Life Insurance Lost & Found (#LIAM15)

September is Life Insurance Awareness Month (hence the #LIAM15 in the post title), and once again the kind folks at the Insurance Information Institute have some helpful advice on digging up old policies.

And while you're thinking about life insurance, here's a timely video from the LIAM15 folks starring one of my favorite actors, Anthony Anderson, with a personal message on the value of life insurance:

LTCi Up North

Seems that we Americans aren't the only ones with a long term care problem. Our Neighbors to the North© have their own challenges:

"Three in five Canadians (63%) say their family is not in a good position (financially or otherwise) to care for older family members if they need long term health care, and it worries them greatly."

The problem is that, much like their counterparts here in the US of A, there's a perception that, absent more government spending, senior care (especially custodial) is going to fall on adult children, spouses and/or other relatives. One solution, of course, is Long Term Care insurance. But contrast the US vs Canadian experience regarding that:

"As of 2010, there were only about 385,000 Canadians with long-term care coverage and the life and health insurance industry paid out total annual benefits of $12 million ... There are over 10 million Americans that are protected by long-term care insurance"

Those were the most recent figures I could find, and I'm sure there are more Canadian LTCi policyholders by now, but the difference is startling. Seems like quite the marketing opportunity, no?

[Hat Tip: Co-Blogger Bob V]

You bet your life (or something)

It's been a while since we've discussed a certain variation on the "Stranger Owned Life Insurance" phenomenon. Last time we looked, the (dubious) folks at Life Partners were winding down their little scheme (or so it seemed, anyway), and there hasn't really been much news on that front.

Regular readers may recall that the whole idea behind this concept is that a 3rd party buys a life insurance policy on or from a terminally-ill person, betting that the insured will die before too many premium payments have been made. There are more than a few variations on this tune, and it's in somewhat of a gray area of the biz.

The latest eruption is this little kerfluffle between AIG (not the most ethics-bound carrier to begin with) and a little outfit called Coventry First (which bills itself as "the leader and creator of the life settlement industry"). Seems that Coventry's been accused by AIG of a sort of "pump and dump" of life policies, which left AIG with a bit of a loss.

And by "bit of a loss" I mean $150 million.

Ouch.

So, one thing lead to another, and now both parties are in court:

"Coventry First LLC illegally marked up prices on hundreds of investments that bet on when people would die, an American International Group Inc. unit said at the start of a fraud trial in New York."

For its part, Coventry refutes the characterization, saying that "its pricing practices with AIG were transparent, and that the allegations are nonsense."

Obviously, they can't both be right.

Frankly, I'm with Secretary Kissinger on this one.

It's about Life (insurance)

Simple, straightforward explanation of the role of life insurance:

Your money or your life?

It's estimated that Medicare spends almost $170 billion each year on beneficiaries' last 6 months of life. There's no question that end-of-life care costs a lot of money. There's also no question that there's no easy "fix." Heck, Britain's Much Vaunted National Health System© had to ditch its infamous Liverpool Pathway program.

But the issue hasn't gone away, and the questions - moral, ethical, financial - still remain.

FoIB Holly R sent in this rather intriguing possibility:

"Why don’t health insurance companies offer bonuses to patients who are willing to forego standard end-of-life medical care?  When a patient receives a terminal diagnosis, I have to believe that the [insurance] companies have actuaries and data sets that would give them guidance on what the next 6-24 months of medical care would cost."

Well, we already have a pretty good idea of how much that might be (almost $80,000, by one estimate). So what if Humana or UHC or whomever offered their terminally ill clients a check for, say $50,000 in exchange for a release from additional liability for medical expenses?

Note that this would be entirely voluntary, and probably taxable. But here's a way for that person to perhaps check off just a few more bucket-list items, for example.

Interesting idea, no?

Risk-free term insurance? Not so fast...

At LifeHealthPro, Brad Cummins (a fellow insurance pro and Buckeye) has an interesting, provocative article on the risks associated with buying term life insurance.

