A Beneficial Conundrum

Well, actually a Beneficiary poser: Long time life insurance client needs to change/update his beneficiaries, which is normally the most mundane thing we do (other than maybe address changes). But, there a twist: he has four (4!) primaries listed, including a trust for one of his adult children.

Of note: my client named zero (0) contingent beneficiaries. Typically, these are folks "second in line" in case the primary predeceases the insured. Not required, or even typically critical, but kinda comes into play here.

Okay, so far not really a big deal, but then he throws me a curve-ball:

"Question, in the unfortunate event that [spouse] and I should pass away together, would her portion automatically go to [son]? How does that work and how do I make sure there is some sort of waterfall to protect my money and those beneficiaries I have listed?"

Hunh.

So, I had a thought, but really not very certain of its validity. So I reached out to our carrier rep, who also had an opinion, but wasn' very confient oin that, either. ZSo, he bumpled it up to the Vice President of Claims, who (very) helpfully replied:

"The rules vary by state and are usually called the Simultaneous Death Act (or similar).

In Ohio, the statute says this:

Except as provided in section 2105.36 of the Revised Code, an individual who is not established by clear and convincing evidence to have survived an event by one hundred twenty hours is deemed to have predeceased the event for purposes of a provision of a governing instrument that relates to the individual surviving an event, including the death of another individual.

So, what that means is that, if the husband and wife die in the same accident, then it would be assumed that the insured died first, unless there is clear and convincing evidence that the beneficiary survived for 120 hours after the accident.   The contingent beneficiary would receive the proceeds.  If no contingent, then it would go to the policyowner’s estate.

If the spouses die two days apart, then it would still be the same scenario, since the beneficiary did not survive for 120 hours.  If it is six days apart, and we have clear and convincing evidence of such, then the proceeds would go to the Estate of the beneficiary, because they survived the insured by more than 120 hours."

Hunh!

So the bottom line is that, if they're both hit by a bus and die simultabeously, the wife's portion of the policy would be paid into my client's estate. Which is I think what he was trying to ascertain.

Regarldess, I was told that the carrier would even be using this as part of a training module. Cool beans!

Also, #LearnedSomethingNew.

[Hat Tip: FoIB Brian D]

Re-thinking transparency

We first blogged on transparency in health care pricing and consumer-centric health care in 2005:

"One of these tools is the pilot transparency program."

So yes, we've long been advocates of what I called the McDonald's Model:

[click to pic to embiggen]

But FoIB Bob Graboyes of the Mercatus Institute offers a contrarian's take:

HEALTHCARE TRANSPARENCY MANDATES — FIRST, DO NO HARM: Op-ed on a point that Jessie McBirney and made in a recent @mercatus paper: why broad-brush healthcare price transparency mandates can paradoxically REDUCE competition and INCREASE prices. https://t.co/o2X1YoAYoQ

— Robert Graboyes (@Robert_Graboyes) August 31, 2020

Interesting.

Teacher's Pet?

This isn't necessarily huge, but it was kinda heartwarming:

Earlier this week, got a call from a nice lady, referred to me by another client (always a nice warm fuzzy), who had a dilemna:

She had just retired from teaching, and was trying to decide between taking the State Teacher's Retirement (STRS) health insurance plan, which was quite extensive, and quite expensive or opting for a short term plan (she wasn't interested in even discussing an ACA-compliant plan). Better still, she had to decide literally that day, because she had to let the STRS folks know by the following morning.

And yeah, I wondered why she'd let such a potentially financially impactful decision go 'til the last last minute, but I could sense the distress in her voice, so I simply said:

"Look, if you can swing the STRS premium for a month or two, then pull that trigger. Doesn't mean you're married to it, just gives us space to find other alternatives."

I could literally hear the sigh of relief as she took that in. She thanked me profusely, and said she'd be in touch.

I really like my job, and sometimes I really love it.

Spoiled baby food

This in from FoIB Jeff M:

"The [North Carolina insurance] department says an examination of 300 claims from over seven years revealed many violations with Gerber Life’s accidental death and dismemberment policies."

Ooops!

