Medicare/Medicare supplement insurance
What is Medicare?
What is the Medicare Modernization Act?
Where can I get more information about Medicare?
Do I need a Medicare supplement insurance policy?
What do Medicare supplement plans cover?
What Are The Most Frequent Consumer Complaints About Health Coverage?
What is an outline of coverage?
Do I have the right to return the policy after I buy it?
What should I know if I want to replace my existing Medicare supplement policy with one from a different company?
What is a Medicare Select policy?
Other than benefits for health care services, how does my Medicare supplement policy work?
What happens if I become eligible for Medicaid while I have Medicare?
How do I buy a Medicare supplement policy?
Who are authorized Medicare supplement providers in Michigan? 
Will I have to fill out an application for a Medicare supplement policy?
Why is Creditable Coverage so important?
Can I get a Medicare supplement policy if I am under the age of 65 and on Medicare?
What is the difference between "attained age" rated policies and "issue age" rated policies?
When is the best time to purchase a Medicare supplement policy?
Are pre-existing conditions covered under a Medicare supplement plan?
What is a Medicare Advantage (MA) plan?
What is the new Medicare drug benefit?
Will the changes to the Medicare law affect my Medicare supplement coverage?

Long Term Care Insurance
What is long term care insurance?
I heard that long term care insurance is guaranteed renewable, what does that mean?
Do I have the right to return the policy after I buy it?
Can an insurance company exclude or limit coverage?
What is an inflation protection rider?
How will I know what home health care services or assisted living services are included in the policy?
What is a summary of coverage?
What do I need to do if I want to replace my existing long term care policy with one from a different insurance company?
Who sells long-term care insurance?
Why do my long-term care premiums keep going up?
What does an insurance company have to show to justify a rate increase?
Will the insurance company ask me health questions when I apply for long term care insurance?
What else will be on the application?
Can the insurance company require a prior hospital stay before it will pay benefits for long term care services?
What is a "Tax Qualified" long-term care insurance policy?

Medicare/Medicare supplement insurance

What is Medicare?
Medicare is a federal government plan to provide medical insurance to persons age 65 or over, those that are disabled that have been receiving Social Security benefits for 24 months, and those persons who are receiving kidney dialysis treatments. The program was established in July 1966. Medicare is divided into two parts: hospital insurance (Part A) and medical insurance (Part B).

• Part A is automatic and is financed by taxes on employers and employees
• Part B is voluntary and is financed by individual monthly premiums
• Part A has a deductible that you must pay before Medicare will be paying for health care services. The Part A deductible will be charged each time there is a hospitalization as long as 60 days separates hospitalizations. Once the deductible is paid, Medicare will pay a share of the covered health care expenses and you will be responsible for a share of the costs of the covered health care expenses.
• Part B also has a deductible but the Part B deductible is an annual deductible. Under Part B, Medicare will pay 80% of covered health care costs and you will be responsible for 20% of the covered health care costs that Medicare does not pay.

What is the Medicare Modernization Act?
The Medicare Modernization Act was passed in December 2003. The law made several changes to the Medicare program. One of the biggest changes to Medicare is the introduction of a prescription benefit under Medicare, identified as Part D of Medicare. For up-to-date information and answers to your questions, call 1-800-MEDICARE (1-800-633-4227) or visit www.medicare.govon the web.

Where can I get more information about Medicare?
For more information on the Medicare program, what is covered, and the changes that have recently been made to the program, please visit www.medicare.gov. The website has a lot of information including a "Frequently Asked Questions" section that covers many topics. You may also want to review the publication "Your Medicare Rights and Protections."

Do I need a Medicare supplement insurance policy?
Medicare supplement insurance is designed to help pay for the costs that are not paid by Medicare for covered health care costs (i.e. deductibles and co-insurance amounts). You should consider purchasing a Medicare supplement policy if you do not have employer or retiree health care coverage.

What do Medicare supplement plans cover?
Basic Core Benefits

• Every Medicare supplement plan includes all of the following:

  Hospitalization: Part A coinsurance plus coverage for 365 additional days after Medicare benefits end.
  Medical Expenses: Part B coinsurance (generally 20% of Medicare-approved expenses) or, for hospital outpatient department services.
  Blood: First three pints of blood each year.

