The national guide covers Medicare (Parts A, B, C and D), Medigap plan letters, Medicaid and the basics of long-term care. Illinois regulates Medicare supplement under 215 ILCS 5/363 and 363a and 50 Ill. Adm. Code 2008. Long-term care is regulated under Article XIXA (215 ILCS 5/351A) and 50 Ill. Adm. Code 2012. Illinois also has an LTC Partnership (215 ILCS 132).

National concepts in brief

• Part A covers hospital care. Part B covers physician and outpatient care. Part C (Medicare Advantage) plans are run by private insurers under contract with Medicare. Part D covers prescription drugs.
• Medigap policies are standardized lettered plans that fill Original Medicare's gaps.
• Medicaid is the needs-based program funded jointly by the federal government and the states.

Medicare supplement in Illinois

Enrollment and eligibility:

• Open enrollment: no denial or health-based pricing for six months from when the person is 65 and enrolled in Part B (50 Ill. Adm. Code 2008.74).
• Under-65 disabled applicants can't be denied if they apply within six months of first enrolling in Part B. Their rate is capped at the insurer's highest filed rate for that plan for people 65 and older (215 ILCS 5/363(6)).
• Birthday rule: people 65 to 75 who already have a Medicare supplement get a 45-day window starting on their birthday each year. They may switch to a plan with equal or lesser benefits from the same insurer or an affiliate (215 ILCS 5/363(8)).
• Preexisting conditions: the look-back is limited to six months, and no exclusion may apply after the first six months of coverage (215 ILCS 5/363(5)).

Free look and paperwork:

• Free look: 30 days (215 ILCS 5/363(4)).
• Outline of coverage: given when the application is taken, with a signed acknowledgment (215 ILCS 5/363a(6)).
• Buyer's guide: applicants also get the Guide to Health Insurance for People with Medicare.
• Policy Check List: completed in duplicate at the point of sale (215 ILCS 5/363a(3)(f)).
• Replacement notice: given before issue or delivery (215 ILCS 5/363a(10)).

Marketing:

• Advertising must state that the insurer and agent are not connected with Medicare (215 ILCS 5/363a(2)).
• Titles like "Medicare consultant" are prohibited (215 ILCS 5/363a(4)).
• Cold-lead advertising is prohibited (50 Ill. Adm. Code 2008.101).
• Buyers get a notice that the policy may not cover all medical expenses.

Other rules:

• No duplicate policies: selling someone more than one Medicare supplement policy is prohibited (50 Ill. Adm. Code 2008.102).
• Loss ratios: at least 65% for individual policies and 75% for group (215 ILCS 5/363a(7)).
• Commissions: first-year commissions may not exceed 200% of second-year commissions, and renewals stay level for at least five years (50 Ill. Adm. Code 2008.82).
• Unapproved policies: knowingly selling one is a Class 3 felony (215 ILCS 5/363a(9)).

Long-term care in Illinois

Definition: LTC insurance covers at least 12 consecutive months, in a setting other than an acute care hospital unit (215 ILCS 5/351A-1).

Benefits:

• ADL trigger: the policy can't require the loss of more than three activities of daily living, or cognitive impairment (50 Ill. Adm. Code 2012.128).
• No prior hospitalization can be required (215 ILCS 5/351A-6).
• Preexisting conditions may be excluded only for losses in the first six months (215 ILCS 5/351A-5).
• Inflation protection: an option at least as good as 5% compounded annually must be offered (50 Ill. Adm. Code 2012.80).

Contestability: the misrepresentation must be material and related to the condition for which benefits are sought (50 Ill. Adm. Code 2012.83).

Sales:

• Shopper's guide and outline of coverage: delivered before an application is presented (215 ILCS 5/351A-8; 50 Ill. Adm. Code 2012.140).
• Lapse protection: the applicant names a person to receive lapse notices, or signs a waiver (50 Ill. Adm. Code 2012.55).
• Free look: 30 days (215 ILCS 5/351A-7).
• Training: one-time training of at least 8 hours, then at least 4 hours before each renewal (50 Ill. Adm. Code 2012.121).

LTC Partnership (215 ILCS 132):

• Asset disregard: every $1 of benefits paid by a partnership policy protects $1 of assets when the person qualifies for Medicaid.
• Inflation protection by age at purchase:
  • under 61: compound inflation protection of at least 3%;
  • 61–75: simple or compound;
  • 76 and older: optional.

Accelerated benefits and viatical settlements

Accelerated benefits (50 Ill. Adm. Code 1407):

• Terminal illness means death expected within 24 months.
• These riders may not be marketed as LTC insurance.
• The use of the proceeds can't be restricted, and a lump sum must be offered.
• An assignee or irrevocable beneficiary must sign an acknowledgment before payment.

Viatical settlements (215 ILCS 159):

• Who may broker: a producer who has held a resident life license for at least one year, with 4 hours of one-time training and 4 hours every 24 months.
• Rescission: the viator may rescind until the earlier of 30 days after signing or 15 days after receiving the proceeds.
• Two-year rule: settlements within two years of issue are prohibited unless an exception applies, such as terminal or chronic illness, divorce or retirement.
• STOLI is illegal.

Common exam traps

• Medigap and LTC free looks are 30 days.
• The Illinois Medigap birthday rule gives 45 days, for ages 65–75, to buy equal or lesser coverage.
• Medigap loss ratios are 65% individual and 75% group.
• LTC can't require prior hospitalization or the loss of more than 3 ADLs.
• Partnership policies for buyers under 61 need 3% compound inflation protection.