Here's a taste:

"[S]ince every life insurance company has financial underwriting requirements, what you are eligible to get (as opposed to what you want to receive) may be exponentially different than what another applicant in another age bracket can buy."

This is key because most folks think that the only applicable underwriting criteria is one's health (which is important, of course, but only one facet of the process).

Here's another:

"There are further age-related limitations, which prevent you from purchasing coverage for as long as you may prefer."

Another salient point; it's become increasingly more difficult to find 20 (or even 15) year lock-ins for my mature clients, as carriers pull back from offering these options.

Definitely read the whole thing - it's not terribly long, but it is packed with good info.

PSA: Lo$t & Found

So, got this in email:

"My Money Monitor Asking Medical Mutual Members for Social Security Numbers and Other Identifying Information to Help Get Unclaimed Funds"

First, it should go without saying that one should never send this type of information without verifying the recipient.

Second, I was a bit curious as to how this outfit was able to ascertain the names of MMO insureds: was the carrier selling its client list?

Turns out that my fears were unfounded:

"This company ... pulls publicly available unclaimed funds reports from states"

So if you've never received or cashed that refund check (for example), it'll eventually show up on the list (both the amount and source). On the one hand, props to this outfit for its resourcefulness.
 
On the other, the company charges a recovery fee. One supposes that might be fair (they did, after all, have to scour 58 states' lists for this info), but, as Medical Mutual notes:

"[P]eople on the list are able to get their money for free by contacting the department in their state that handles unclaimed funds"

Methinks that might be a better (and safer) idea.

No Crystal Ball Necessary

Another co-op bites the dust. This time it's Dirty Harry's home state of Nevada where operations will cease at the end of 2015. Just a short 15 months ago Bloomberg touted the "successful" start of the Nevada Co-Op in this article and referenced how they had the lowest rates in Las Vegas.

Fast forward to today's press release. Here's a few quotes from the company, one of it's board members, and the co-op CEO. Definitely not the success they envisioned.

“It is with deep sadness that based on challenging market conditions, the Board made a painful decision to wind down operations of the Nevada co-op at the end of this year.”

“Rather than spending resources on next year’s uncertain market, we would rather make sure we protect our current members. This is all about providing the most affordable, effective health insurance and service possible.”

“With a second year of high claims costs and limited opportunities for new investment, it has become clear that the amount of growth required to provide quality care at reasonable rates will be unlikely in the next plan year.”

The odds makers really missed the mark on this one. With enrollment of only 14,000 the company still lost $15,000,000 since it began enrollment in 2014. Not to mention the $66,000,000 they received from the federal government to get started.

Mid-Week Linkfest

■ From SoIB Gail S, we learn that a "common heart drug called a beta blocker was associated with a striking increase in survival for women with ovarian cancer in a study that suggests a possible new strategy for treating a variety of tumors."

Although the test subjects were taking the med to treat their hypertension, not specifically for cancer, the effect was such that they ended up living up to four years longer.

There were a few wrinkles such that the results aren’t necessarily dispositive, but they're certainly powerful enough to warrant additional research, and perhaps lead to even better cancer treatment options.

■ Your tax $$'s at work. We've mentioned the myriad problems related to the ObamaTax risk adjustment program before, but this news lends additional fodder:

"Before an insurer in a market can collect the risk-adjustment program cash transfers it's expecting to receive for the 2014 benefit year, the insurers in the market that owe the payables have to pay their risk-adjustment program bills."

That is, Company B must wait to collect its share until Company A ponies up what it was dinged. And what happens when a carrier goes south? Well then, all bets may well be off.

Talk about a chilling effect on the market.

■ Continuing our IRS-bashing theme (and a more deserving group of folks it would be hard to imagine):

"How slow are the project trackers helping the Internal Revenue Service (IRS) keep tabs on Patient Protection and Affordable Care Act (PPACA) administration system projects?"

They're so slow that the folks tasked to gather, collate and analyze the info have been left twirling their thumbs. In some cases, info that was supposed to be available in two weeks or less ended up dragging out for almost 3 months. One wonders how helpful that information, now quite stale, turned out to be.

