Final Examination
NOTE to Department of Financial Services. The following questions represent a bank of questions that we will use to compile a student's final exam. We use a software package that creates a unique final examination for each student, scrambles choices and question order. This bank is presented in its current format to allow the Department to see the text references for these questions. Simply click on the question link to see the text reference. Obviously, the links, correct answers and rationale will not appear on the version of the final exam presented to students.
a. bathing b. taking medication c. transference d. continance
ANS: B
The six ADL's allowed in a tax-qualified LTC plan are bathing, eating, transference, continance, toileting and dressing.
a. custodial b. supervisory c. personal d. acute
ANS: C
Personal care provides assistance with basic living functions and household chores.
a. ineligible, he has too much equity in his home b. immediately eligible, his home is exempt and his income is low c. might be ineligible, his income is too high d. must obtain a reverse mortgage on his home and make up the difference in cost of care before Medicaid will pay
ANS: A
Medicaid imposes a limit on hme equity ($500,000 or $750,000 depending on the state) unless a spouse or other family member lives in it. In the case of this widower, his equity exceeds the threshold.
a. John names his wife as beneficiary of the annuity b. The annuity payments are based on John's life expectancy c. John names the state as a contingent beneficiary d. all of the above would exempt the annuity from the asset transfer rules
ANS: D
Annuities are not considered an asset transfer if the annuity payments are actuarily sound (based on the transferor's life expectancy), and if the state is named as a contingent beneficiary in case the transferor dies and leaves value in the annuity. The state must be primary beneficiary, or in the case of a married transferor, a secondary beneficiary if the spouse is the primary beneficiary.
a. 24 months b. 36 months c. 48 months d. 60 months
ANS: D
With transfers taking place since February 8, 2006, the look back period is 60 months. The old rule (pre-2006) was 36 months for non-trust transfers, 60 months for transfers to a trust.
a. penalty period b. disallowance of the transfer c. 10% penalty on the difference between fair market value and transfer value d. all of the above
ANS: A
Transfers for less than fair market value will be suject to a penalty period, based on the average monthly private pay rate for nursing facility care.
a. immediately b. beginning in 6 months c. beginning in 10 months d. beginning in 20 months
ANS: D
Medicaid imposes a disqualification or penalty period when assets are transferred for less than fair market value. In this case, $90,000 was transferred below market value -- which represents 20 months of nursing home costs ($90,000 divided by $4,500). Carla will have to pay for the first 20 months of nursing home care before Medicaid will begin to pay.
8. All state partnership LTC policies must be:
a. federally tax qualified b. non-tax qualified c. tax-qualified at the option of the state d. tax-qualified at the option fo the insured
ANS: A
All partnership LTC policies must meet HIPAA's qualifications -- i.e., they must be tax qualified.
a. 8 hours of initial LTC training and 8 hours of LTC Partnership training every compliance period b. 4 hours of initial LTC training and 4 hours of LTC Partnership training every compliance period c. 8 hours of initial LTC training, including LTC Partnership training, and 4 hours of LTC training every compliance period thereafter d. 8 hours of LTC training, including LTC Partnership training, every compliance period
ANS: C
The NAIC model's training requirement is for an initial 8 hours of training, and 4 hours of continuing education in each subsequent continuing education compliance period.
a. state plan amendment (SPA) b. qualified state long-term care insurance partnership (QSLTCIP) c. NAIC Model legislation d. all of the above
ANS: A
To set up a QSLTCIP (partnership plan) the state must submit the SPA (state plan amendment) to the CMS.
a. amendment of state insurance laws to exempt certain assets equal to LTC benefits from Medicaid eligibility requirements b. amendment of Medicaid laws to exempt certain assets equal to LTC benefits from Medicaid eligibility requirements c. amend state laws to permit the sale of tax qualified LTC policies within that state d. all of the above
ANS: B
To implement a state partnership plan, the state must change its Medicaid eligibility rules to exclude assets equal in value to benefits paid by private insurance policies for LTC costs. All states permit the sale of tax-qualified LTC plans (in fact most LTC policies sold today are tax-qualified).
