Ensuring Your Future

Selecting Insurance for You and Your Family's Financial Security

Written by Amy R. Joyner edited by Susan Wells Courtney

Financial planning for people with MS goes far beyond balancing the checkbook and saving for retirement. Insurance is a fundamental tool for providing income and asset protection. Investigating beyond the common issues of health insurance is essential for today's needs, as is having the right life insurance to provide for your family in the future.

People with MS are becoming very capable researchers at evaluating their insurance needs and analyzing choices. Options include private and government-sponsored health insurance, disability benefits, long-term care policies, and life insurance.

This article highlights types of insurance, government programs, and financial assistance for medications. Many websites are listed as resources, so if you don't have computer access, computers and internet assistance should be available at your local library. You may also call MSAA's Helpline at (800) 532-7667 to discuss any questions. Please see page 48 for helpful resources available through MSAA's Lending Library.

Health Insurance Options

When shopping for health insurance, doing your homework and keeping detailed lists for comparison will be beneficial. If you are able to get employer-sponsored coverage, this is a good place to start your list. But employer-sponsored coverage can be confusing, as employers often offer multiple plans. Sometimes, the premium for an employer's plan may be more expensive than obtaining insurance on your own.

In her MSN Money column, writer Liz Pulliam notes that slightly more than half of Americans can get health insurance through an employer, which usually subsidizes the cost. Pulliam points out that shopping around can pay off in the long run. Individuals seeking coverage should get several quotes, or use an independent insurance agent who can prepare comparisons.

Common Types of Health Insurance

"Fee for Service" or "Indemnity" Plans

These provide specific cash reimbursements for covered services, and participants may use any medical provider. Individuals enrolled in this type of plan pay a monthly premium along with any out-of-pocket charges accrued up to the policy's deductible. Once the deductible is satisfied, the insurance company starts paying its share of the approved medical costs, up to a certain percentage (usually 80 percent).

Indemnity plans typically pay for prescription drugs and diagnostic tests, in addition to physician and hospital services. "Basic Medical" coverage pays room costs and hospital care, while "Major Medical" takes over where Basic coverage ends, such as the expenses of a lengthy, high-cost illness.

Managed Care

Many types of medical management companies have contractual agreements with healthcare providers, administrators, and patients. Managed care is a pyramid of co-pays and deductibles. The "co-pay" is a set amount, determined by the insurance company, that participants must pay at the time they receive covered services or prescriptions.

The "deductible" is the dollar amount that one must pay before the insurance company begins to pay its share. Sometimes deductibles vary for the primary insured and his or her dependants who are insured on the same policy. Out-of-pocket limits may differ for each individual as well.

Types of Managed Care include:

• Preferred Provider Organizations (PPO) have preset co-payments that are paid at each visit. Out-of-network services cost patients much more. An annual deductible must be met, and total out-of- pocket expenses are higher than those of a Health Maintenance Organization (HMO); PPOs also require pre-authorization for most services other than those provided by the primary care provider.
• Health Maintenance Organizations use a prepaid insurance plan to provide specific services for a specific price from specific providers. Comprehensive care includes: physician visits, hospital stays, emergency room care, diagnostic tests, and therapy. Some include prescription drugs.

With an HMO, the insured person must choose a Primary Care Physician (PCP) within the network, who oversees care and specialist referrals. If a patient receives care out-of-network, the HMO will not pay, except for certain, pre-arranged situations.

Understanding the Differences

A popular website, www.insure.com, offers advice on securing the proper type of insurance for individual needs. Insure.com advises people who are young and healthy to opt for lower premiums and higher co-pays. Older people, those with children who see doctors often, or those with a chronic health condition like MS, are advised (by Insure.com) to choose higher premiums and lower co-pays.