■ Finally, some good news. Back in March, we reported that The Old Line State was toying with the idea of bringing actual licensed agents onto the state's HIX (as opposed to unlicensed, unvetted amateurs). Now, it seems, they're actually pulling that trigger:

"Maryland’s state-run exchange ... will start a pilot program during this year’s upcoming open enrollment that will transfer consumers calls from a call center directly to a broker, who will then enroll the consumer."

Will be interesting to see how this works out, and whether other states will follow suit.

Unwise Traveler Tricks

First, our thoughts and prayers to Ms Jimenez and Mr Fox.

It doesn't get much worse than this:

"A Tampa-area college student lies in a Cuban hospital bed, having been injured in a collision outside Havana, and her friends and family are desperately trying to scrape together the $50,000 they need to get her airlifted to Florida."

The collision, it turns out, was not her fault (she was a passenger in a taxi that was hit by a truck).

But that's about all that's not her fault.

Let's begin here:

"Not having any health insurance..."

Now, go back to that first paragraph: "Tampa-area college student." A few minutes on the USF site seems to confirm that undergraduates aren't required to have health insurance (although they're obviously in violation of the Mandate). One also wonders why she's not on her parents' plan (assuming they have coverage).

Which then raises another question [ed: gee, wouldn't it be nice if the MSM actually did its job, and asked them?]: if she was uninsured, how did she get into Cuba in the first place?

After all:

"All overseas visitors to Cuba must have a travel insurance policy in place with sufficient cover for medical evacuation by air, the Cuban government has said"

So how, exactly, did she gain entry in the first place?

But Henry, travel medical insurance is expensive!

No, no it's not:

A plan that would pay up to $100,000 (more than enough to cover her expenses, according to the article) with a very modest $500 deductible would have set her back all of $28 for a month of coverage (and that would include air evac and hospital-related charges).

And by the way, this took less than 3 minutes to quote; one supposes that's still too much time for the "reporter" to invest.

Penny wise....

PSA: On Waiving Provider Fees

Not sure when this became "news:"

"Recent changes to policy and plan language and increased litigation by third-party payers suggests that out-of-network providers who waive co-pays and deductibles may be in for some rough sailing"

One supposes it's a symptom of ObamaPlan "skinny networks," but the concept is quite established.

I reached out to co-blogger Kelley Beloff (herself a medical office manager), who confirmed that "you cannot routinely waive any portion of a patient's responsibility. This is stupid, you are leaving money on the table and trains patients that they do not have to pay. Come to think of it, I have not heard in a while, "My other doctors don't collect a copay." Old news."

So there ya go.

BIDT (Back in the Day)

In early 1991, the venerated Mutual Benefit Life Insurance Company (Mutual Ben) closed its doors, signalling the end of an era. Mutual Ben was well-regarded in the industry, with a great reputation, good products fairly priced, and field reps second-to-none. Unfortunately, it succumbed to an unkind real estate market (insurance companies generally love real estate for its long term stability and growth).

Long before HIPAA and EOB's, carriers like Mutual Ben had a more personal touch. FoIB Jeff M has kindly agreed to share with us correspondence he came across in his grandmother's effects. It's a fascinating glimpse into a simpler, arguably kinder time.

Here's a sample:

 [click picture to embiggen]

The whole set is available here. Thanks for sharing, Jeff!

Dumb Carrier Trick: Redeemed

So, 20+ years ago, I had the privilege of writing my first single-pay Long Term Care policy. What was so special about it was that the client, the prototypical little old lady with the most beautiful smile, called me a few months later to buy another one.

Fast forward a couple of decades, and she passes away. A sad time for her family, to be sure, but the best time of all for any life insurance carrier to shine.

Or screw up mightily.

Unfortunately, "Ajax Life" chose the latter.

[ed: I've redacted the carrier's real name because they've demonstrated a willingness to resolve the issues.]