a. OBRA b. COBRA c. HIPAA d. DRA
ANS: D
Four states implemented LTC Partnership plans -- but federal law precluded additional states from adopting the program. The Deficit Reduction Act (DRA) lifted those restrictions in 2005.
a. OBRA b. COBRA c. HIPAA d. DRA
ANS: C
The Health Insurance Portabiltiy and Accountability Act of 1996 (HIPAA) addressed the tax status of benefits payable under a long-term care policy, accelerated death benefits provision, viatical settlements -- among many other provisions.
a. educating consumers about the need, risk and cost of LTC b. curb insurance spending by Medicaid on LTC expense c. provide tax deductions for purchasers of qualified LTC policies d. encourage the private LTC insurance industry
ANS: C
The state partnership plans do not offer any tax deductions. They encourage consumers to buy private LTC as a way to cover the initial costs of nursing home care and reduce state expenditures through Medicaid.
a. nationwide reciprocity is a goal, but is not currently available b. the four original states currently enjoy reciprocity, but not with other states c. only those states that have implemented partnership plans enjoy reciprocity d. none of the states currently has any reciprocal benefits
ANS: A
Reciprocity is a goal, but is not currently available in most states. Indiana and Connecticut currently have a reciprocal arrangement.
a. $100,000 b. $150,000 c. $250,000 d. unlimited assets
ANS: D
In the total asset approach (which is available only in Indiana and New York), the insured's total (unlimited) assets are excluded from Medicaid's eligibilty rules. Had the question asked about a dollar-for-dollar approach, the answer would have been $100,000 -- the same amount as the policy benefits.
a. $100,000 b. $150,000 c. $250,000 d. unlimited assets
ANS: A
In a dollar-for-dollar approach, the Medicaid will exclude an amount equal to amount of policy benefits paid by the private insurance -- in this case $100,000. This individual will still have at least $50,000 in assets ($150,000 home less the $100,000 in asset protection).
In the total asset approach (which is available only in Indiana and New York), the insured's total (unlimited) assets are excluded from Medicaid's eligibilty rules.
a. Medicaid's asset requirements b. Medicaid's income requirement c. Medicaid's estate recovery rules d. a and c
ANS: D
LTC partnership policies are designed to protect the insured's assets -- during the insured's lifetime (protection from asset requirements) and after his or her death (estate recovery). The insured must still comply with Medicaid's income requirements.
a. Chris, age 56 b. Pat, age 67 c. Lou, age 74 d. all partnership LTC plans must include automatic inflation protection
ANS: A
All partnership policies must offer the applicant some form of inflation protection. The Deficit Reduction Act requires automatic inflation protection for applicants age 60 or younger. Those between ages 60 and 76 must include some form of inflation of protection -- but it need not be "automatic". For applicants age 76 or older, the offer must be made, but inflation protection is not a requirement.
a. inflation protection b. guaranteed renewability c. free look provision d. tax free benefit payments
ANS: A
Most LTC policies issued today comply with HIPAA's requirements -- and therefore are tax-qualified (benefits are paid tax free), guaranteed renewable and have a 30-day free look provision. In addition, PQ (partnership qualified) policies must have some form of inflation protection. This is not required under HIPAA.
a. surrender the old policy for a new PQ policy b. request an endorsement on the old policy for inflation protection and new issue date c. continue to hold the old policy, as long as it has inflation protection, it is automatically partnership qualified d. either a or b
ANS: C
Older policies are not automatically afforded with PQ status -- even if they meet all the criteria. The older policy must be lapsed and reissued, or an endorsement make to include the PQ criteria. Only claims paid on a policy issued after the state enacted the partnership plan will qualify for the asset protection.
a. the policy must be tax-qualified under HIPAA b. the policy must contain consumer protections based on the NAIC Model LTC Policy c. the insured must be a resident of the state when he or she collects policy benefits d. the policy must be issued after the date the state partnership plan becomes effective in the insured's state of residence
ANS: C
Partnership qualified plans must be tax-qualified (that is, comply with HIPAA's criteria), contain the consumer protections provided in the NAIC Model Policy (also a HIPAA requirement), and be issued after the plan becomes effective in the state. The insured must be a resident of the state when the policy is first issued, but the insured could move and receive benefits under a reciprocity agreement if LTC services are provided out-of-state.