Sources from Insure.com also suggest getting answers on the following issues:

• whether or not a policy covers the product or service you need
• any restrictions to obtaining coverage
• seeing approved physicians, pre-approval, and fees involved
• cost, visit, and time-period limits to benefits, and whether time is based on a calendar year or fiscal year
• whether or not the insurance company uses a formulary (a listing of pharmaceuticals and their applications) to determine what medications are pre- approved for full payment, partial payment, or no payment

Prescription Drug Card

Many insurance plans have a contractual agreement with a separate company to manage prescription drug benefits.

With a prescription drug card, a co-payment may be required, and the pharmacy typically files the appropriate insurance claims. Some plans also require that prescriptions are filled at "in-network" pharmacies, names of which are provided by the insurance company or your employer's human resources department. Using an out-of-network pharmacy could mean that your prescription will not be covered.

Under some insurance plans, payment for prescriptions may be due up front, when the medication is purchased. Participants must then file a reimbursement claim.

Financial Tools for Medical Expenses

Insure.com provides information on financial planning tools other than insurance policies that can save you money. Government-allowed savings accounts have been setup to give participants a tax benefit.

A Flexible Spending Account (FSA) allows employees to pay for out-of-pocket health and dependent care costs on a pre-tax basis. Over time, this lowers payroll-related taxes for the employer and employees.

A Medical Savings Account (MSA) was a tax-deferred trust in which you set aside money to pay for out-of-pocket healthcare expenses and save for future medical costs. MSA accounts expired at the end of 2003, and have been replaced by the Health Savings Account (HSA). The fundamentals are the same — participants save money specifically for health costs while receiving a tax break. HSA funds not used in one year can roll over to the next. Unlike MSAs, both workers and their employers can contribute to the accounts.

COBRA and HIPPA's Extended Coverage

If you already have health insurance through an employer and leave your job, you don't necessarily lose your health coverage. Your benefits could continue under a federal law known as COBRA (Consolidated Omnibus Budget Reconciliation Act).

In general, your former employer's group plan should provide individual or family healthcare coverage for up to 18 months for someone without a disability, at your own expense. Individual plans that you buy privately, are not subject to COBRA law. Your human resources department, state insurance office, or health plan representative can give you the details on how COBRA eligibility and coverage applies specifically to you and your family.

Strict guidelines dictate how long a person can remain on COBRA, as well as how premiums are paid. People eligible for Social Security disability benefits may receive COBRA coverage for 29 months and certain qualifying events may permit a beneficiary to receive a maximum coverage of 36 months.

Cost is a major consideration with COBRA, as you'll be required to pay the full premium. With a chronic illness such as MS, however, going without COBRA could put you at risk financially. Plan participants will receive an election notice within two weeks of leaving the job and have up to 60 days to decide to continue insurance coverage through COBRA. For more information, you may log onto www.dol.gov (for the United States Department of Labor) and go to COBRA by searching within the site, or call (866) 444-3272.

If you are wavering after losing a job and create a gap in your coverage of 63 days, you'll lose your health insurance rights under the federal HIPAA law (Health Insurance Portability and Accountability Act). HIPAA guarantees people who have had continuous health coverage, without a gap of 63 days or more, can't be denied insurance even if they have a pre-existing condition, such as MS. So if you forgo COBRA and experience more than a two-month gap in coverage, you would lose your HIPAA protection when you try to buy insurance. For more information, go to www.cms.gov/hipaa; select "HIPAA" Insurance Reform, and then select "What is HIPAA" under the topics section on the right. You may also contact the centers for Medicare and Medicaid Services at (877) 267-2323.

State Assistance with Insurance

Many states have health insurance programs as an option of last resort for those who are medically uninsurable and considered high risk. The policies traditionally have high premiums, high deductibles, and may have caps on prescription drug coverage. You may contact your state insurance office for more information. Their specific contact information may be found in the phone book's blue pages or by going to www.statelocalgov.net.

You may also log onto www.phrma.org for a listing of drug programs that provide drugs to physicians whose patients cannot afford them. That site includes contact information on all United States' state and local government insurance programs too.