When Emily (not her real name) passed away, her son originally called the home office instead of me; his brother, with whom I had met alongside Emily in those early days, had since died. Eventually, the surviving son (we'll call him Les) called me for help. He had never received the forms that Home Office had promised to send him.

To further complicate things, there were multiple beneficiaries on multiple plans, so I had to coordinate them. So, I called Home Office and requested the proper forms and instructions on how to put this together. To their credit, Ajax promptly emailed me the forms and instructions.

I eventually received all the completed forms and appropriate documentation, packaged everything up (sans pink ribbon, natch) and sent them to Ajax.

And waited.

And waited.

Finally, I called to ask where the checks were, and was told any number of different stories: first, they'd never received the package. Then, they'd received it, but it was still being processed.

No one could (or would?) tell me exactly what needed "processing;" these were 20 year old policies, the insured had died of natural causes, this was not rocket surgery. I was finally able to get them to commit to having their claims "processor" call me.

Which he did. And then told me that the reason it took so long was that they had to get an exception because I'd sent in the wrong forms.

Excuse me?!

I got those forms from you!

Well, you see, he'd also (allegedly) sent the correct ones to Les in May and again in July, but never heard back. Which was news to Les when I told him about it: he'd never received any such forms. But even supposing he had, how is it relevant? Ajax sent me the claim form, which I in good faith passed along to the beneficiaries. The only clock that counts here is the one that started when I sent in the completed forms and documentation.

The "good" news is that (supposedly) the claim has been approved and the checks will go out shortly.

But:

This was my very first death claim with this company, and there are very few things they could have screwed up worse. Topping the list is the complete stupidity of sending me the wrong form in the first place: how does that happen, exactly?

And no one thought it’d be appropriate to reach out to me to indicate that there'd be a delay, and why?

Until now, I'd had no reason to doubt the capabilities of this carrier, and felt good about recommending them to my clients.

What to do?

So, I reached out to the Vice President of Claims & Operations, expressing my frustration, explaining its source, and offering a path to redemption. Several days later, I received a very satisfactory reply, including an unqualified apology and a detailed explanation of the steps being undertaken to ensure that this kind of thing doesn't happen again (or at least, will minimize the chances).

I was particularly impressed that this executive admitted that he "was embarrassed to see the timeline and claim form confusion associated with this claim. The claims management team will be discussing the coaching and additional processes we need to implement to prevent future experiences such as this." That was just one of several steps he mentioned towards remediation.

Although I was quite disappointed that this whole situation occurred, I am quite satisfied with the outcome. People do make mistakes, and this company's willingness to unequivocally acknowledge (and correct) theirs is a very positive sign.

Patrick @ The Federalist

Co-blogger Patrick makes The Federalist (again!):

"Obamacare’s Transitional Reinsurance Program screwed you and helped pad insurance company pockets"

Details at The Fed(eralist).

Media Misses

From FoIB Jeff M:

"Local hospitals see increase in Medicare fines ... Combined, the nation's hospitals are losing $420 million, government records show."

Uh-hunh.

Question for the MSM:

Who do you think actually pays those fines?

(Hint: It ain't the hospitals)

Sheesh.

DPC Insurance, "The Wrap"

As promised in the Update to our previous Direct Primary Care (DPC) post, we have details about Pan-American Life's "wrap" plan.

Pan-American VP Carlo Mulvenna was kind enough to walk me through the basic idea behind the plan's design, as well as share product details. In a nutshell, the carrier has staked out a niche in what Carlo calls the "limited benefit space," and focuses its efforts there. They were approached by the folks at MedLion (the DPC bundler) because there was a perceived need for at least some non-primary care coverage.

The folks at Pan-American basically took their off-the-shelf limited benefit plan and carved out the primary care pieces (which would be redundant in this application). This gives insureds access to specialists and lab work via reimbursement (there are prescription med options available, as well). Because the plan is built on a "hospital indemnity chassis," it's approved as an "excepted benefit" and thus exempted from major pieces of the ACA. The whole program is designed to meet the ACA individual mandate requirement.