a. not impose any requirements on partnership qualified plans addition to those required by the DRA b. impose requirements on partnership qualified plans addition to those required by the DRA, if the state also imposes the same requirements on non-partnership policies c. impose requirements on partnership qualified plans addition to those required by the DRA, but does not have to impose the same requirements on non-partnership policies d. none of the above are true
ANS: B
States may impose additional restrictions or requirements on partnership policies, as long as the state imposes the same requirements on non-partnership policies. The goal is to keep partnership and non-partnership policies as similar as possible to facilitate marketing and consumer awareness.
a. OBRA b. COBRA c. HIPAA d. DRA
ANS: A
The Omnibus Budget Reconcilation Act of 1993 imposed estate recovery rules on new states' partnership plans. This law effectively curtailed new partnership plans -- allow the original four states could continue their partnership programs. The Deficit Reduction Act of 2005 reversed the 1993 Act and allowed for the current expansion of partnership plans.
a. Dana, who is in poor health b. Martin, who has limited financial means c. Tom and Linda, who plan on resideing in their home for the rest of their lives d. Molly, who is planning to move in the near future
ANS: D
A reverse mortgage is most effective if the homeowner is planning to reside in the property for a long-time. The health or financial well-being of the homeowner is relatively unimportant. The payments are based primarily on the value of the home, the homeowner's age and interest rates.
a. viatical settlements b. accelerated benefits provisions c. cash surrender d. policy loans
ANS: A
Insurers can provide a life insurance policyholder through surrender of the policy, policy loans, and accelerated benefits provisions. A viatical settlement is the sale of a life insurance policy to a third party.
a. reverse mortgage b. home equity loan c. life insurance policy loan d. all of the above
ANS: B
Reverse mortgages need not be repaid unless the homeowner moves or sells the home. Life insurance policy loans do not need to be repaid -- although interest accrues on the loan and will be deducted from eventual death proceeds. Home equity lines of credit, like regular mortgage, must be repaid.
a. compound inflation protection b. some level of inflation protection c. simple inflation protection d. no inflation protection is required, but the policy can be sold
ANS: B
Applicants between age 60 and 76 must select some form of inflation protection (automatic, guaranteed purchase option, or other). Policies sold to those age 60 or younger must have annual compound inflation protection.
a. at the time of application b. after the application is submitted to the underwriters c. upon delivery of the policy d. only if requested by the applicant
ANS: A
Outlines of Coverage must be delivered at the time of application.
a. a physcian determines the insured needs long term care b. family members can no longer care for the insured c. the insured is discharged from the hospital and needs follow-up care d. the insured is deemed "chronically ill"
ANS: D
Since the passage of HIPAA, the benefit trigger has been a "chronic illness" -- that is, the inability to perform at least two activities of daily life, or suffer a cognitive impairment that requires care to protect the insured -- certified by a licensed health care provider..
a. blood and urine sample b. an application requiring disclosure of medical history c. attending physician's statement (APS) d. all of the above
ANS: D
All individual applicants for LTC will be asked questions about their medical history and current physical condition. Individual underwriting may include medical reports including an attending physician's statement, as well as follow up interviews.
a. blood and urine sample b. an application requiring disclosure of current medical condition c. attending physician's statement (APS) d. all of the above
ANS: B
Group underwriting of LTC occurs on a number of levels: modified guaranteed issue (MGI) policies will ask a series of basic questions -- such as are you currently unable to perform any ADL? If the answer is yes, that applicant is rejected, all others are accepted. In simplified or short-form underwriting, the application may lead to follow-up questions from the underwriters. Some companies engage in full underwriting of group applicants -- in which full medical reports and follow-up interviews may be required. The one choice required in all group underwriting is an application.
a. elimination period b. guaranteed renewability c. guaranteed issue d. guaranteed purchase option
ANS: A
The applicant may choose the length of the elimination (deductible) period of the policy. The longer the elimination period, the lower the premium the policyholder will pay. The other policy features will not have a significant impact on the policy's premium rate.