Medicare

Medicare is the federal government's health-insurance program for 40 million people who are either age 65 or older, or younger people with certain disabilities. Medicare Part A covers inpatient hospital care, skilled nursing care, home health care, and hospice care. Part B covers doctors' services, outpatient services, durable medical equipment, and home health care. Part A has no monthly premium, while Part B has a monthly fee of roughly $59 (in 2003).

The original Medicare plan is a traditional fee-for-service arrangement, which means you can go to any healthcare provider who accepts Medicare. You pay a deductible, and then you and Medicare each pay your pre-set annual share of remaining costs. Choices can be less restricted with traditional Medicare than with other Medicare options.

Though you can go to any doctor who accepts Medicare's set payment, your costs could still be rather high, and Parts A and B don't cover all services. For these reasons, many people purchase Medigap insurance to help cover extra costs, including prescription medicines. Private insurance companies offer up to 10 government approved types of Medigap policies.

Reform is Happening

Last December, President Bush signed the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, making the broadest changes in Medicare's 38-year history. Some details are still developing, but the Prescription Discount Cards are active.

The website www.whitehouse.gov explains how Americans with disabilities are likely to be affected by the changes. Main points include: Medicare participants will be able to choose the best healthcare plan for their needs; prescription drug coverage has been added to traditional Medicare; preventive care has been expanded; and private insurance companies can compete in the marketplace without government price-setting.

For information on the demonstration program for the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, please see page 31 of this issue.

Medicare-Approved Drug Discount Cards

If you have Medicare Part A or Medicare Part B, or both, you may be able to save more money with a Medicare Drug Discount Card. Enrollment forms for the cards are available on www.medicare.gov or by calling 1-800-MEDICARE.

If you have Medicare, you may be eligible for a Medicare-approved drug discount card. You will not qualify if you receive financial assistance for drug costs from other sources.

Signing up for the card is voluntary, with no deadline or late-enrollment penalty. The maximum card fee is $30 per year, but some cost less. If you want to change to another Medicare-approved card for 2005, you can make that choice from mid-November until the end of December 2004. You can only have one card at a time.

If you do not have other drug coverage and meet income criteria, you might qualify for a $600 credit on the Medicare-approved drug discount card. You can use the credit toward most prescriptions, even those not on the discount drug list. If you get the $600 credit, you will still have a five to 10 percent co-pay for each prescription.

For more information on Medicare, please log onto www.medicare.gov. You may also call (877) 267-2323.

Medicaid

Because each state has different rules, which change, visit www.medicaid.com or call (877) 267-2323 for the latest information. In general, Medicaid is a program that pays for medical assistance for qualifying individuals and families with low incomes and resources. It is jointly funded by federal and state governments.

Following national guidelines, states establish eligibility standards; determine the type, amount, duration, and scope of services; set the rate of payment for services; and administer their own program. Some of the basic services that must be offered in each state include: hospital and physician services; surgical-dental services; nursing facility services; home healthcare; family planning; rural health services; laboratory and x-ray services; nurse-midwife services; and early, periodic screening, diagnosis, and treatment for individuals under age 21.

Medicaid pays providers directly. Medicaid-approved providers must accept the Medicaid reimbursement as payment in full. States may impose deductibles or co-payments, although emergency services and family planning must be exempt from such co-payments.

Financial Assistance Programs for MS Medications

Betaseron® Indigent Patient and Support Program is available to patients who are uninsured and have reduced annual incomes and resources. Applications and specific criteria may be obtained by calling (800) 788-1467. Help may also come from The Betaseron Foundation. For information, call (800) 948-5777, or log onto www.betaseronfoundation.org.

The Avonex Alliance program provides services to determine insurance coverage, assist with insurance authorization, and explore options for additional funding and reimbursement support. You may contact MS ActiveSource at (800) 456-2255 or by going to www.msactivesource.com.

