Speaking of Flood Insurance

Courtesy of Jeanne Salvatore:
 

And more on how Flood Insurance works here.

Tacklin' the Toughies [UPDATED]

My favorite cases are the "tough" ones. It's not that I deliberately seek out difficult-to-write clients, they just seem to gravitate to me. The thing I like most about these is the opportunity to learn something new.

For several years now, colleagues (and marketers) have been urging me to offer Critical Illness (CI) plans. The problem was, I really could just never get my head around how to quote them, nor really "get" why I should. It's not that I had any ethical issues with these plans, I just had a mental block regarding them.

I was recently referred to a couple looking for Long Term Care insurance. As a result of the pre-screen process we use, it was pretty clear that Doug wouldn't qualify, but Denise would. My gurus at the Long Term Care Agency recommended a Critical Illness plan for Doug, and as soon as I saw the quote they emailed, I could feel the lightbulb over my head begin to glow: I 'got' it!

Here's why: For many years, I've used a bucket metaphor to explain how Universal Life plans work. The LTC Agency folks use it to explain CI plans:

As soon as I saw this, it became crystal clear. The plan pays a monthly benefit for folks who end up with cancer, stroke, even Alzheimer's (which is important: remember, we're talking about Long Term Care insurance alternatives here). And the plan's Guaranteed Issue, so we don't have to worry about Doug passing underwriting Well this is disappointing: the gentleman who recommended this plan to me, and whose agency I've been using for quite a few years as my primary LTCi resource, just told me that "oh, yeah, it's a voluntary benefit, have to have at least (so many) employees. And it's guaranteed issue if he gets past the knockout questions."

Um, Randy? Then it's not Guaranteed Issue. And now I look like an idiot. Good bye.
 
There are other features, as well (for example, alert readers may be wondering about that $216,000 benefit pool), but my point is that I seem to have found at least one more way to help folks with health issues fund potential Long Term Care expenses.

And I'd call that a win.

[Special IB Thanks to Randy G]

Sharing & Caring: A Veteran's Perspective

Once again, reader Brian J brings helpful insights, this time about health care sharing ministries and the VA: 

All those caveats about the "healthcare sharing ministry" are eerily reminiscent of what it’s like to be a military veteran with non-service-connected non-emergency medical needs.

If you’re a military veteran – and enrolled in the VA healthcare system (which does meet the minimum essential coverage standard) – you’re disqualified from obtaining subsidized medical coverage through the Obamacare marketplace. (If you’re married, the marketplace will give your non-veteran spouse coverage with a subsidy, but you – being enrolled in the VA healthcare system – would have to pay the full [unsubsidized] amount for ACA health insurance coverage.)

Now, one might ask why is that a bad thing? If the veteran already is enrolled in VA coverage that provides care that meets the minimum essential standard for health care coverage, why would the veteran be concerned about obtaining health insurance outside of the VA?

The reason is that (1) VA health coverage is not considered to be “health insurance” and (2) because of the healthcare eligibility “Priority Group” that the VA assigns a veteran when that veteran enrolls.

Years ago, when the VA realized that budgets were tight, they began a system of rationing health care, so that the veterans who needed health care assistance the most – and the ones who had made the greatest military sacrifice – obtained priority in coverage (and were assigned to higher “priority groups”). I think that was an appropriate and reasonable decision.

Here’s a link to a pamphlet that is produced by the VA that describes those priority groups.

But, what that means is that those veterans who do not qualify to a higher priority group based on their (lesser) military sacrifice are assigned to lower priority groups and are enrolled (and obtain coverage) determined by the amount of money Congress gives the VA each year, which then determines the amount of co-pay the veteran has to pay, and affects the healthcare services and benefits made available to the veterans in those lower priority groups. (If you’re assigned to Priority Group #7, you’re near the bottom of the list.)

The VA clearly states that “VA health care is NOT considered a health insurance plan.”