a. 5% simple rate b. 5% compound rate c. 5% guaranteed purchase option d. there is no difference in the premium cost of these options
ANS: C
The premium will be highest on the option that provides the greatest level of protection. The simple and compound rate will automatically adjust benefits upwards -- the compound rate providing greater protection than the simple rate. The guaranteed purchase provision allows the policyholder to increase benefits at his or her option. This option will be the least expensive -- but provide the least amount of protection.
a. cash surrender b. return of premium c. shortened benefit period d. contingent nonforfieture benefits
ANS: D
All of the choices presented are nonforfeiture options -- but only the "contingent" option is available at no extra premium. The others may add significantly to the cost of the policy.
a. 10 days b. 30 day c. 60 days d. 10 days but varies from state to state
ANS: B
Federal legislation, HIPAA, requires tax-qualified LTC policy to offer applicants a 30 day free look. Most LTC policies are tax-qualified.
a. custodial care b. hospice care c. respite care d. home health care
ANS: B
Hospice care is designed to especially address the needs of terminally ill persons.
a. $0, as she is not confined to a nursing home b. one year c. two years d. one or two years depending on the policy's language
ANS: D
Older policies, with daily benefit limits and maximium benefit periods, can be written in a number of different ways. Some will cover the same number of days regardless of whether care is given in a facility or at home (in this case, one year) and limit home health care to 50% of the full benefit rate. Other policies may offer two days of home health care or one day of nursing home care as a "day of care" (keeping the same 2:1 ratio) -- in this case two years of home health care. It is important that an agent read the policy carefully.
a. $0, as she is not confined to a nursing home b. one year c. two years d. one or two years depending on the policy's language
ANS: C
Newer policies, with lifetime maximum benefit limits operate on a pool of money principle: the daily benefit is multiplied by the length of the benefit period to find the total amount payable under the policy -- in this case 365 days x $200 per day = $73,000. This is the maximum benefit payable under the policy. This policy covers home health care at $100 per day (50% of the nursing home benefit of $200). So $73,000 divided by $100 per day, yields 730 days of home health care, or 2 years (730 days divided by 365 days per year).
a. one year b. three years c. five years d. unlimited
ANS: D
Some policies have an unlimited lifetime benefit -- these are called lifetime policies.
a. one year b. three years c. five years d. unlimited
ANS: A
NAIC policies must provide at least 12 months of benefits (and some states require two or three years as a minimum).
a. respite care b. home health care c. adult day care d. assisted living residences
ANS: C
There are three levels of care: home, community and residential. Home health care and respite care is usually provided in the individual's private residence. Residential care is given in a congregate living facility such as a nursing home or assisted living facility. Community based care is care given temporarily outside the individual's residence -- such as in adult day care centers.
a. acute, supervisory, skilled, personal b. supervisory, acute, skilled , personal c. skilled, acute, personal, supervisory d. personal, supervisory, skilled, acute
ANS: A
Acute care -- such as care given in a hospital to treat a curable disease or injury is typically the most intensive (but for the shortest period of time). The other levels of care are for chronic conditions. Supervisory care provides close supervision of cognitively impaired person to ensure his or her safety. Skilled care is provided by professional and nonprofessional on an ongoing, but not constant basis. Personal care provides assistance with basic living fundtions and household chores.
a. custodial care b. personal care c. respite care d. assisted living facilities
ANS: C
Respite care is short-term care that allows primary caregivers to take a break.
a. individuals may include LTC premiums in their itemized medical deductions b. benefits can be received tax free c. there are age limits on the deductibilty of individual LTC premiums d. all LTC policies qualify for federal tax deduction
ANS: D
Policies must meet HIPAA requirements to qualify for tax-deductible premiums and tax-free benefit payments. A portion of LTC premiums can be included in a taxpayers itemized medical expenses, depending on his or her age.
a. Medigap pays for nursing home care beyond the 100 covered by Medicare b. Medigap pays co-pays and deductibles Medicare imposes c. Medigap pays for care in more expensive facilities or those not Medicare certified d. Medigap pays for types of care Medicare won't cover, e.g., personal care
ANS: B
Medigap policies cover expenses that are "Medicare-approved" but that are not covered by Medicare, namely copays and deductibles. Medigap policies do NOT expand nursing home care (the policies do increase the insured's lifetime days of hospitalization, not nursing home care).