The carrier, primarily known for its "$1 for the first 6 months" juvenile life insurance plans, has been ordered to pay over $3.5 million in fines, recoveries and interest.

Not a good look there, folks.

Interesting HSA query

Recently, one of my clients had occasion to interview a potential new hire, and to explain how their benefits include both an HSA-compliant health insurance plan and that the employer contributed a non-trivial amount into it.

The potential new hire replied that he was a big believer in HSA's, and already had an established one. My client reached out to me to see if that would pose any issues.

I, of course, reached out to our gurus at FlexBank/Navia, who replied:

"As long as he hasn’t fully contributed, the employer can contribute into his already established HSA."

Nice!

Fom the P&C Files: Flo meets Darth

 

Medical Kidnapping. Wait. What?

You may have read about a young teenager named Justina Pelletier, from West Hartford, CT. In 2013 Justina was kidnapped by a hospital where she had been admitted for treatment.   Her kidnapping and other similar incidents have given rise to the term "medical kidnapping".  Medical Kidnapping is a growing phenomenon that bears watching.  

I think there is not a more accurate term for what happened to Justina Pelletier than kidnap.  Justina’s ordeal, and that of her family, is described here and here.  Her story is worth reading.  Fair warning:  The story will upset you, especially if you are a parent or a medical care professional

 

The accounts are comprehensive so I’ll add only the following observations of my own. 

 

 (a)  the core issue in the Pelletier case seems to be a scientific and clinical fight about whether mitochondrial disease is actually a physical ailment or primarily psychological.   This type of issue may be present in other cases where there is overlap between the physical and the psychological. Connection with insurance = Do insurers consider a diagnosis of mitochondrial disease consistently as either medical or psychological? 

 

(b)  It is clear that cases of Medical Kidnapping are on the rise. See here and here and here and here.   You can search for yourself by entering Medical Kidnapping and just start reading 

 

 Connection with insurance = How might insurance for mitochondrial disease change as the incidence of the disease rises?  

(c)  Justina’s parents sued Boston Children’s Hospital charging medical malpractice.  Nearly 7 years after Justina’s 2013 admission to BCH, a jury took fewer than 6 hours find BCH not guilty.

Connection to insurance = How might hospital and professional liability insurance coverage/ limits  be affected as the incidence of this diagnosis continues to rise?  

(d)  I have been unable to find any account of specific reasons behind the jury verdict.  For whatever reasons, the jury believed the hospital not the parents.  But consider.  Boston Children’s Hospital is widely thought to be America’s #1 pediatric hospital.  Its teaching affiliate is Harvard Medical School. BCH is also a primary source of professional expertise in child abuse cases before the Massachusetts Department of Children and Families.  No doubt there are many strong ties among BCH officials and physicians; influential Harvard officials and alumni; and DCF officials regarding medical care, politics and even the courts. Especially in Boston.  The influence of these ties naturally extends over the general public, from which jury members are selected.  One can appreciate how difficult it is for anyone not inside that circle of influence, to prevail when taking action against it.

I suppose a teaching hospital anywhere has similarly widespread influence within its community and can be similarly immunized from scrutiny and full accountability - as appears true regarding BCH and the Justina Pelletier experience.  

 

Connection to insurance = Same as in (c).

 

(e)  Aside from medical and insurance issues, the growing number of medical kidnap cases is a social problem, increasingly encountered in the care of minor children.  The Pelletier case illustrates the kinds of problems encountered.  Here are a few that stand out to me, there must be others:

 

1.  Significant differences of opinion among physicians treating minor children

2.  Scientific disagreement over the nature of some condition(s) affecting minor children

3.  Legislative flaws e.g., do States' children & family services bureaucracies abuse their authority? 

4.  Inadequate consultation among attending physicians

5.  Inconsistencies among insurers over terms of coverage for medical & legal liabilities

6.  HIPAA protections of minor children’s patient privacy can be used to keep parents from knowing what treatment their minor children are receiving.  This can effectively remove parents from participation in decisions involving their own minor children’s care.  

7.  Growing influence of the regulatory state, in which persons accused of regulatory violations are presumed guilty, and have the burden of proving themselves innocent.  This negates the presumption of innocence historically imbedded in our legal system.