Friday, March 22, 2019

Happy Anniversary!

For certain values of "Happy:"

Thursday, March 21, 2019

Policy Loans: The Dark Side

One of the benefits of cash value life insurance plans (eg Whole Life, Universal Life, etc) is the ability to "borrow against" it. That is, as the cash value (equity) increases, it's available as a loan, with the death benefit as the collateral.

This can be very handy when sudden, unexpected expenses rear their ugly heads. For example:

"Unable to secure a large enough bank loan, Walt Disney borrowed against the cash value from his life insurance policy to help finance the creation of his new theme park, Disneyland."

Other famous folks with similar stories include James "JC" Penney and Ray Kroc.

Of course, there's a balance here: while these loans can be quite helpful, they have the potential to be very dangerous, as well.

How's that, Henry?

Well, generally speaking, if one borrows from a policy and fails to pay it back, then the company merely subtracts the balance due from the death claim. No harm, no foul, no taxes. But what happens if one borrows from the policy, and it dies before the insured? That is, if it lapses while the insured is still alive?

Well, in that case, the borrower (and potentially his/her heir) are in for a nasty surprise: Form 1099-R.

Such was the case for a recently deceased client:

In January of '18, she let her Whole Life insurance policy lapse with a substantial loan balance. This January, she passed away. Yesterday, I got a call from her widower asking why he had received a tax form from Acme Life. I asked for the policy number to which it referred, and advised him that when the policy lapsed last year it created a taxable event, and that the balance due is being treated as taxable income (which would have also been the case if my client was still with us).

I always advise clients who take loans against their plans to at least keep up with the interest each year, to avoid the loan balance snowballing until the policy is unrecoverable.

Now you know.

Wednesday, March 20, 2019

A Friend Needs Help

My college roomie and Best Man is married to a wonderful, vibrant, caring woman who has been diagnosed with early onset Alzheimer's. She is fading fast.

Deb and Rich recently moved from Connecticut to Florida to see if the change of environment would be beneficial. Unfortunately, her condition has continued to deteriorate, and she is now in a nursing home. Rich would like to bring her back home to Connecticut, but lacks the funds to do so.

He has set up a GoFundMe to try to resolve that. Please consider donating to it.

Wednesday Roundup: International edition

We've written before about the so-called 'Secondary Market' for life insurance:

"And so, as part of HIPAA, a new word entered the popular lexicon: viatical. Basically, one can sell one's plan to a 3rd party with little (or no) tax consequence."

But of course, the good ol' US of A isn't the only place on Earth where this type of sale takes place. Our Neighbors to the North also have this available, but it's getting a little more 'iffy' as to the buyer's benefits. According to FoIB Allison Bell:

"Manulife Financial Corp. and other Canadian life insurers won a legal battle against hedge funds that contended the insurers should be compelled to take unlimited deposits into high-yielding investment policies."

This basically serves to limit the tax-advantaged growth available to certain plans, and re-focuses on the death benefit itself. Will be interesting to see if these restrictions wend their way here.

One of our most enduring memes here is that coverage ≠ care; that is, insurance doesn't guarantee that actual care will be available, either quickly or even at all. And so we look again at CanuckCare© as a warning to those who advocate MedicareForAll:

Be careful what you wish for.

And piling on, we look Across the Pond to Britain's Much Vaunted National Health Service©:

"HIP replacements, cat­aracts, varicose veins and tonsillectomies are among a string of surgical operations that will no longer routinely be carried out on the NHS "

[Hat Tip: Sally Pipes]

Since even (especially?) socialized medical care schemes have proven unsuccessful at reining in the cost of care, the only viable alternative is to ration deny it.


Tuesday, March 19, 2019

Monday, March 18, 2019

MVNHS© Winninng: A Story in Two Parts

Part 1:

This is what happens when a country turns its medical care over to government bureauweenies. As a result of consistent and increasing budget cuts, the Much Vaunted National Health Service© is "push[ing] more patients towards paying for treatment privately."

Wait, what?

"paying for treatment privately"

It's a not-so-closely guarded secret that even countries with government-run health "care" have huge markets for private insurance. As we reported 7+ years ago:

"Private Medical Insurance ... allows you to have complete reassurance of knowing that, should the need arise you and your family can receive medical treatment privately, without waiting for the NHS to treat you."

We wondered at the time about why this was necessary, given the free and widely available health care that is the MVNHS©. Now we know.

Part B):

One of our most enduring memes here at IB is the fact that health care ≠ health insurance. That is, what good is the coverage if there's no one to provide the care?

Well, our British Cousins are learning this lesson good and hard. From FoIB Rich W:

A lesson to be learned as we rush headlong toward #Medicare4All: Be careful what you wish for.

Friday, March 15, 2019

*True* Junk Plans: A Retrospective

So big news on Capital Hill:

What they really need to be reviewing are the true junk plans:

"Twenty percent of Ohio adults reported that they or a household member go without medical care because of the cost even though more than 90 percent of them have health insurance"

Hint: They're not talking about STM's....

Thursday, March 14, 2019

Blue Cross: Word Salad edition

So this morning, FoIB Jeff M emailed this item about the planned merger of Blue Cross Blue Shield of North Carolina "with Portland, Ore.-based insurer Cambia Health Solutions. The two not-for-profit organizations with combined revenue of $16 billion and more than 6 million customers said the alliance will make health care "simpler, better and more affordable."

Wait a minute: what does "simpler, better" actually mean?

Well, it depends. According to the official email announcement:

It might mean "Each company retains its current assets, such as its reserves and capital, and there is no change to the underlying business in our states."

On the other hand, it could be that "The companies will share services, which will cause some resources to shift."

On the gripping hand, perhaps it notes that "Our long-term goal is to make health care more affordable for the individuals and families we serve ... Our expertise, common management and increased resources will allow us to better address rising costs in the health care system by reinvesting shared savings, enhancing price transparency tool."

Okay, but why does all of that remind me of this?

In the end, one suspects that it means "business as usual," only with a bigger footprint.

And as Jeff notes, a look at their website seems to indicate that "they still think healthcare and health insurance are the same."



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So, FoIB Holly R sent us this:

"Just had a doctor's office tell me the doctor couldn't discuss test results over the phone because of HIPAA. This is false, and another reminder that medical facilities constantly use HIPAA as a bogus excuse for being opaque and difficult."

Interesting take, and one I've heard before. But is it true?

I reached out to co-blogger Kelley B, herself a medical office manager, for her reaction. She replied:

"The reality is that the doctor will be paid nothing to tell the patient his test results over the phone. Since this requires medical decision making on the doctor's part, he/she is entitled to be paid and that means that the patient has to come in for an appointment. The patients hate this because it costs them money.

Is it a HIPAA violation. It could be as you cannot confirm that the person on the other end of the phone is the patient. It is in the doctor's best interests not to give out results over the phone and have the patient come in."
That makes sense, although I would point out (before others do) that under the nascent DPC (Direct Care) model, that first point would be moot, since the doc's already been paid.