a. 0% for the first 20 days, all except $100 for the next 80 days, 100% of trhe last 20 days b. 100% for the first 20 days, all except copay for the next 80 days, 0% beyond 100 days c. all except the daily copay for the first 20 days, 100% of the next 80 days d. all except the daily copay for the first 80 days, 100% of remaining days
ANS: B
Medicare will fully pay the first 20 days of approved nursing home care expenses, for the next 80 days Medicare will apply a sizable copay -- and nothing after 100 days.
a. HIPAA allows policies to exclude benefits up to 6 months for an condition manifasting itself within 6 months of application b. most policies exclude benefits up to 6 months for any condition manifasting itself prior to application c. most policies exclude benefits up to 3 months for an condition manifasting itself within 3 months of application d. most policies no longer exclude benefits for pre-existing conditions
ANS: A
HIPAA limits pre-existing condition exclusions to conditions that were diagnosed or treated within 6 months of application. Exclusions may be imposed up to 6 months after an LTC policy is issued.
a. the only nonforfeiture benefit available at no additional cost b. in is a nonforfeiture required in some states c. is available only if the premium rate is significantly increased d. all of the above
ANS: D
The contingent nonforfeiture option allows the policyholder to exercise a nonforfeiture option if premiums are raised significantly. This option is available at no additional premium (unlike other non-forfeiture options) and some states require it.
a. elimination period b. daily benefit amount c. survivor benefit d. inflation protection
ANS: B
Of the choices made by the applicant, the benefit amount normally has the greatest impact on the amoun fot he premium. In general there is a direct proportional relation -- a daily benefit of $120 is 20% more expensive than a daily benefi of $100, and a daily benefit of $80 costs 20% less.
a. Outline of Coverage b. Buyer's Guide c. History of Rate Increases d. A.M. Best's rating of the insurer
ANS: D
Agents must provide applicants with an Outline of Coverage, Buyer's (or Shopper's) Guide as well as any rate increases the insurer has imposed on this or similar policies.
a. Medical Saving Account b. tax-qualified LTC policies c. HIPAA eligible LTC policy d. PQ LTCI
ANS: A
Medical Savings Accounts are tax-advantaged methods to save for medical expenses. They require accountholders to have a high deductible medial plan to defray serious medical expenses.
a. her membership in a service club b. her three sisters also applied for coverage c. a widow's discount d. her excellent health
ANS: C
Discounts are available through group policies offered by employers, associations such as service clubs or financial institutions. Insurers offer discounts when multiple members of family apply -- especially a husband a wife as they based on the concept that they will be able to care for each other. Preferred rates are available for those in good health.
a. required under NAIC Model legislation b. a method to deny payment of claims c. only used when issuing group policies d. none of the above
ANS: B
Post-claims underwriting is the practice of accepting applications without adequate information about health history with the intent to use "mistakes" on the application as a way to deny claims. It is prohibited by NAIC Model legislation.
a. policy surrender b. policy loans c. accelerated benefits d. viatical settlements
ANS: D
Viatical settlements are the sale of life insurance policy by a terminally ill insured. Life settlements are also sales of a life policy, but there is no requirement that the insured by terminally ill.
a. guaranteed renewability b. no pre-existing condition exclusions c. third party notification of policy lapse d. incontestability clause
ANS: B
Policies may impose exclusions on benefits for pre-exisiting conditions up to 6 months following the policy's issuance.
a. service day b. calendar day c. both will result in the same premium d. it depends on other policy provisions
ANS: B
An elimination period measured in "calendar days" will result is earlier payment of benefits -- and therefore costs more.
a. elimination period b. benefit period c. probationary period d. accumulation period
ANS: A
The elimination period is also known as the deductible or waiting period.
a. reimbursement model b. disability model c. cash model d. indemnity model
ANS: A
The reimbursement model is sometimes called the expense-insured model. This model will pay benefits based on long-term care costs actually incurred.