Medicare supplement standardized plans

(a) Plan A includes only the basic core benefits
(b) Plan B includes the basic core benefits and the Medicare part A deductible.
(c) Plan C includes the core benefits, the Medicare part A deductible, skilled nursing facility care, Medicare part B deductible, and medically necessary emergency care in a foreign country.
(d) Plan D includes the core benefits, the Medicare part A deductible, skilled nursing facility care, medically necessary emergency care in a foreign country, and the at-home recovery benefit.
(e) Plan E includes the core benefits, the Medicare part A deductible, skilled nursing facility care, medically necessary emergency care in a foreign country, and preventive medical care.
(f) Plan F includes the core benefits, the Medicare part A deductible, skilled nursing facility care, Medicare part B deductible, 100% of the Medicare part B excess charges, and medically necessary emergency care in a foreign country.
     (a) High Deductible Plan F includes 100% of covered expenses usually paid under Plan F following the payment of the annual high deductible.
(g) Plan G includes the core benefits, the Medicare part A deductible, skilled nursing facility care, 80% of the Medicare part B excess charges, medically necessary emergency care in a foreign country, and the at-home recovery benefit.
*(h) Plan H includes the core benefits, the Medicare part A deductible, skilled nursing facility care, and medically necessary emergency care in a foreign country.
*(i) Plan I includes the core benefits, the Medicare part A deductible, skilled nursing facility care, 100% of the Medicare part B excess charges, medically necessary emergency care in a foreign country, and at-home recovery benefit.
*(j) Plan J includes the core benefits, the Medicare part A deductible, skilled nursing facility care, Medicare part B deductible, 100% of the Medicare part B excess charges, medically necessary emergency care in a foreign country, preventive medical care, and at-home recovery benefit.
     *(a) High Deductible Plan J includes 100% of covered expenses usually paid under a Plan J, following the payment of the annual high deductible.

*Plans H, I, J, and High Deductible J used to include a prescription benefit. The Medicare Modernization Act prohibits Medicare supplement insurance plans to include coverage for prescription benefits.

What Are The Most Frequent Consumer Complaints About Health Coverage?

• Claim denial
• Claim handling delay
• Unsatisfactory settlement offer
• Coverage question

What is an outline of coverage?
The outline of coverage is a document that is required to be given to the applicant at the time of application. An outline of coverage consists of 4 parts:

(a) A cover page giving company contact information
(b) Premium information
(c) Disclosure pages:
     Disclosure items include:
     That the policy may not fully cover all of your medical costs.
     Neither the company nor its agents are connected with Medicare.
(d) Charts displaying the features of each benefit plan offered by the insure

Do I have the right to return the policy after I buy it?
The policy is your insurance contract. You must read the policy itself to understand all of the rights and duties of both you and your insurance company. If you find that you are not satisfied with your policy, you may return it to the insurance company. If you send the policy back within 30 days after you receive it, the company will treat is as if it had never been issued and return all of your payments.

What should I know if I want to replace my existing Medicare supplement policy with one from a different company?
Do not cancel your present policy until you have received your new policy and are sure that you want to keep it. The agent that is selling a Medicare supplement policy that will replace a Medicare supplement insurance policy that you have with a different insurance company must provide you with a notice regarding replacement of Medicare supplement coverage. The notice will look similar to this:

• According to (your application) (information you have furnished), you intend to drop or otherwise terminate existing Medicare supplement coverage and replace it with a policy or certificate to be issued by (company name) insurance company. Your new policy or certificate provides 30 days within which you may decide without cost whether you desire to keep the policy or certificate. You should review this new coverage carefully comparing it with all disability and other health coverage you now have and terminate your present coverage only if, after due consideration, you find that purchase of this Medicare supplement coverage is a wise decision. I have reviewed your current medical or health coverage. The replacement of coverage involved in this transaction does not duplicate coverage, to the best of my knowledge. The replacement policy is being purchased for the following reasons (check 1):
  ______ Additional benefits
  ______ No change in benefits, but lower premiums
  ______ Fewer benefits and lower premiums
  ______ Other. (Please specify)
  1. Health conditions which you may presently have (pre-existing conditions) may not be immediately or fully covered under the new policy. This could result in denial or delay of a claim for benefits under the new policy, whereas a similar claim might have been payable under your present policy.
  2. Your insurer will waive any time periods applicable to preexisting conditions, waiting periods, elimination periods, or probationary periods in the new policy or certificate for similar benefits to the extent such time was spent or depleted under the original coverage.
  3. If, after thinking about it carefully, you still wish to drop your present coverage and replace it with new coverage, be certain to truthfully and completely answer all questions on the application concerning your medical and health history. Failure to include all material medical information on an application may provide a basis for the insurer to deny any future claims and to refund your premium as though your policy or certificate had never been in force. After the application has been completed, and before you sign it, review it carefully to be certain that all information has been properly recorded.

What is a Medicare Select policy?
A Medicare select policy is a Medicare supplement policy that conditions the payment of benefits, in whole or in part, on the use of network providers. Network providers are providers of health care, or a group of providers of health care, that have entered into a written agreement with the insurance company to provide benefits under a Medicare select policy. A Medicare select policy cannot restrict payment for covered services provided by non-network providers if the services are for symptoms requiring emergency care or are immediately required for an unforeseen illness, injury, or a condition and it is not reasonable to obtain such services through a network provider. A Medicare select policy must provide payment for full coverage under the policy for covered services that are not available through network providers. A Medicare select insurer must make full and fair disclosure in writing of the provisions, restrictions, and limitations of the Medicare select policy to the applicant. This disclosure shall include at least all of the following:

(a) An outline of coverage sufficient for the applicant to compare the coverage and premiums of the Medicare select policy with other Medicare supplement policies offered by the insurer or offered by other insurers.
(b) A description, including address, phone number, and hours of operation, of the network providers, including primary care physicians, specialty physicians, hospitals, and other providers.
(c) A description of the restricted network provisions, including payments for coinsurance and deductibles if providers other than network providers are utilized.
(d) A description of coverage for emergency and urgently needed care and other out-of-service area coverage.
(e) A description of limitations on referrals to restricted network providers and to other providers.
(f) A description of the policyholder's rights to purchase any other Medicare supplement policy or certificate otherwise offered by the insurer.
(g) A description of the Medicare select insurer's quality assurance program and grievance procedure.

At your request, under a Medicare select policy; the insurance company must make available to you the opportunity to purchase a Medicare supplement policy offered by the company that has comparable or lesser benefits that does not contain a restricted network provision. The insurer shall make the policy available and cannot require evidence of insurability after the Medicare supplement policy or certificate has been in force for 6 months.

Other than benefits for health care services, how does my Medicare supplement policy work?
A Medicare supplement policy cannot pay for losses resulting from sickness on a different basis than losses resulting from accidents. A Medicare supplement policy must provide benefits that are designed to cover cost sharing amounts under Medicare and will be changed automatically to coincide with any changes in the applicable Medicare deductible amount and co-payment percentage factors. Premiums may be modified to correspond with such changes. A Medicare supplement policy shall be guaranteed renewable. Termination shall be for nonpayment of premium or material misrepresentation only. Termination of a Medicare supplement policy shall not reduce or limit the payment of benefits for any continuous loss that began while the policy was in force, but the extension of benefits beyond the period during which the policy was in force may be predicated upon the continuous total disability of the insured, limited to the duration of the policy benefit period, if any, or payment of the maximum benefits. A Medicare supplement policy cannot cancel the coverage of a spouse solely because of the occurrence of an event that caused the cancellation of coverage of the insured, other than the nonpayment of premium.

What happens if I become eligible for Medicaid while I have Medicare?
Benefits and premiums under the policy will be suspended at your request for a period not to exceed 24 months. You must notify the insurance company within 90 days after you the become entitled for the assistance. The insurance company must return to you the portion of the premium attributable to the period of Medicaid eligibility, subject to adjustment for paid claims.