Both the MedLion and Pan-American programs are offered as employer-sponsored arrangements, not (currently) available to individuals ("retail"). The wrap plan is guaranteed issue and imposes no pre-existing condition exclusions; it does require a minimum enrollment of 50 employees.

Carlo told me that he understood that MedLion's DPC fee runs about $85 a month per adult; coupled with a typical "wrap" plan the total cost comes to about $180 per member, per month.

I still have reservations about this: as Carlo conceded, there is no provision for catastrophic claims. I know that DPC proponents tend to focus on how good primary care can help prevent a lot of major claims. And that's a legitimate point, but entirely irrelevant to the discussion of insurance:

I don't think anyone disputes that primary care is important; the issue is why the heck it should be covered by insurance. As one who looks at these things through the lens of risk management, I can't help but think of the old saw about "penny wise, pound foolish." So taking it out of the insurance realm, as DPC does, is a positive step. And I grant that Pan-American's wrap program is indeed better than nothing, especially to folks at the lower end of the income spectrum. But when we're talking about nearly $200 a month per adult, then I'm just not seeing the value when a cancer or heart attack or kidney failure can quickly wipe out any possible savings.

Color me unconvinced.

[Special IB Thanks to PALIG's Carlo Mulvenna for his time and insights]

And the 2015 Award for Excellence in Product Positioning goes to...

Aetna for their new ACO in Southern California: Aetna Whole Health - MemorialCare.

I don't know about you, but it makes me think of funeral homes and tombstones.


(Yeah, I know, it uses Long Beach Memorial Medical Center and MemorialCare Medical Group, but honestly guys, you ever think of running focus groups?)

LTCi Partnership Refresher, 2015 edition

So, it's that time again for my bi-annual Long Term Care refresher course (actually, I'm a few months early, but figured better safe than sorry, given southwest Ohio January weather). As usual, I was fortunate to have as my instructor LTCi master Ray Copenheaver, who's likely forgotten more about LTCi than I'll ever learn.

And also as usual, there were a few interesting gems. For example:

■ A company called LifeCare Funding (?) is developing (has developed?) a program to use existing life insurance plans to buy long term care policies, essentially viaticating one to pay for the other. Interesting.

■ Section 884 of the 2010 Pension Protection Act includes a provision that allows one to "invest" into tax advantaged annuities that have tax-free withdrawals for long term care expenses.

■ There's a new, industry-wide effort to get more folks thinking about long term care insurance. Called 3in4needMore, it's a website with some great resources, including videos and calculators to help you figure out your own long term care needs.

■ I was surprised to learn that about 1.5 million Americans are currently receiving care in skilled nursing facilities, and another 900,000 in Assisted Living.

Why was I surprised? Because I really expected those numbers to be much higher. On the other hand, over 11 million folks are receiving at least some level of long term care at home.

Thanks, Ray!

DPC Insurance? Maybe, maybe not [UPDATED]

[Scroll down for Update]

One of the "hot new(ish) things" is something called Direct Primary Care (DPC); the "ish" is because we actually blogged on this a few years ago in our interview with Dr Rob Lamberts. But it's gaining increasing traction of late, primarily due to a new (and as-yet unavailable) insurance product that would seem to answer some major objections. More on that in a moment.

First, let's define what DPC is (and isn't):

DPC is often conflated with "concierge" medicine; the major difference between the two models is that concierge is essentially a pre-paid subscription service that promises enhanced access to one's provider. These fees can range from a few hundred to tens of thousands of dollars (a month!). Some concierge providers also accept insurance.

DPC providers also charge a fee (although it is usually much lower than their concierge cousins'), but don't accept insurance; in fact, one of the model's primary goals is to service the uninsured.

One of the immediate problems that one encounters with either model is that, since insurance is not a pre-condition of membership, there seems to be a problem with the ACA tax penalty fine. That is, if one can eschew insurance and still gain provider access, then one is by definition skirting the (Evil) individual mandate.

Or is one?