a. disability model b. indemnity model c. cash model d. all of the above
ANS: D
The reimbursement (or expense-incurred) model bases benefit payments on actual costs incurred. The other methods -- disabilty (or cash) model and indemnity model -- pay a flat benefit if the insured's condition triggers benefits.
a. comprehensive services b. services provided in nursing homes only c. home health care service only d. community-based health care services only
ANS: A
Policies covering comprehensive (all-type) services are the most common policy type.
a. requires the inability to perform ADLs for at least 90 daysto trigger benefits b. is the maximum elimination period allowed on LTC group certificates c. is the NAIC mandated waiting period on partnership policies d. none of the above
ANS: A
The benefit trigger under HIPAA is the inability to perform at least two ADLs for at least 90 days. A physician must certified the condition will last for at least 90 days.
a. physician b. nurse c. medical social worker d. all of the above
ANS: D
Under HIPAA a licensed health care professional must certify an insured's need for long-term care.
a. bathing and dressing b. toileting and continance c. transferrance and eating d. toileting and eating
ANS: A
Dressing and bathing require fine motor skills, which are typically lost first.
a. meal preparation b. personal care c. help with medication d. on-staff physical therapist
ANS: D
ALFs typical include up to three meals a day, assistance with personal care; help with medication, staff to handle medical emergencies and social programs.
a. nature of long-term care b. cost of long-term care c. levels of long-term care service d. all of the above
ANS: D
Agents should inform their clients of all of these important topics
a. material facts not disclosed in the application b. the completed application, signed disclosure documents, and the first premium check c. medical information collected by the agent d. all of the above
ANS: A
The Agent's Report allows the agent to append additional information known to the agent as part of the application
a. completed fact-finding forms b. customer correspondence c. notes on conversations with clients d. all of the above
ANS: D
All of these should be retained by an agents, as well as completed applications, lists of products shown or recommened to clients, and due diligence check lists
a. a greater level of LTC than a PQ LTC policy b. a greater level of LTC than a TQ LTC policy c. payment of legal fees to defend against unfounded charges of negligence d. none of the above
ANS: C
Error and Ommission insurance is a liability policy that protects agents from charges of neglience or malpractice. The policy will pay claims in the event of founded or unfounded charges.
a. churning b. cold lead advertising c. high-pressure tactics d. twistng
ANS: B
Cold lead advertising occurs with an insurer or agent conceals the purpose of the sales presentation is to sell insurance. Ethical agents always disclose their status as a licensed agent and the true nature of the sales presentation.
a. application b. personal worksheet c. Buyer's Guide d. Outline of Coverage
ANS: B
Personal worksheets address a particular client's LTC needs and the suitability of a proposed solution. Buyer's Guides and Outlines of Coverage are documents that describe policies -- not necessarily their suitability for a particular client.
a. obtain relevant information from the client b. adhere to state suitability requirements c. document the sales presentation d. all of the above
ANS: D
Agents should make reasonable efforts to obtain relevant information from prospects, usually using a personal worksheet -- and document that effort.
a. always buy LTC insurance b. generally buy LTC insurance c. generally not buy LTC insurance d. never buy LTC insurance
ANS: C
These prospects generally cannot afford the premiums for LTC -- and will generally qualify for government programs such as Medicaid
a. The client exposes himself to uncapped liability b. This is a good method to maximize the size of the estate he can leave to heirs c. both a and b are true d. neither a nor b are true
ANS: A
Relying on personal assets exposes the client to an unlimited "uncapped" level of liabiity. While savings on premiums may increase the size of any eventual estate left to heirs, if teh client needs LTC in the future, those costs could deplete the estate.
a. the identity of the existing policy's insurer b. whether the existing policy is tax-qualified or partnership-qualified c. the length of time the client has owned the existing policy d. the policy language of the existing policy
ANS: A
The agent will want to compare the existing policy's terms and exclusions with the proposed policy -- this includes features such as tax-status and asset protection affored by partnership plans. Older policies may have less-favorable terms than newer contracts -- and older policies may lock in lower premium rates. The identity of the existing insurer is usually not a factor (unless the company's financial status is impaired).
