Tuesday Health Tip...

Here at InsureBlog, we agree with the central tenet of Consumer Driven Health Care: that each of us is, ultimately, responsible for our health and well-being.

One way we can all accomplish at least part of this goal is with a healthy, and healthful, diet. Fortunately, this just got a whole lot easier, thanks to our friends, the Dutch:

"A study of older men in The Netherlands, known for its luscious chocolate, indicated those who ate the equivalent of one-third of a chocolate bar every day had lower blood pressure and a reduced risk of death."

As for me, I'm off to the health food store right now.

Insuring Mrs Cleaver, Part 2...

In Part 1, we outlined the financial challenges facing homemakers who may become disabled. The post was inspired by an article written by Thrivent’s Kim Anderson, who also sent me some helpful occupational class information (more on this shortly).

Since there doesn’t seem to be a non-fraternal carrier offering this cover, we got to thinking about creative solutions to the problem. What we’ve developed is imperfect, but it is at least a solution.

Let’s start with a premise: I’ve always described Long Term Care insurance as “disability insurance for retired folks.” In a sense then, disability insurance could be viewed as “LTCi for working folks.” Why, then, couldn’t a SAHS (Stay at home Spouse) purchase a Long Term Care policy to replace the economic value of his/her contributions?

There are, of course, many different LTCi plans available. Without getting too technical, we'd use an “indemnity” type plan, rather than a “reimbursement” one. Indemnity plans pay out the specified amount each month, regardless of actual expenses; reimbursement plans pay out based on how much was actually spent on LTC. In the “regular” LTCi market, there is some debate as to which is more appropriate, but in this application, it seems obvious that the indemnity plan works best.

Disability insurance benefits and premiums are based (in large part) on the occupation class of the proposed insured. These classes are determined by the carriers, and typically range from 4A (e.g. attorneys, physicians, the producer of Desperate Housewives) down to B (e.g. butcher, blacksmith, pool boy on Desperate Housewives).

Ms Anderson told me that Thrivent assigns homemakers a 2A rating. A typical policy available to this class would define disabled as “unable to perform all the important, substantial and material duties of your occupation due to illness or injury, and you require the care of a doctor.” This would be the test to determine whether one is eligible to receive benefits.

The eligibility test for a Long Term Care policy is quite different, at least superficially: in order to receive benefits, one would need substantial assistance to perform at least 2 Activities of Daily Living (ADL): bathing, continence, dressing, eating, toileting and transferring.

Almost like two different languages.

And yet…

The physical conditions described in both definitions seem pretty similar. And there's this: according to the Government Accounting Office, 40% of those receiving long term care are "Working-Age Adults."

So here's my thinking: if a 30-something owned both a DI policy and a LTCi policy, and she was eligible for benefits under one, it seems likely to me that she’d meet the test of the other, as well. Flawed, yes, but not (IMHO) fatally so.

Perfect? No. Acceptable? Let’s see.

The Medblogosphere: Grand Rounds

Over at Cut to Cure, the unlikely-named Bard Parker hosts this week's Grand Rounds. Go for the incredible artwork, and stick around for some great articles. For instance, did you know that green tea may help stave off Alzheimer's?

A Tale of Two Kidneys...

You may have read the heart-warming story of the wives who've agreed to donate kidneys to each other's husbands. What you probably didn't know is that there may be some heartbreaking tax implications. Roth & Co do an exam.

No good deed goes unpunished, indeed.

Gaming the System

Hardly a day goes by without someone suggesting ways to me to game the system in their favor. Since this is an insurance forum, you must have concluded by now the system is insurance. Specifically, health insurance. Even more specifically, individual health insurance (contrasted with group health insurance).

Last week I spoke to a lady who found a plan that was just like the one I suggested, but was 30% less in premium. Of course she did not know, nor did she care to hear that the plan also had 50% less coverage.

Before that I had a woman who complained that her $1000 per month health insurance premium was too high for the benefit she received. When I suggested a more reasonable $450 premium plus another $400 monthly into a HSA she balked saying she could not afford the $5000 deductible nor the out of pocket for her annual doctor visit. She insisted there MUST be a plan out there that is better than what she has but doesn’t charge as much in premiums.

Today, at 8:06AM I had an email from a lady who is pregnant (2 months) and wanted health insurance to cover her prenatal & delivery. This is the same woman I talked to last Thursday and explained that the only plan she could find to accomplish this feat was a small group plan through a major carrier. (She and her husband do own a small business that would qualify them under Georgia small group laws).

In today’s email she stated she had found another carrier who does not impose the same requirements for eligibility as the carrier I proposed, and the rates were lower for more coverage. She had reviewed the application for this carrier and determined this carrier does not require payroll records to substantiate qualifying for group coverage.

Due to her pre-ex condition, the rates on the proposal (mine as well as the other carrier) are not reflective of final rates which can change as much as 65% (for the other carrier) or 45% for my proposal. This may tend to level the playing field once final underwriting is concluded.

Neither carrier makes mention of supporting documents in the master application. Yet both carriers do require such documents.

