gmhTODAY 08 gmhToday May June 2016 - Page 44

By Michele Campbell, Independent Agent Michele has been in the insurance business for over 25 years and specializes in Medicare, individual health and life insurance. She is passionate about helping her clients to find the right plan to fit their needs. She is an active member of the Gilroy Chamber of Commerce, Gilroy Rotary and Gilroy Leadership Class of 2015. Visit or call 408.848.2271. LONG TERM CARE The need for Long Term Care has never been greater than it is now and it will only be needed more as each generation is living longer. If you haven’t heard the scary statistics, here are a few: About two -thirds of Americans will need long-term care; The average annual cost of a private room in a nursing home is $87,600; the length of stay can run three years or more. Do a few quick calculations, and it’s easy to get very worried about the potential fi nancial impact on your retirement plan. But recent research is shedding new light on the risks. The key fi nding: The odds of needing nursing-home care may be higher than previously thought, but the length of needed care is shorter, with an average stay of up to about a year and a half. The new data has experts talking about the implications for revamping our current approach to insuring against the risk of high long-term care expenses. How much nursing-home care is being paid for by Medicare? The Medicare program isn’t designed to cover long-term care, but it does cover up to 100 days of skilled nursing care following a hospitalization. Long-term care still should be regarded as a significant retirement risk. Many policy experts view long-term care as one of the most important unsolved pieces of the nation’s health-care puzzle and many ideas are being tossed around. While politicians on both sides of the isle are throwing around their solutions to supply this need, there are some very good options out there now. Below is one strategy but there are many others. Call us to help analyze your situation and offer the best solution for you. Alternative Strategy for Long-Term Care: One strategy is having your coverage built into a life insurance policy, where the company provides cash from the face value of the life policy to cover in-home care or long-term care costs if you incur them. This cash reduces the benefits paid to the beneficiary. This way, you don’t have to spend thousands of dollars on a long- term care policy, only to pass away and never use it. With a life policy, even if you don’t use it, your beneficiary will get the full life insurance payout. There are several types of life insurance to purchase to satisfy this need. MEDICARE INSURANCE Thinking of staying on Cobra because it’s easy, you know it, or maybe you have a spouse that’s under 65 and they still need coverage? Think again! Avoid the Part B Penalty! If you are 44 GILROY • MORGAN HILL • SAN MARTIN MAY/JUNE 2016 eligible for Medicare and you are planning on retiring, be sure to follow the correct guidelines or you may be penalized by Medicare. Once you leave your employer’s group plan, and you are eligible for Medicare, you must take out Part A and Part B and pick up a Part D (drug) plan. Medicare gives you 8 months from the time you leave your group plan to get Part B in place. [You should have signed up for Part A when you turned 65, but if you did’t, then you need to get that too.] If you pass this eight months, then you cannot enroll in Part B until Medicare’s General Election Period, January 1st through March 31st, and that will give you a Part B effective date of July 1st. Then you can add additional coverage, also effective July 1st. Part B Penalty: If you fall into the above situation and you end up taking Cobra, this is not considered creditable coverage, and you’ll have to pay a late enrollment penalty for as long as you have Part B. Your monthly premium for Part B may go up 10 percent for each full 12-month period that you could have had Part B, but didn’t sign up for it. UNDER 65 INDIVIDAL HEALTH INSURANCE If you are under 65 and you go on a Cobra plan, in most cases you will be fi ne and you will not have any penalty. This is considered creditable coverage under the ACA (Affordable Care Act) guidelines as long as that Cobra plan meets the ACA requirements of minimum essential coverage. Most Cobra plans meet these guidelines, but if you are concerned, contact the Cobra Administrator to advise you. Be aware though, if you are mid-year and outside of open enrollment, and you decide to drop the Cobra plan, you cannot do that until the next Open Enrollment period. OPEN ENROLLMENT TIMEFRAME NOVEMBER 1, 2016 - JANUARY 31, 2017 Cobra extends your coverage for 18 months and if you’re offered Cal-Cobra you have another 18 months. If you have either of these situations and your coverage runs out mid-year, then you will be able to get coverage through an individual plan or through Covered California because you’re not choosing to leave the plan, you are losing coverage. Basically, the coverage has run its course and is ending. This gives you a Special Election Period and allows you to purchase new coverage within 60 days. If you miss the 60-day window, then you will have to pay a penalty.