I think there's a disconnect between what the ACA considers to be minimum coverage in the VA healthcare system and what healthcare benefits a veteran enrolled in one of the lower Priority Groups might actually be entitled to and paying for. (Basically, if you have a non-service-connected non-life-threatening injury – say, you get the sniffles or stub your toe and go to your primary care physician down the street -- the VA is not likely to pay for that treatment.)

The VA warns (advises) veterans to keep their private health insurance – if they have it – due to the risks of being in one of the lower priority groups. See the section titled “Risks of Giving Up Your Private Insurance” in this VA pamphlet.

Many low-income military veterans with non-service-connected medical needs are dis-enrolling from the VA Healthcare System in order to be eligible for enrollment in the ACA (Obamacare) and obtain subsidized coverage for themselves and their spouses. (At least until they become Medicare-eligible -- then, they're re-enrolling into the VA Healthcare system.)

Thanks again, Brian!

Is Medical Mutual of Ohio Losing or Winning?

Medical Mutual of Ohio, one of the largest insurers in the state, announced that with the 2017 open enrollment they will discontinue to offer PPO plans both on and off exchange. This has significant ramifications to Ohio's Obamacare marketplace with the biggest impact being that eliminating these plans reduces the counties that Medical Mutual will participate in from all 88 down to 31.

This is not what Medical Mutual wants to do, but is necessary to continue selling individual plans.

Overall this decision will eliminate insurance to 25% of their membership and cause an unknown (guessing very large) percentage of their membership to have to switch from a PPO plan to an HMO or POS plan. The POS plans will only be available in the Cleveland market while all other regions will be migrated to HMO plans.

Beside losing plans, members will also lose access to providers and facilities. At the top of the list of facilities no longer available is Cleveland Clinic. Unless you fall in one of the nine counties surrounding Cleveland (POS plans) you are out of luck. What if you want the James Cancer Center at OSU? Not if you are outside of Columbus. How about Bowling Green, Ohio's Wood County hospital? Sorry, they aren't even in the HMO networks available. The list goes on and on and we haven't even mentioned the potential loss of primary doctors and specialists.

The decision came down to survival. For 2014 and 2015 Medical Mutual lost a combined $175 million. Even with reinsurance payments of $125 million it still leaves them $50 million in the hole. Obamacare supporters and insurers expected to see claims slow down and the market to stabilize. Neither of these things have happened. Add to the mix reinsurance is ending, and insurers like Medical Mutual see that it is impossible for them to continue the same strategy in the marketplace.

The new strategy is simple. Limiting network choice and limiting where to do business is bound to reduce the unhealthy risk while also eliminating providers who are unwilling to lower their reimbursement rates.

Instead of Medical Mutual rolling out 45% increases to members they will send them cancellation notices. Those in the 31 counties where HMO's will be offered will see renewals that map them to new plans. These renewals will vary based on rating regions. For those going from PPO to POS (Cleveland area) they will see increases in the low teens. Those already in HMO products will see increases in single digits. The winners will be those going from PPO to HMO where significant rate decreases will be given.

It's the financial winners that will be the focal point. Obamacare supporters will point to the rate reductions as a product of the law working. Never mind the fact that it is only "working" by limiting the providers of care that are essential to the health of those Obamacare was supposed to protect the most.

If you like your plan: RIP

With all the news today about Aetna bailing on most on-Exchange individual health insurance business, this news is falling under the radar:

"Important Changes to Medical Mutual’s 2017 Individual Products

While Medical Mutual is firmly committed to Ohio and the Individual ACA market both on and off exchange, it is necessary for us to make changes to our 2017 individual health insurance products."

The regional carrier goes on to announce that, effective with the 2017 plan year, they're completely abandoning 57 of Ohio's 88 counties (almost 2/3's) altogether, and "mapping most of those remaining from PPO plans to the stricter HMO model.

The good news (such as it is) is that grandmothered and grandfathered plans aren't subject to these changes.

Co-blogger Patrick wonders:

1. How many people do they have covered on the exchange and off the exchange?
2. How many people will lose coverage?
3. How many people will lose their PPO plan but be able to migrate over to an HMO option?