If you lose entitlement to medical assistance under Medicaid, the policy shall be automatically reinstituted effective as of the date of termination of the assistance

(a) The reinstitution shall not provide for any waiting period with respect to treatment of preexisting conditions.
(b) Reinstituted coverage shall be substantially equivalent to coverage in effect before the date of the suspension.
(c) Classification of premiums for reinstituted coverage shall be on terms at least as favorable to the policyholder or certificate holder as the premium classification terms that would have applied to the policyholder or certificate holder had the coverage not been suspended.

How do I buy a Medicare supplement policy?
Some Medicare supplement policies are purchased through licensed agents of insurance companies. Some Medicare supplement policies are purchased through a direct response method where you fill out an application and send it directly to the insurance company. You do not work with an insurance agent with direct response sales.

Will I have to fill out an application for a Medicare supplement policy?
Yes, when you fill out the application for a policy, be sure to answer truthfully and completely all questions about your medical and health history. The company may cancel your policy and refuse to pay any claims if you leave out or falsify important medical information. Review the application carefully before you sign it. Be certain that all information has been properly recorded. Application forms or a supplementary application or other form to be signed by the applicant and agent for Medicare supplement policies must include the following statements and questions:

• [STATEMENTS]
  (1) You do not need more than 1 Medicare supplement policy.
  (2) If you are 65 or older, you may be eligible for benefits under Medicaid and may not need a Medicare supplement policy.
  (3) The benefits and premiums under your Medicare supplement policy will be suspended during your entitlement to benefits under Medicaid for 24 months. You must request this suspension within 90 days of becoming eligible for Medicaid. If you are no longer entitled to Medicaid, your policy will be reinstituted if requested within 90 days of losing Medicaid eligibility.
  (4) Counseling services may be available in your state to provide advice concerning your purchase of Medicare supplement insurance and concerning Medicaid.
• [QUESTIONS]
  These questions should be answered to the best of your knowledge.
  (1) Do you have another Medicare supplement insurance policy, certificate, or contract in force (including a health care corporation certificate or health maintenance organization contract)? If so, with which company?
  (2) Do you have any other health insurance policies, certificates, or contracts that provide benefits that this Medicare supplement policy would duplicate? If so, with which company? What kind of policy, certificate, or contract?
  (3) If the answer to question 1 or 2 is yes, do you intend to replace these disability or health policies, certificates, or contracts with this policy or certificate?
  (4) Are you covered by Medicaid?
  (3) An agent shall list on the application form for a Medicare supplement policy any other health insurance policies, certificates, or contracts he or she has sold to the applicant, including policies, certificates, or contracts sold that are still in force and policies, certificates, and contracts sold in the past 5 years that are no l longer in force.

Why is Creditable Coverage so important?
Creditable coverage gives you the right to purchase new coverage that does not include a pre-existing condition exclusion if you had other prior coverage.
"Creditable coverage" does not include any of the following:

(a) One or more of the following:
(i) Coverage only for accident or disability income insurance, or any combination of accident or disability income insurance.
(ii) Coverage issued as a supplement to liability insurance.
(iii) Liability insurance, including general liability insurance and automobile liability insurance.
(iv) Workers' compensation or similar insurance.
(v) Automobile medical payment insurance.
(vi) Credit-only insurance.
(vii) Coverage for on-site medical clinics.
(viii) Other similar insurance coverage, specified in federal regulations, under which benefits for medical care are secondary or incidental to other insurance benefits.
(ix) Limited scope dental or vision benefits.
(x)Benefits for long-term care, nursing home care, home health care, community- based care, or any combination of long-term care, nursing home care, home health care, or community-based care.
(xi) Such other similar, limited benefits as are specified in federal regulations.
(xii) Coverage only for a specified disease or illness.
(xiii) Hospital indemnity or other fixed indemnity insurance.