According to Dave Chase, writing at Forbes, the model is unequivocally empowered by the ACA itself (Section 1301 (a)(3):

(3) TREATMENT OF QUALIFIED DIRECT PRIMARY CARE MEDICALHOME PLANS.—The Secretary of Health and Human Servicesshall permit a qualified health plan to provide coveragethrough a qualified direct primary care medical home plan thatmeets criteria established by the Secretary, so long as thequalified health plan meets all requirements that are otherwiseapplicable and the services covered by the medical homeplan are coordinated with the entity offering the qualifiedhealth plan.

So, seems legit, and an interesting, perhaps even viable alternative to an expensive ObamaPlan, which satisfies the mandate. What's not to love?

Well, the problem with the DPC and concierge models is that they provide for only one provider's care. They don't have any mechanism to pay for one's oncologist or nephrologist, or the ER doc, for that matter. Neither do they pay for the surgeon or anesthesiologist, or the hospital charges themselves. Nor, of course, one's insulin or Lipitor. What to do?

Well, up until now, perhaps, not much: the ObamaTax has effectively killed off the mini-med market, and if one chooses the DPC route then no HSA for you. One could, of course, still purchase an ObamaPlan, but this defeats the purpose of DPC, no? After all, the ObamaPlan already includes first-dollar preventive care, and its own (typically hefty) price tag and additional out-of-pocket exposure. Not to mention, a DPC plan would be subsidy-ineligible. Oops.

Enter Pan-American Life, which recently announced a partnership with MedLion (a sort of DPC co-operative, which seems to have a price transparency problem of its own). Pan-Am has announced a new "wrap around" product that seems to promise an answer to the conundrum named above,  namely: what about non-preventive care?

According to the company's press release:

"Pan-American Life’s U.S. Benefits division will administer a supplemental “wrap” insurance program exclusively for MedLion Direct Primary Care clients."

And that's it. Not exactly long on details, is it?

So, we reached out to Pan-Am, but they were unwilling to share any information about the plan itself. Which is, of course, their call to make, but leaves us a bit doubtful about the product. Plus, such an arrangement means two expenses: the DPC fee plus the "wrap-around" plan (and any additional out-of-pocket exposure that such a plan may also entail).

And there's this: the kind of policy that would be needed to supplement the DPC plan is likely illegal. Which may be why Pan-American is reluctant to share details.

'Tis a bummer. [SEE UPDATE BELOW]

Which is not to say that the idea lacks merit: we're all for any product (or products) that offers a viable ObamaPlan alternative.

I just don't see this one accomplishing that.

Yet.

Look, I like the DPC model. It's just very obvious that this is an experiment that should have been tried pre- (or, wishcastingly, post-) ACA. And let's be frank, it was never going to have the kind of impact that its proponents claim: at most, 20% (and more likely less than 10%) of total health care expenditures are PC-related. So reducing PC costs by even substantial amounts (quite uncertain) wasn't going to impact overall expenditures all that much.

UPDATE/CORRECTION: Just spent a very fruitful half hour with Pan-American VP Carlo Mulvenna, who brought me up to speed on how the wrap plan works, and why.

I'll put up a full separate, complete post on the program shortly; suffice it to say, it does what the press release says it will do.

I'd add that it also doesn't do what I mentioned that it wouldn't. Stay tuned.

[Special IB Thanks! to Jason S, David W and co-blogger Patrick]

Louise has questions

As we've seen time and again, the MSM does a poor job of actually reporting insurance-related stories (here for example, or here). Our good friend Louise Norris, a fellow blogger and insurance agent, recently had her own experience with this kind of malfeasance:

"Many patient advocates have been pushing to make maternity a qualifying event [for Special Open Enrollment] ... But Colorado tackled that problem five years ago [pre-ACA] ... The law required all health insurance plans in Colorado - including the individual market - to include maternity coverage."

Louise wants to know why the Jenks' family didn't already have maternity coverage, as it's been required on all individual health insurance plans in Colorado since before ObamaCare. And of course, the media can't be bothered to either investigate this, or offer an explanation.

Read the whole post: it's interesting, provocative and very well-written.