a. guaranteed renewability b. policy exclusions c. benefit limits d. asset protection
ANS: D
One goal of the Deficit Reduction Act that allows for partnership policies is that there be uniformity between the terms of PQ and non-PQ policies. The key distinction is that partnership policies offer possible asset protection from Medicaid eligibility requirements.
a. automatically qualify for Medicaid benefits once their policy's benefits are exhausted b. may protect their assets and income from Medicaid eligibilty requirements c. locks in current Medicaid eligibility requires relating to assets, but not income d. none of the above
ANS: D
PQ LTCI policies will protect assets (but not income) from the Medicaid eligibility requirements in place at the time the insured applies for Medicaid benefits (that is, when the policy's benefits are exhausted). The insured will have to apply for Medicaid if the policy is exhausted -- the same procedure as non-insured applicants.
a. possible relocation of the insured in the future b. possible changes in the Medicaid eligibility rules c. possible discontinuance of the state in the partnership program d. all of the above
ANS: D
All of these could negatively affect the effectiveness of a partnership policy in attaining the client's financial goals.
a. the client has a high level of income b. the client purchases a partnership policy with a long benefit period c. the client has relatively few assets d. all of the above
ANS: D
Partnership plans are designed to protect assets from Medicaid eligibility rules -- and avoid "spending down" assets and still qualify for Medicaid. If the client has a high income, he or she may not be able to qualify for Medicaid, so the partnership plan will fail in meeting that planning objective. The policy will only protect assets in the event that the LTC benefits are exhausted -- policies with high benefit levels or long benefit periods may mnever be exhausted. If the client has relatively few assets, there is no need to "protect" them.
a. Medicaid does not provide the same level of LTC services as the partnership policy may provide b. Medicaid benefits are not automatic c. a partnership LTC policy may be more costly thatn a non-partnership policy d. all of the above
ANS: D
A prospect relying on a partnership policy should be aware of the shortcomings of the Medicaid system, that the prospect may have to apply for (and may be rejected) for Medicaid benefits and that policies offering asset protection will cost more than comparable plans without that feature
a. the same as that at nursing home b. the same as that of a hospital stay c. less than that of a nursing home d. more than that of a nursing home
ANS: C
The average cost of a semi-private room in a nursing home for one year is more than $60,000 ($5,000 per month). The average cost of assisted living is a little more than half than amount ($2,700 per month).
a. tie fees to the level of services provided b. offer a wide range of home-care services at one fixed rate c. are another name for assisted living facilities d. provide personal and skilled in-home care
ANS: A
CCRCs offer a wide range of services in one location -- allowing a patient to stay in one location even if the level of needed service changes.
83. A grantor is a person who establishes a trust to hold assets. Medicaid will NOT apply its asset transfer rules to assets transferred to a trust that:
a. pays income to the grantor b. could pay income to the grantor, but pays it to someone else c. could pay income to the grantor but the trust retains the income instead d. pays income to a disabled grantor
ANS: D
In general, any trust in which the grantor benefits, or could benefit, will be included in the grantor's assets for purposes of calculating asset levels. One exception is for grantors who are disabled or trusts that hold only the grantors Social Security payments, pension benefits.
a. qualified retirement plans b. life insurance c. family burial plot d. collectibles
ANS: C
Non-countable (or exempt) assets include household goods, one automobile, very small amounts of life insurance, wedding and engagement rings, and burial plots. Most everything else will be "countable".
a. if the Medicaid applicant is not applying for LTC benefits, the value of the home does not count as an asset b. if the applicant moves out of the home into LTC facilities the value of the home is counted regardless of value c. if the Medicaid applicant is applying for LTC benefits, any home equity in excess of $100,000 counts as an asset d. Medicaid can place a lien against the home, even if the home is not deemed "countable"
ANS: C
Equity in excess of $500,000 (not $100,000) is countable if the applicant is seeking LTC benefits. The other statements are true.
a. $1,500 b. $2,000 c. $3,000 d. $5,000
ANS: B
Medicaid generally requires a single applicant to have assets totally less than $2,000 ($3,000 for married applicants).