Special situations where you are entitled to a limited open enrollment for Medicare supplement plan A, B, D, and F.
You have 63 days to apply for new coverage with guarantee issue rights of Medicare supplement plans A, B, C, and F if you have had any of the circumstances listed below:

• You are enrolled under an employer plan that provides health benefits that supplement the benefits under Medicare and the plan terminates or the plan ceases to provide all those supplemental health benefits to the individual.
• You are enrolled with a Medicare + choice organization (HMO) or a PACE program and any of the following circumstances apply:
  The certification of the organization or plan has been terminated.
  The organization has terminated or otherwise discontinued providing the plan in the area in which you live.
  You are no longer eligible to elect the plan because of a change in your place of residence
  You can show that the organization offering the plan substantially violated a material provision of the organization's contract including the failure to provide on a timely basis medically necessary care for which benefits are available under the plan or the failure to provide covered care in accordance with applicable quality standards, or the organization, or agent or other entity acting on the organization's behalf, materially misrepresented the plan's provisions in marketing the plan to the individual.
• You are insured under a Medicare supplement policy and the insurance ends because of any of the following:
  (i) The insolvency of the insurance company
  (ii) The insurance company substantially violated a material provision of the policy.
  (iii) The insurer, or an agent or other entity acting on the insurer's behalf, materially misrepresented the policy's provisions in marketing the policy to the individual.
• You were insured under a Medicare supplement policy and you cancel the coverage and subsequently enroll, for the first time, with any Medicare choice organization (HMO) and the subsequent enrollment is terminated by you during any period within the first 12 months.
• When you first became eligible for benefits under part A of Medicare at age 65, you enrolled in a Medicare choice plan and you disenroll from the plan or program by not later than 12 months after the effective date of enrollment.

Can I get a Medicare supplement policy if I am under the age of 65 and on Medicare?
If you are under the age of 65 your choices of Medicare supplement policies is generally limited to a Medicare supplement Plan A or Plan C. There are a limited number of companies that must offer Plans A and C to the persons under the age of 65. Companies that are required to offer Plans A and C to persons under the age of 65 are allowed to charge those insureds more for the coverage. The only company that may not charge more because the person is under the age of 65 is Blue Cross/Blue Shield of Michigan.

What is the difference between "attained age" rated policies and "issue age" rated policies?
There are three basic ways that insurance companies price their policies.

• Attained age: basis. This means that that your premium will increase slightly for each year you age. The risk to the insurance company because of the aging process is built into the development of the premium.
• Issue age: This means that your premium will only increase if the company files a request for a rate increase with OFIR .
• Community rating: Under community rating, all insureds in the same classification pay the same amount

When is the best time to purchase a Medicare supplement policy?
The best time to purchase a Medicare supplement policy is during the Open Enrollment Period. The open enrollment period begins when two events happen: the first is that you turn 65; the second is that you have Part B of Medicare. The open enrollment period lasts six months during which you can purchase any Medicare supplement plan that any company offers. Each Medicare supplement policy currently available from an insurer shall be made available to all applicants who qualify under this section

Are pre-existing conditions covered under a Medicare supplement plan?
A Medicare supplement policy cannot deny a claim for losses incurred more than 6 months from the effective date of coverage because it involved a preexisting condition. The policy cannot define a preexisting condition more restrictively than to mean a condition for which medical advice was given or treatment was recommended by or received from a physician within 6 months before the effective date of coverage. A Medicare supplement policy cannot use waivers to exclude, limit, or reduce coverage or benefits for specifically named or described preexisting diseases or physical conditions. If a Medicare supplement policy replaces another Medicare supplement policy, the replacing insurer must waive any time periods applicable to preexisting conditions, waiting periods, elimination periods, and probationary periods in the new Medicare supplement policy for similar benefits to the extent such time was spent under the original coverage.

What is a Medicare Advantage (MA) plan?
Medicare Advantage plans include:

• Medicare HMOs which were previously identified as Medicare + Choice programs. These are plans that use managed care and contract with network providers. The MA program kept many of the same provisions that were in the M+C program such as the eligibility, enrollment, grievance and appeals provisions.
• Fee-for-service plans offered by insurance companies with new plan options for beneficiaries, including regional PPO plans and Special Needs Plans for individuals with specific health conditions.

What is the new Medicare drug benefit?
Medicare has contracted with private companies to offer prescription drug coverage. These companies will offer a variety of options, with different covered prescriptions, and different costs. Medicare prescription drug plans are voluntary. If you want prescription drug coverage under Medicare, you must choose a plan offering the coverage that best meets your needs and then enroll.