MedMutual is hosting another webinar later this month, perhaps we'll have those answers then.

But remember:

UPDATE: Pat has more details on this breaking story.

Is Sharing (Really) Caring?

I was recently invited to represent a so-called "health care sharing ministry." These plans (about which Bob has written, most recently here) are considered ACA-"exempted" plans, meaning that although they don't meet the stringent ACA coverage requirements, they are nonetheless deemed "kosher" [ed: Heh] for ObamaTax purposes.

These plans essentially rely on the kindness of others to help folks pay for care. What's different (and somewhat appealing) with this one, offered by Altrua Healthshare is that it seems more structured than the ones I've seen previously, and from an agent's point of view, more attractive:

• Broad Network
• EXEMPT from Affordable Care Act
• Purchase all year, not just during open enrollment
• Very affordable memberships
• Available in all 50 states
• Pays great commissions

That last is important, as carriers continue withholding commissions, especially for "off-season" enrollments.

There are several things I do like about this particular iteration: first, they are non-denominational, meaning that they are open to different "flavors" of Christianity. Of course, this leaves folks like yours truly out in the cold as far as actually joining, but it may be attractive to my Christian clients (which most are, of course).

I also like that they set things up to mirror ACA metallic tier plans: Gold, Silver, Bronze. And it seems affordable, with rates for even "Gold" level plans available in the low $200's (per month). This is at least partially due to the fact that it's medically underwritten:

"Some individuals may not be eligible or have a membership limitation due to certain past or present medical conditions."

Of course, I have some significant reservations, the most important of which is that this is not insurance (and to be fair, they make this perfectly clear up front):

"Altrua HealthShare members understand that Altrua HealthShare is NOT an insurance company and each member remains self-pay" [emphasis in original]

This presents a problem for me as an agent: if I recommend it, and the client blows past the $1 million lifetime maximum, or the plan fails to pay as set forth, then it seems to me that I've opened myself up to quite the E&O (Errors and Omissions) claim. It's rather like the argument about going "bare" in that I walk a very thin line between understanding a client's financial situation and recommending a potentially risky alternative.

A couple other thoughts from Bob:

First, the Idaho DOI shut down Altrua in the Gem State in 2011. It's not clear to me whether that's been resolved [ed: although the fact that it's touted as being available in "all 50 states" certainly implies that].

Second, he says "I like the concept, but hate the upside risk to client and and agent. I've suggested them in the past with caveats. A few have enrolled in a plan but none have really tested one yet."

And there's this:

"All low price insurance (and non-insurance) is great until you really need it."

Indeed.

[Hat Tip: Cornerstone]

Interesting UL "News"

I've long been a critic of first and second generation Universal Life plans. Which is not to say that they didn't have a role to play, just that I think they required more "hands-on" attention by insureds than they were really prepared (or encouraged) to take on.

One of the biggest challenges to older plans is that they often become "upside-down;" that is, the internal costs far exceed the premium and interest credited, and they quickly become very expensive. Compounding this are IRS rules that effectively quash any hope of recovery by limiting premiums to a level where the policy just can't sustain itself.

The problem is that, if one doesn't really "goose" the cash value the first few years, then by the time the problem (insufficient cash value) becomes clear, it's too late to correct.

Or so I thought.

Turns out that although carriers can't illustrate level premiums sufficient to carry the policy forward, there's a stipulation in the tax code that if a policy violates IRS guidelines, once the cash value has been drained you can pay the premium needed to cover the monthly cost of insurance deductions/expenses. You just can't build a significant amount of cash value.  So, you'd need to increase the premium each year as the cost of insurance deductions increase.

[ed: Link to relevant code is here, scroll down to 7702 f 6]

So, problem solved? Eh, to the extent that one can continue to pump cash into a quickly expiring insurance policy. The question then becomes whether that's really a good idea. Or it may be that this is the time to seriously consider selling the policy. Still, it's always nice to have options.

[Hat Tip: FoIB Sara S]