Teva Neuroscience, Inc., the maker of Copaxone® also has a patient assistance program. The Shared Solutions® benefits investigation staff can advise you on insurance questions about Copaxone, and can also assist in finding medical reimbursement assistance programs. Call (800) 887-8100 or go to www.sharedsolutions.com for more information.

MS LifeLines offers a patient assistance program which provides help with the funding of Rebif® for individuals who are in financial need. Furthermore, MS LifeLines works with patients to explore reimbursement options irrespective of need. To contact them, call (877) 447-3243 or log onto www.mslifelines.com. Individuals using Novantrone® may also learn about possible financial assistance by calling the same number at MS LifeLines.

The National Organization for Rare Disorders (NORD) assists with many chronic conditions. Visit www.rarediseases.org, to see how NORD handles a premium co-pay assistance program for individuals with MS, so they can afford their FDA-approved medications. To apply, call (800) 247-4963.

Disability Insurance

According to the U.S. Census Bureau, every American has a one in five chance of becoming disabled. A 1997 census study reveals that more than 152 million people between the ages of 21 and 64 have some form of disability.

These odds are not a problem for people who have substantial savings. But for people with a high-cost chronic illness, setting aside money for a rainy day is difficult, if not impossible. Insure.com has several articles online explaining this common predicament.

Financial writer Liz Pulliam points out that people often think of their home or 401K as their biggest asset. She says it's actually your ability to earn money. Chances are, most people don't have enough protection should they be unable to work for more than a few weeks due to illness.

Short and Long-Term Disability Coverage

Short-Term Disability (STD) pays a percentage of your salary if you become temporarily disabled. According to Insure.com, a typical STD policy provides you with a weekly portion of your salary, usually 50 to 66 percent for 13 to 26 weeks. Most STD policies have a "cap" of a maximum benefit amount per month.

Long-Term Disability (LTD) picks up where short-term disability (STD) stops. Insure.com explains that once STD benefits expire (generally after three to six months), the LTD policy pays you a percentage of your salary until you turn 65. Paying premiums with after-tax dollars will also provide some tax benefits.

About 25 percent of the nation's workers have LTD coverage through their jobs, according to United States' Department of Labor statistics. Either their company pays for the insurance, or the workers can buy it at reasonable group rates.

Though employer-sponsored coverage is the easiest to get, if it's not offered or you're self-employed, your next option is to seek a policy through a professional or trade organization. The cost of membership could pay for itself with its access to disability insurance.

Variables in Coverage

Insure.com points out that the first variable in disability insurance is the amount of the monthly benefit, i.e., how much and for how long the policy will pay. The next variable is their definition of disability, specifically, whether it is "own occ," or the inability to perform the duties of your specific occupation, or "any occ," the inability to perform the duties of any job for which your education and training make you qualified.

Yet another variable is the amount of time you must be disabled before benefits kick in and you begin receiving payments. Waiting periods range from one week to two years, and the longer you agree to wait, the less your disability policy will cost.

Insure a Care Partner

An often overlooked necessity is including insurance for your care partner in addition to your own coverage. If you rely on your partner for physical assistance, emotional support, and financial matters, insurance for healthcare and unforeseen disability for your partner is essential.

Social Security Disability Insurance

If you are currently working, or ever held a job that deducted Social Security taxes, you probably already have one form of disability insurance: Social Security Disability Insurance (SSDI). Qualifying for SSDI is very difficult. More than 80 percent of applications are denied the first time. Individuals who are turned down may find that hiring a lawyer for an appeal can assist with getting this decision reversed.

For a free estimate of the retirement, disability, and survivors benefits that might be payable to you and your family, call the Social Security Administration (SSA) toll-free at (800) 772-1213. Have the appropriate Social Security numbers available. You may also visit a local SSA office, or log onto www.socialsecurity.gov/disability.

Just as with retirement benefits, your disability income is dependent upon the amount on which you have been taxed for Social Security. SSDI benefits are great to have if you qualify, but they usually aren't enough for you and your family to maintain even the most basic standard of living.

