Beware Fake Health Care Plans In Wake of Reform

In the wake of sweeping health care reform, consumers will need to be wary of con artists promoting fraudulent plans and benefits.  State regulators are already struggling to stop fraudulent health insurance plans, a growing problem that has cheated tens of thousands of consumers at a cost of tens of millions of dollars, according to Sean P. Carr, Washington Correspondent in an article published March 23, 2010, by InsuranceNewsNet.com.

According to the article:

Fraudulent plans continue to grow in size and scope. "There's no end in sight," said James Quiggle, communications director for the Coalition Against Insurance Fraud.  A common scam involves plans that promise full health care coverage but deliver worthless policies or lesser products designed to look like comprehensive coverage, said Quiggle, who has studied the issue for years. Consumers may purchase "limited benefit" plans or medical discount cards that often present themselves as providing full insurance coverage -- until the bills come, he said. Such fraudulent plans surged in the early 2000s, Quiggle said. When confronted, companies sometimes claimed they were not subject to state insurance regulation...Regulators knocked many of them out of business in the mid-2000s, he said, but the combined effects of recession, sustained joblessness and increasing numbers of uninsured provided a target-rich environment for their return. The number of people victimized are in the tens of thousands, he said. 

States Attack Community Spouse Income Planning

One of the benefits of an annuity in estate and government benefits planning is the ability to convert assets countable for the purpose of determining Medicaid eligibility, and therefore subject to long term care spend down, to income for a community spouse, that is not countable, and therefore, not subject to spend down. This strategy is particularly comforting to a community spouse, who often is confronted with the task of making limited assets and income last over a lifetime. Given that the community spouse is often a younger female with a much longer life expectancy than the institutional spouse, providing a guaranteed income that the spouse cannot outlive from assets that otherwise would be extinguished by long term care is an important goal for seniors and their families, and the planners representing them.

This technique is not common, and is not without its risks. The community spouse must make an irrevocable decision preferring income over assets the spouse could otherwise spend without limitation. As income, the spouse has comfort in meeting routine obligations, but does not have a large pool of convertible assets as a safety net. The spouse gives up flexibility and liberty to convert a lump sum of assets to whatever purpose the spouse might have. Moreover, the technique means making a decision to prefer taking care of the surviving spouse at the expense of an inheritance for the children. Under the Deficit Reduction Act of 2005 (DRA), the state must be the beneficiary of any residue upon the death of the community spouse.

Nonetheless, states have waged an aggressive battle in the courts to prevent families from converting assets to income, but have, to date, been largely unsuccessful. The Third Circuit Court of Appeals, for example, recently held that since the annuity payment is payable to the community spouse, it is income and should not be included in the eligibility calculations, regardless of whether it can be sold on the secondary market. Weatherbee v. Richman, 2009 U.S. App. LEXIS 24939 (2009). See also, Vieth v. Ohio Dep't of Job and Family Servs., 2009 Ohio 3748 (Ohio Ct. App., Franklin County, July 30, 2009) (where community spouse purchased $140,000 annuity, court granted Medicaid benefits to the institutional spouse). But see, N.M. v. DMAHS, 405 N.J. Super. 353 (2009) (annuity is countable for Medicaid purposes if it can be sold in the secondary market).

Now, apparently conceding defeat in the courts, the National Association of State Medicaid Directors (NASMD) has sent a letter to the Center for Medicaid and State Operations (CMS) requesting that the Agency revisit its treatment of community spouse annuities. NASMD seeks to foreclose a family from preferring income for the benefit of a community spouse over assets, the latter of which may be lost in a long term care spend down.The effort, if successful, would reverse years of accepted law and practice. In the 1993 Omnibus Budget Reconciliation Act (OBRA), Congress delegated the Medicaid treatment of annuities to the Secretary of Health and Human Services (HHS). 42 U.S.C. § 1396p(d)(6). CMS then exercised that authority in Transmittal 64 to the State Medicaid Manual which contained the Secretary's determination. The treatment was modified somewhat by the DRA, but recent cases have upheld the purchase of DRA compliant annuities by community spouses to protect resources in excess of the default Community Spousal Resource Allowance (CSRA). NASMD now wants CMS to change its rules so that annuities will be treated like trusts which would make them countable and available resources.  More importantly, the change removes from community spouses the opportunity to make assets

