Over the holidays, Deanne had mentioned that shortly before her 65^th birthday she had worked with a health insurance advisor to sign up for unbundled Medicare insurance coverage. As Miles recounted their discussion to you, he noted that Deanne is enrolled to receive hospital insurance, medical insurance and coverage for prescription drugs. To ensure that Deanne is receiving the necessary health insurance coverage through Medicare, Miles would like you to identify the basic provisions associated with each of the insurance coverages that Deanne had indicated and clarify how these coverages work. Of particular interest to the Jarretts is Deannes prescription drug coverage because she has significant monthly prescription drug costs and they had recently learned about a lapse of coverage that occurs with Medicare. Finally, Miles has asked for you to list any shortcomings of unbundled Medicare plans Deanne has selected.

Grandparents

Miless mother, Deanne, age 65, was widowed four years ago when her husband, Marvin, died at age 60. Her living expenses total $1,400 per month, and her only income is $900 a month from Social Security and $500 a month from Miles and Erykah. Deanne lives near the Jarretts in a small senior community apartment. She has limited assets, approximately $25,000, but is expected to receive $100,000 as beneficiary of a life insurance policy owned by a much older brother. Her brother has been diagnosed with terminal cancer and is in hospice care. It is the Jarretts understanding that Deanne will either be able to receive the $100,000 as a lump-sum, leave the $100,000 with the insurance company and receive interest each year, or elect a lifetime annuity payout.

Deanne has a partnership long-term care policy that she purchased 10 years ago. The policy had a maximum coverage amount of $100,000, which grew to $125,000 with its inflation protection rider. The policy includes provisions for both nursing home care and home health care. The Jarretts assume they will soon need to assume the $1,000 annual premium payments. Miles feels the policy may no longer be necessary because his mother is covered by Medicare and is expected to inherit $100,000, which could be used to pay for long-term care in the event of an extended need.