SSDI benefits include monthly pay, Medicare health insurance, and if your disability allows it, employment-supported programs that help you get back to work. Benefits might also include Supplemental Security Income (SSI), which is explained later in this article. You may receive SSDI benefits until you reach age 65 when disability benefits automatically convert to retirement benefits. Benefits may be reduced by other coverage, such as worker's compensation or private insurance. Applying as soon as you are disabled is a good idea, because approval will likely take 60 to 90 days or more.

After you start receiving SSDI, you may want to try working again. Special "work incentives" such as a trial work period of nine months (not required to be consecutive) will allow you to keep your cash benefits and Medicare while you attempt returning to work.

The Ticket to Work and Self-Sufficiency Program began in 1999 as an employment program for people with disabilities who are interested in going to work, but are afraid of losing health insurance while trying. For beneficiaries, the program aims to increase work opportunities, vocational rehabilitation (VR), and other support services from public and private providers, employers, and other organizations called Employment Networks (ENs).

SSA determines which SSDI and SSI beneficiaries are eligible to receive "tickets." The beneficiary takes the ticket to an EN or VR agency where work is assigned. SSDI suspends their Medical Continuing Disability Reviews (CDRs), as long as the beneficiary demonstrates that he or she is making "timely progress" and/or working to meet the goals identified in the work plan.

SSDI Review Process

All people receiving disability benefits must have their medical conditions reviewed from time to time. Your benefits will continue unless the medical review shows strong proof that your condition has improved and you can return to work.

During a review, a team consisting of a disability examiner and a doctor will review your file and request your medical reports. An important policy amendment allows the severe fatigue of MS as a qualifying symptom for obtaining benefits. A doctor's verification is essential. When a decision is made, if they decide you no longer are disabled and you disagree, you can file an appeal.

Please note that people can continue to work and receive SSDI beyond a trial program period. Many individuals with MS work part time, and provided they do not exceed their state's maximum for monthly earnings, they will continue to receive their benefits. Income limitations vary by state, so individuals should contact their local Social Security office for more information.

Supplemental Security Income

Although offered through the SSA, Supplemental Security Income (SSI) has different eligibility requirements. They are based on your financial need, not past earnings. SSI does not come out of Social Security taxes as do the other benefits, but rather is funded by a portion of federal taxes. Some states also contribute.

To receive benefits, you must be 65 or older, blind, or disabled, and have low income and few assets; children might qualify for SSI disability payments too. The amount you'll receive depends on your financial situation and where you live. Generally, if you qualify for SSI, you'll also qualify for Medicaid, food stamps, and other state welfare programs. For more information, please go to www.ssa.gov/notices/

supplemental-security-income or call SSA at (800) 772-1213.

Long-Term Care Insurance

Long-term care insurance should be considered by those with significant assets and income that will need protection in case of a long-term disability. This coverage is needed because Medicare, Medicare supplements, and health insurance won't cover most long-term care expenses.

Vicki Lankarge, a writer with Insure.com, says the younger you are when you get the policy, the cheaper your premiums will be. On the other hand, most people will pay those premiums for a longer time before getting to use the benefits.

She says that the best time to buy long-term care insurance is between ages 50 and 55. According to the American Health Care Association (AHCA), a policy costing $800 annually when you're 55 will cost you nearly twice as much if you wait to buy it when you're 65. If your employer sponsors an attractive long-term care group plan at an affordable price, you may want to consider purchasing such a plan before you're 50.

To determine eligibility for long-term insurance coverage, insurance companies rely on your ability to complete "activities of daily living," or ADL. Typical policies pay benefits when an insured person can't do two or three ADLs, such as bathing, dressing, eating, toileting, and transferring in and out of bed.

People over 85 or those with pre-existing medical conditions probably can't get coverage. Most plans require an insured person to be receiving skilled nursing care before providing coverage. Good long-term care policies cover care at all levels: adult day care; assisted living facilities, residential nursing sites; and facility care services that provide nursing as well as speech, physical, and occupational therapies.