I do not claim to have complete understanding of all aspects of health insurance and readily admit that I still learn things every week despite a long tenure in the industry. But one thing I do know is this. If you think you can beat the carriers at their own game you are wrong. They have been doing this a lot longer than any of us, and have probably seen it all. They also have high paid attorneys, actuaries and underwriters who know how to protect the carrier.

I know for certain there are no ways to beat the carriers at their own game. But I also know that when you understand the rules, and I feel I know them as well as any, you can work the system to your favor. If you think you have found a way to beat the carrier, most likely the only thing you have accomplished is finding a way for the carrier to deny coverage at some future date, once all the facts come to light.

Once you are in claim, that is not the time to find out your policy isn’t what you thought it was.

It's Money Monday!

The Carnival of Personal Finance, hosted this week by Money Blog Network, offers links to a variety of helpful posts. My favorite this week is this one from Joe Kristan, which illustrates tax-protestor follies.

IdeaLogic hosts this week's Carnival of the Capitalists, with links to useful and interesting info. For example, Searchlight Crusades has a helpful primer on mortgages, deconstructing the partial-truth that "all mortgage money comes from the same place."

Insuring Mrs Cleaver...

And no, I’m not trying to be sexist, but rather to make a point:

“ (W)hat is the Human Life Value of a stay-at-home mother (or a stay-at-home father)? No income, so nothing, right?

Wrong. ”

Disability income insurance (DI) is often called “Paycheck Insurance.” The idea is that, if one is injured or ill, and is unable to work for an extended period of time, the insurance would kick in to help pay the bills and put food on the table.

Nowadays, many folks have such coverage through a group plan at work. Others have purchased it directly, which usually means a more appropriate coverage, but often a higher price, as well.

The amount of DI coverage that one can buy is generally based on two criteria: the nature of one’s job, and the size of one’s paycheck. In the case of a homemaker, it may be relatively easy to ascertain the first, but how does one determine the second? After all, there are no paystubs, W-2’s or 1099’s, no actual cash changes hands.

Yet there is obviously value in what the homemaker does. Determining that is essential. Harder still, however, is finding a way to insure it.

Years ago, I recall that Golden Rule used to sell a disability policy for Stay at Home Mom’s (SAHM’s). They haven’t had that available for many years, though, and the market itself has evolved. For one thing, there seem to be a lot more SAHD’s, which also alters the picture.

SAHS’s (Stay at home Spouse’s) can generally buy life insurance with no real problem. So why is it so difficult to find disability cover?

“Think about the daily tasks typically performed by the stay-at-home spouse, such as child care, laundry, grocery shopping, bill paying, cooking, cleaning, etc. These services not only have an intrinsic value but also a real economic value to a family.” (Ibid)

Exactly so. All of those issues make it relatively easy to find life insurance. Don’t these same factors justify DI coverage, as well?

Kim Anderson, the author of the article, notes that “(t)raditionally, the DI industry has not recognized the economic value of the stay-at-home spouse for purposes of providing coverage. The reason for this is simple: Companies calculate eligible benefits based directly on a person’s income.” She adds that “(a) few companies now offer stay-at-home spouses disability income protection without a need for the insured to validate a source of income.”

That last intrigued me, so I dropped her a note, asking about who is now writing this cover. To my delight, I received a prompt reply: After doing quite a bit of research, she and her associate determined that only Thrivent Financial is currently marketing this type of product. The challenge is that the plans are available only from a (relatively) small group of agents to a (relatively) small group of folks (Lutherans). However, she promised to keep me apprised if her further research turned up another carrier.

Somewhat disheartened, I conducted a little research of my own, confirming the lack of availability.

And yet…

A recent conversation with a friend gave me new hope. We look at a potentially useful way to solve the problem in Part 2.

Wal-Mart Caves?

Wal-Mart stores, facing a raft of state legislation that would require it to increase spending on employee health insurance, will lift several of its long-standing — and most-criticized — restrictions on eligibility over the next year, the giant retailer said this morning.
Wal-Mart insures less than half of its 1.3 million employees in the United States and has come under growing criticism for skimping on benefits and shifting the cost of health care to state governments.

More affordable coverage is on the way.

At the same time, Wal-Mart said it would make a new health-care plan introduced in several regions this year, with premiums as low as $11 a month, available to half of its employees by next year.

But it won’t be without its’ detractors . . .

That plan allows for several prescriptions and doctors visits before a $1,000 deductible kicks in. But it is unlikely to cover a complicated illness or expensive hospital stay during the first year, when there is a $25,000 insurance cap. In addition, out-of-pocket payments range from $300 for prescriptions to $1,000 for hospital stays.

Seems generous to me, but the $25k cap is dangerously low. It will be interesting to watch this (I am certain) continuing saga.

A Step in the Wrong Direction

New clients come to me in several ways. Some as a result of advertising, some from referrals. Others find me quite by accident.

One of my newest clients came to me by way of taking a step in the wrong direction. Like many, they were looking for a way to save money on health insurance. They applied with a low price carrier and were almost immediately denied coverage within a few days of making application. Seems the health issue they considered more of a nuisance than anything was preventing them from being approved.