If you have retiree health coverage or are covered under an employee group health plan, please watch for any information that is sent by the employer. You may not have to make any changes. If you do not understand the information you receive from your current or former employer, please contact the company's human resources department or use the contact number provided on any written communication you receive.

The Office of Financial and Insurance Regulation does not regulate these prescription plans. Please visit the following links for additional information on the prescription drug plans:

http://www.medicare.gov/
http://questions.medicare.gov/cgi-bin/medicare.cfg/php/enduser/std_alp.php
www.mmapinc.org

or call:

1-800-MEDICARE (1-800-633-4227) - for Medicare and Medicare Prescription Drug coverage information.

1-800-803-7174 - MMAP - for free senior health insurance counseling.

Will the changes to the Medicare law affect my Medicare supplement coverage?
Yes. Starting in 2006, Medicare supplement policies will include two new kinds of benefit packages that you can choose (Plans K and L). No new Medicare supplement policies with drug coverage (plans H, I, and J) will be sold. If you have a Medicare supplement policy with drug coverage, you can choose to renew it. Or, if you choose to join a Medicare prescription drug plan in 2006, you won't be allowed to renew your current Medicare supplement policy. The company must remove the drug coverage from Medicare supplement plans H, I, and J and make an appropriate premium adjustment.

Long Term Care Insurance

What is long term care insurance?
"Long-term care insurance" is an insurance policy designed to provide coverage for at least 12 consecutive months for 1 or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, personal, or custodial care services provided in a setting other than an acute care unit of a hospital.

I heard that long term care insurance is guaranteed renewable, what does that mean?
Guaranteed renewable means that you have the right to continue the long-term care insurance by paying premiums on time. The insurance company does not have the right to make any change in any provision of the policy or rider while the insurance is in force unless mandated by law. The insurer cannot cancel the policy if your premiums are paid on time and there have been no material misrepresentations. Rates may be revised by the insurer on a class basis.

Do I have the right to return the policy after I buy it?
Your new policy provides 30 days within which you may decide, without cost, whether you desire to keep the policy.

Can an insurance company exclude or limit coverage?
The following is a list of circumstances where an insurance company can exclude or limit coverage:

• Preexisting condition: a condition for which medical advice or treatment was recommended by, or received from, a provider of health care services within the 6 months immediately before the effective date of the policy.
• State law provides that your replacement policy or certificate cannot contain new preexisting conditions or probationary periods. The insurer will waive any time periods applicable to preexisting conditions or probationary periods in the new policy for similar benefits to the extent such time was spent under the original policy.
• Mental or nervous disorders; however, this shall not be defined to include more than neurosis, psychoneurosis, psychopathy, psychosis, or mental or emotional disease or disorder and shall not permit exclusion or limitation of benefits on the basis of Alzheimer's disease or related disorders.
• Alcoholism or drug addiction.
• Illness, treatment, or medical condition arising out of any of the following:
  • War or act of war, whether declared or undeclared.
  • Participation in a felony, riot, or insurrection.
  • Service in the armed forces or units auxiliary to the armed forces.
  • Suicide, whether or not the individual was sane or insane at the time of the suicide, attempted suicide, or intentionally self-inflicted injury.

An insurance company cannot limit or exclude coverage by:

• type of illness,
• type of provider,
• territorial limitations,
• treatment,
• medical condition,
• or accident other than a motor vehicle accident

What is an inflation protection rider?
The inflation protection rider is an optional additional benefit to your policy that provides for benefit levels to increase to account for reasonably anticipated increases in the costs of long-term care services covered by the policy. Insurers must offer, at the time of purchase, the option to purchase a policy with an inflation protection feature with at least 1 of the following:

• Increases benefit levels compounded annually at a rate not less than 5%.
• Guarantees the insured the right to periodically increase benefit levels without providing evidence of insurability or health status so long as the option for the previous period has not been declined.
• Covers a specified percentage of actual or reasonable charges and does not include a maximum amount or limit.