Www.consumerlawpage.com is a helpful website. On this site, attorneys explain major components used for calculating how much insurance you should buy.

Life Insurance

On MSN, Liz Pulliam Weston recently reported that people are overwhelmed when shopping for life insurance. The choices may be difficult, such as whether to buy term, permanent, or a combination of both. To follow is an overview of what's available.

Term life policies offer death benefits only, so if you die, your beneficiary receives a cash benefit. If you live after the policy's term expires (10, 20, or 30 years, for example), no money will be reimbursed.

Permanent life policies offer death benefits and a "savings account," which Weston says is often called "cash value" or "account value." Even when still alive, you usually can access at least some of, and possibly more than, the amount you spent on your premium. You get this money back either by cashing in the policy or by borrowing against it.

The premiums paid into a permanent life policy are more expensive than term ones. Usually, the longer the policy has been in force, the higher the cash value, since money paid has been invested and earning interest.

Term vs. Permanent: The Debate

The debate centers on cash value. The initial annual premium is usually much higher for a permanent life policy than for term. Premiums for permanent life usually stay the same over the years, and the money is invested. The ideal situation is to hold a permanent life policy long enough to reap some investment benefit.

Which type of plan you choose depends on how long you want to keep your policy. But Weston offers these guidelines: if you plan to keep the policy for less than 10 years, term is clearly the answer, though premiums for term life usually increase; if you plan to keep the policy for more than 20 years, permanent life is probably the way to go. You may want to consult an expert who can run the comparison for you.

You may choose from three main types of permanent insurance, and the one with the most guarantees is traditional whole life coverage. It has a guaranteed premium, along with a minimum guaranteed cash value and death benefits. Weston suggests avoiding policy riders, except one that suspends your premium payments and keeps the policy in place if you become disabled.

Universal life is more competitive with other financial service industries. It has maximum guaranteed premiums, with a minimum guaranteed cash value and death benefits. Instead of dividends, universal life policies earn annual interest.

Variable life insurance has the fewest number of guarantees and therefore offers the greatest potential for cash-value increases. Annual premiums and a minimum death benefit are guaranteed. Cash value, however, is not guaranteed, and you will need to select the investments for your policy from money markets to aggressive growth funds.

Insurance ratings are essentially letter grades assigned to insurers based on their financial strength. The ratings can reassure you that you'll get paid if you ever file a claim. Their ratings are just like grades in school, with an "A" assigned to the best. Reputable sources for ratings include: A.M. Best Co. at www.ambest.com; Fitch Ratings at www.FitchCDx.com; Moody's Investors Services at www.moodys.com; and Standard & Poor's at www.standardandpoors.com.

The Value of Planning Ahead

Insurance is a financial necessity for people living with a chronic health condition. Whether you're dealing with health insurance for routine care and prescription drug coverage, government or agency-sponsored programs, or insurance for disability, long-term care, and life, the options are seemingly endless. And the choices become more complicated as people get older or their health becomes more uncertain.

Protecting your financial security for you and your family can be as important as protecting your health, something every person with MS is coming to know. Helpful information abounds on the internet and in many recent publications. If you have devoted the time to make educated decisions, when the time comes, you will have the financial support you need.

References

Cooper L.D., Insurance Solutions, Plan Well — Live Better, Demos Medical Publishing, New York, 2002.

Northrop D.E. and Cooper S., Health Insurance Resources: Options for People with a Chronic Disease or Disability, Demos Medical Publishing, New York, 2003.

Stolman M.D., A Guide to Legal Rights for People with Disabilities, Demos Publications, New York, 1994.

Information for this article was also derived from the following websites:

www.insure.com

www.medicare.gov

www.socialsecurity.gov

www.medicaid.com

www.whitehouse.gov

www.phrma.org

Back