday. (This amount is always 1/8thof the current year’s deductible

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WHAT COSTS DOES THE PATIENT PAY FOR SKILLED NURSING? – Pg. 75

1. The patient pays nothing for the first 20 days of covered services in each spell of illness; after 20days, coinsurance is payable for each additional day, up to a maximum of 80days. For a patient in a skilled nursing facility during this current year, the coinsurance is1/8 of the current year’s deductible per day.

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WHAT ABOUT AN OVER-ALL LIMIT THAT A PERSON CAN RECEIVE UNDER MEDICARE? – Pg. 58

1. Under the Basic Hospital Plan, care in a psychiatric hospital is subject to a lifetime limit of 190 days.

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IMPORTANT RULES REGARDING CARE COVERED UNDER MEDICARE? Pg. – 52

1. Medicare does not cover custodial care or care that is not “reasonable and necessary “for the diagnosis or treatment of an illness or injury.

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WHAT INPATIENT BENEFITS ARE PAID? – Pg. 68

1. Medicare pays for hospital care if the patient meets the following four conditions: (1) a doctor prescribes inpatient hospital care for treatment of the illness or injury, (2) the patient requires the kind of care that can only be provided in a hospital, (3) the hospital is participating in Medicare, and (4) the Utilization Review Committee or a Peer Review Organization (PRO) does not disapprove of the stay.

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THE DEFINITION OF MEDICARE – Pg. 53

1. PART-A |Medicare consists of Hospital Insurance protection (Part A) and Medical Insurance protection (Part B). Part A provides institutional care, including inpatient hospital care, skilled nursing homecare, home health care, and, under certain circumstances, hospice care. Part A is financed for the most part by Social Security payroll tax deductions, which are deposited in the Federal Hospital Insurance Trust Fund. Medicare beneficiaries also participate in the financing of Part Aby paying deductibles, coinsurance and premiums.

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THE DEFINITION OF MEDICARE – Pg. 53

1. Part B | is a voluntary program of health insurance which covers physician ‘s services, outpatient hospital care, physical therapy, ambulance trips, medical equipment, prosthesis, and a number of other services not covered under Part A.

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WILL THE DEDUCTIBLE & COINSURANCE REMAIN THE SAME? – 78

1. The initial deductible for inpatient hospital care for the current year is based on the1966-68 figure of $40 and increases in average per diem inpatient hospital cost since1966 (and also some legislative changes) and, beginning with the 1987 determination, on increases in average national hospital costs, based on a hospital-cost “market basket” index. The daily coinsurance amounts are based on this per diem rate. The daily coinsurance for inpatient hospital care for the 61st through 90th days in a benefit period is 25% of the current year’s deductible. The daily coinsurance for post-hospital extended care after 20 days is 1/8 of the current year’s deductible. The lifetime reserve days’ coinsurance is 50% of the current year’s deductible

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1. WILL THE DEDUCTIBLE & COINSURANCE REMAIN THE SAME?