a. earned income b. unearned income c. Social Security benefits d. veteran pensions
ANS: A
Medicaid's income rules relate to unearned sources of income (from investments, government benefits, private and public pensions) -- earned income is not counted (but for most applicants for LTC benefits, earned income is not a factor)
a. a married recipient of community-based LTC b. a married period living in a community property state c. the spouse of a person residing in a nursing home d. none of the above
ANS: C
A community spouse is the spouse of a person receiving LTC services (home helath care community care of nursing home care). This is the person who continues to live in the "general community".
a. income a community spouse may retain and not trigger income eligibility rules of Medicaid b. the maximum amount of income a Medicaid applicant may retain and still be eligible for Medicaid LTC benefits c. the amount of income a nursing home resident may retain for personal care needs such as toiletries of reading material d. none of the above
ANS: A
The MMMNA is the amount of income a community spouse may retain or receive from a spouse who receives Medicaid benefit. This is designed to avoid "spousal impoverishment".
a. the maximum level of assets a community spouse may retain b. is limited to an inflation adjusted amount set by federal law c. is designed to avoid spousal impoverishment d. all of the above
ANS: D
The PRA are assets a community spouse may retain to avoid "spousal impoverishment". The federal government sets an maximum permissible amount (about $100,000) but states may set lower limits.
a. nursing home services b. home health care services c. community based care d. all of the above
ANS: A
Estate recovery is the process of reclaiming assets of Medicaid beneficiaries who have died. If applies to all nursing home beneficiaries -- and beneficiaries of home health care and community care services if they were age 55 or older when then began receiving Medicaid benefits.
a. home health care services b. community based care services c. nursing home care service d. all of the above
ANS: C
The minimum federal requirement is for nursing home care, although many states provide a wider range of LTC services unde Medicaid.
a. less generous than available under Medicare b. the same as available under Medicare c. more generous than available under Medicare d. more or less generous depending on the state
ANS: C
Medicare covers only skilled care in nursing homes -- Medicaid covers skilled care and less intensive levels of service.
a. home health care b. skilling nursing care c. occupational therapies d. custodial care
ANS: D
Skilled nursing care is available under Medicare Part A if is medically necessary following at least three days of hospitalization. A limited level of home care is available and that may include occupational therapy. Medicare does not provide for custodial care.
a. the care is certified as medically necessary by a physician b. the patient has been hospitalized for at least 3 days in the previous month c. skilled care is provided d. all of the above are required for Medicare to cover nursing home care
ANS: D
All of these conditions must be met to qualify for Medicare coverage of nursing home care.
a. supplement coverage under Parts A and B b. replace coverage under Parts A and B c. automatically offer prescription drug benefits d. all of the above
ANS: B
Medicare Advantage plans offer a wide range of alternatives to original Parts A and B coverage. By enrolling in Part C, beneficiaries are "disenrolled" from traditional Medicare.
a. $90,000 b. $100,000 c. depends on when Medicaid processes his application d. Jake cannot apply for Medicaid benefits before his policy is exhausted
ANS: A
Jake can apply for Medicaid benefits at any time -- but the level of asset protection is based on the benefits actually paid by the partnership policy at the time the application is made.
a. is permitted, by the policy loses is partnership status b. is permitted, provided inflation protection is retained c. is not permitted, although a change from facilities-only to comprehensive plan would be d. is not permitted
ANS: B
Under federal law, such hanges in plans are permitted and will retain partnership status as long as the new plan includes partnership requirements such as inflation protection. States may impose their own requirements on any plan changes
a. either dollar-for-dollar or total asset protection b. total asset protection only c. dollar-for-dollar only d. reimbursement plans only
ANS: C
New state plans may allow for benefit payments on a reimbursement, disability or indemnity basis -- but new states may only use the dollar-for-dollar asset protection model.
a. it will lapse as of the premium due date b. the company must notify a third party of the potential lapse c. the company must allow a third party to reinstate the policy d. all of the above
ANS: D
LTC policies must provide a notice to a third party of any possible lapses due to nonpayment of premiums. The insured (and in many states, the third party) must be granted the ability to reinstate any policy that lapses due to non-payment. If the premium is not paid (within permitted time frames) the policy will lapse.
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