Once you have been denied by a carrier it becomes more difficult to obtain a fair review by later carriers. Every application has a gatekeeper question that goes something like this.

“Have you had coverage denied, postponed, modified or rated?”

That pretty much says it all. Answer yes and you are subject to intense scrutiny. Answer no and you have committed fraud and run the risk of having claims or coverage denied at a later date.

After much discussion and a review of the medical condition, I started polling my top 3 carriers. I work closely with these carriers and have a good feel for the way they underwrite.

I also have field underwriting manuals for all of these carriers as well as a dozen more.

The results from my inquiry were a “no”, a “maybe” and a “probably”.

The “maybe” was a strong carrier not known for aggressive underwriting but is almost always in the hunt on price. The "probably" is a lesser known carrier but strong in many ways and has recently become more reasonable in underwriting.

The “maybe” indicated a rate of $180 per month with a rider for the medical condition. The “probably” told me they would most likely cover the condition but with an extra premium bringing the total monthly to $300.

The condition is a “slight arrhythmia” that is asymptomatic and has remained unchanged in 15 years. The condition is controlled by two inexpensive medicines that cost less than $40 per month.

My new client did the obvious and wanted to apply for the lower priced plan. I counseled them by saying this might not be a wise choice. They stood fast so I countered with a form where they would attest that I showed them a plan with full coverage which they rejected.

Then they were the ones who balked.

In their mind, the $120 monthly premium savings more than offset the $40 monthly med cost. No argument there. What I did next was to explain why each carrier took their respective positions.

The one with the exclusion rider was not dodging the $40 monthly meds or even the annual EKG. They were more concerned about potential stroke or M.I. down the road.

The carrier with the higher premium was willing to absorb not only the meds and the annual EKG but the potential heart attack or stroke that could occur at any time.

Or never . . .

In the end the client agreed to make application to the carrier with the higher premium. I had not only stated my case in a logical and comprehensive manner, but they also agreed I had been more helpful than anyone else who had reviewed their case . . . including the initial agent who simply ran away once he had a rejection from his carrier.

This is not about me or my skills. Rather it is all about making an informed decision and not just taking the lower priced plan for the sake of saving money now. The $120 monthly savings could have gone for other things besides health insurance premiums. But all of that would have been worthless if the annoying medical condition were to take a turn for the worse.

Comments Glitch... [UPDATED]

UPDATE: Comments back online.

HaloScan (which hosts our comments) appears to be having technical difficulties this morning. While that's being resolved, feel free to drop me an email (addy in profile) and I'll make sure it gets added once the glitch is resolved.

Thanx for stoppping by InsureBlog!

Alphabet Soup: S or LLC?

Joe Kristan at Roth & Co has an intriguing take on why folks choose one type of corporation over the other. Pretty interesting reading.

Singin’ the Blues...

Did you know that the Internal Revenue Code gives certain Blue Cross plans a special tax deduction? I certainly didn’t.

I learned about this by way of an email I received from an insurance activist group (nothing wrong with that). Generally, I treat these much like I treat the numerous other warnings that appear in my “in box:” a healthy skepticism, followed by a click over to snopes, which generally debunks them as urban legends.

This time, though, the information seems to be on the up and up. Apparently, the Blues get a special tax break, which is ostensibly based on the “public good” that they are perceived to do. In reading through the statute, it appeared that other carriers could qualify for the deduction, so long as they met a rather interesting set of criteria:

(i) substantially all the activities of such organization involve the providing of health insurance,

(ii) at least 10 percent of the health insurance provided by such organization is provided to individuals and small groups (not taking into account any medicare supplemental coverage),

(iii) such organization provides continuous full-year open enrollment (including conversions) for individuals and small groups,

(iv) such organization’s policies covering individuals provide full coverage of pre-existing conditions of high-risk individuals without a price differential (with a reasonable waiting period), and coverage is provided without regard to age, income, or employment status of individuals under age 65,

(v) at least 35 percent of its premiums are determined on a community rated basis, and

(vi) no part of its net earnings inures to the benefit of any private shareholder or individual.

Looks to me like there’s only one carrier that meets this particular test. Could be wrong, of course, and I’d love to hear from IB readers who know of another qualifying insurer.

As in “the dog that didn’t bark,” I noticed that there is nothing which lets us know exactly why the Blues rate this special treatment, nor is there any test set forth to determine whether or not they continue to deserve it.

Now, I’m not saying that Blue Cross is evil incarnate, or that they shouldn’t take all the largesse that they can find (it is capitalism, after all). But I’d really like to know the justification for this special tax break, and its continued existence.

Any takers?

Grand Rounds...

is up, hosted this week by Dr Andy. The good doctor tries out a new format this week: putting his "Top 10" at the head of the line, followed by numerous (and terrific) other submissions.

InsureBlog's own Bob Vineyard, by the way, made the Top 10. WooHoo!

And Dr Eric has his own take on the malpractice issue.