CFG CFG Healthcare & Long-Term Care Planning 2 — Questions and Answers
Question 1: What is 'Medigap' insurance and what does it primarily cover?
- Supplemental insurance that covers Medicare deductibles, copayments, and coinsurance (Correct answer)
- Insurance that replaces Medicare entirely for seniors over 80
- Coverage for prescription drugs not covered by Medicare Part B
- A government program providing dental and vision to Medicare beneficiaries
Correct answer: Supplemental insurance that covers Medicare deductibles, copayments, and coinsurance
Medigap (Medicare Supplement Insurance) is sold by private insurers to cover cost-sharing gaps in Original Medicare such as deductibles, copayments, and coinsurance.
Question 2: At what age does an individual become eligible for Medicare in the United States?
- 62
- 65 (Correct answer)
- 66
- 70
Correct answer: 65
Most Americans become eligible for Medicare at age 65, provided they or their spouse paid Medicare taxes for at least 10 years.
Question 3: What is the 'spend-down' process in Medicaid long-term care planning?
- Investing assets in annuities to grow wealth before applying for Medicaid
- Reducing countable assets to meet Medicaid eligibility thresholds (Correct answer)
- Spending down life insurance cash value to purchase long-term care insurance
- Converting retirement accounts to Roth accounts to avoid Medicaid look-back
Correct answer: Reducing countable assets to meet Medicaid eligibility thresholds
The Medicaid spend-down process involves reducing countable assets below the state-specific eligibility threshold, often by paying for care, making allowable transfers, or purchasing exempt assets.
Question 4: What is the Medicaid 'look-back period' for asset transfers, and what penalty applies for improper transfers?
- 12 months; a one-year waiting period for benefits
- 36 months; a three-year penalty period
- 60 months; a period of Medicaid ineligibility proportional to the value transferred (Correct answer)
- 24 months; a two-year premium increase on Medicaid
Correct answer: 60 months; a period of Medicaid ineligibility proportional to the value transferred
The federal Medicaid look-back period is 60 months (5 years); improper asset transfers within this period create a penalty period of ineligibility calculated by dividing the transferred amount by the average monthly nursing home cost.
Question 5: Which type of Medicare Advantage plan requires members to use a network of providers and obtain referrals from a primary care physician?
- Preferred Provider Organization (PPO)
- Health Maintenance Organization (HMO) (Correct answer)
- Private Fee-for-Service (PFFS)
- Medical Savings Account (MSA)
Correct answer: Health Maintenance Organization (HMO)
Medicare Advantage HMO plans require members to use network providers and typically need a referral from a primary care physician to see specialists.
Question 6: What is 'inflation protection' in a long-term care insurance policy, and why is it important for younger purchasers?
- A feature that reduces premiums if the insured remains healthy
- A rider that increases the benefit amount annually to keep pace with rising care costs (Correct answer)
- A guarantee that the insurer cannot raise premiums
- A provision that extends the benefit period during inflationary periods
Correct answer: A rider that increases the benefit amount annually to keep pace with rising care costs
Inflation protection riders, typically offering 3–5% compound annual increases, ensure that LTCI benefits keep pace with the rising cost of care over time, which is especially critical for policies purchased decades before expected use.
CFG CFG Healthcare & Long-Term Care Planning 2
What is 'Medigap' insurance and what does it primarily cover?