How will I know what home health care services or assisted living services are included in the policy?
A long-term care insurance policy that provides coverage for home care services or assisted living services shall define and provide a detailed explanation in plain English of what home care services or assisted living services are covered. A long-term care insurance policy that provides coverage for assisted living facility stays shall define in plain English what assisted living facilities are covered.

What is a summary of coverage?
The summary of coverage provides a very brief description of the important features of the policy. You should compare this summary of coverage to summaries of coverage for other policies available to you. The summary of coverage will include, among other things, the following:

• A graph showing a comparison of benefit levels over at least a 20-year period of a policy that has an inflation protection rider and the benefit levels of a policy that does not have an inflation protection rider.
• Any expected premium increases or additional premiums to pay for automatic or optional benefit increases.

What do I need to do if I want to replace my existing long term care policy with one from a different insurance company?
When an agent determines that a sale will involve replacement, the agent must furnish a notice regarding replacement of accident and sickness or long-term care coverage. One copy of the notice will be kept by you and an additional copy signed by you will be kept by the insurance company.

Who sells long-term care insurance?
Agents that are licensed to sell health insurance products in Michigan.

Why do my long-term care premiums keep going up?
Long term care insurance is a relatively new type of insurance. There has not been a lot of experience with paying claims for the company to rely on when developing rates. When the initial rates were being developed there may have been erroneous assumptions made about how much the company would actually pay for claims. There may have been fewer people that dropped their policy than the insurance company had predicted. Fewer people may have bought the coverage than the insurance company had originally predicted. There may have been more people that bought an inflation protection rider than the company anticipated. The company may not have used strict underwriting practices, which allowed people to purchase the insurance that really should have been denied coverage.

What does an insurance company have to show to justify a rate increase?
Benefits under individual long-term care insurance policies shall be considered reasonable in relation to premiums provided the expected loss ratio is at least 60%. In evaluating the expected loss ratio, due consideration shall be given to all relevant factors, including:
(a) Statistical credibility of incurred claims experience and earned premiums.
(b) The period for which rates are computed to provide coverage.
(c) Experienced and projected trends.
(d) Concentration of experience within early policy duration.
(e) Expected claim fluctuation.
(f) Experience refunds, adjustments, or dividends.
(g) Renewability features.
(h) All appropriate expense factors.
(i) Interest.
(j) Experimental nature of the coverage.
(k) Policy reserves.
(l) Mix of business by risk classification.
(m) Product features such as long elimination periods, high deductibles, and high maximum limits.
(n) Premiums charged and losses incurred for other similar policies.

Will the insurance company ask me health questions when I apply for long term care insurance?
Yes, all applications for long-term care insurance policies must contain straightforward questions designed to assess the applicant's health condition. If an application contains a question that asks whether the applicant has had medication prescribed by a physician, it must also ask the applicant to list the medication that has been prescribed. If any medications listed in an application were known by the insurer or should have been known at the time of application to be directly related to a medical condition for which coverage would otherwise be denied, then the policy shall not be rescinded for that condition. The application must contain the following language:
"Caution: If your answers on this application are incorrect or untrue, [company] has the right to deny benefits or rescind your policy."

What else will be on the application?
Application forms are designed to find out if you have any other long-term care insurance policy in force or whether a long-term care policy is intended to replace any other accident and sickness or long-term care policy presently in force.

Can the insurance company require a prior hospital stay before it will pay benefits for long term care services?
The insurance company cannot require a prior hospital stay before benefits are payable.

What is a "Tax Qualified" long-term care insurance policy?
Eligibility for you to have benefits paid by the insurance company are based on the need for "substantial assistance" to perform at least 2 out of 5 activities of daily living or you have severe mental impairment which requires "substantial supervision."
Your doctor must certify that your disability will last at least 90 days. Your premiums may be tax deductible.
     Long term care insurance premiums can be added to your unreimbursed medical expenses that exceed 7.5% of your adjusted gross income
     The amount of premium that can be deducted depends on your age. Please talk to a tax advisor for more information.
If you purchased a Michigan approved long term care policy before 1997, the policy is "grandfathered" to be tax-qualified.

(c120377)