End-of-Life Care Not to Blame for Increased Costs

In this information age, there certainly seems to be a large amount of misinformation.  One of the more persistent myths, is that the high cost of end-of-life care for the elderly represents a financial threat to the health care system.  According to a recently released study by the International Longevity Center-USA, "Myths of the High Medical Cost of Old Age and Dying," it is simply not true that the aging of Americans and over aggressive care at the end of life are major causes of increasing health care costs in the United States.

According to the report, studies that have looked at the causes of increased health care spending conclude that as little a 5 percent of the increase may be attributed to the aging of the population, the other 90 to 95 percent resulting from other causes.

Many have predicted that the already high cost of caring for seniors will skyrocket in the next tewenty years as the oldest baby boomers start reaching age 85. The new report suggests that this is not necessarily true, particularly if better health care can reduce the prevalence of chronic disability as it has in the past. For example, the incidence of chronic disability among seniors decreased  by 6.5 points over the period between 1982 and 1999.  The mere fact that full recovery from stroke and heart failure is now so prevalent, suggests that mere extrapolation from the past regarding disability or related health care cost is likely to lead to wrong conclusions.

"Today Show" Tells Story of Divorce Resulting from Long Term Care

An emotional segment on a recent Today Show episode featured a wife who divorced her husband after 44 years of marriage in order to protect assets from a a long term illness. Suggesting the divorce, and also appearing on the show, was Massachusetts attorney Hyman Darling, a member of the National Association of Elder Law Attorneys (NAELA).

The husband of "Roberta" (not her real name) was diagnosed with dementia after the couple had been married more than 40 years. When she became unable to care for him at home, Roberta moved her husband to a nursing home and began paying bills of between $7,500 and $8,000 a month. After she had gone through $75,000, her husband's neurologist suggested that she find "a really good lawyer."

Roberta found Darling, an elder law attorney with the firm of Bacon & Wilson, P.C., based in Springfield, Massachusetts. Darling suggested to her that, as a last resort, she could terminate her marriage. This would preserve her remaining assets and allow her husband to quickly qualify for Medicaid coverage of his nursing home care.

Value of Annuities Behind Fed Efforts to Boost Retirement Savings

In January, the Obama administration announced an initiative to promote the availability of annuities in qualified retirement, 401(k), and similar plans. Only 22% of such plans now offer annuities among the options available to plan participants.   While the initiative is not long on details, it is gaining support among senior advisors and advocates.  Making annuities an option in qualified retirement planning would permit more workers to turn some of their nest egg into guaranteed income for life.  The opportunity to insure a lifetime of income is an attribute unique to annuities, and is an attribute uniquely suited for retirement planning.

Simultaneously, a Senate bill that would require your 401(k) to inform you of the projected monthly income you could expect at retirement based on current savings.  Causing investors to focus on the income they can expect from their retirement planning, rather than upon their account balances, is a welcome turn of events.  Investors often pay too much attention to the balances in their retirement plan portfolio, without careful attention to whether that portfolio will sustain them after retirement.  Simply, income is a more relevant basis upon which to plan for retirement.  That is the approach Social Security takes with its annual statements.

The confluence of these events suggests that the government is finally acknowledging the value of income retirement planning, and the value of annuities in securing that income.  As Americans grapple with the challenge of potentially outliving their retirement savings, lifetime income annuities are among the most cost-effective and least risky asset class for generating guaranteed retirement income for life according to numerous studies, perhaps the most prestigious being one co-sponsored by the Wharton Financial Institutions Center at the University of Pennsylvania and New York Life Insurance Company.

Planner's Corner- Beware of Ghostwritten Articles

You've probably received the solicitation, and been tempted to purchase the beautiful book or glossy magazine, with your picture and name on the cover.  The solicitation promises instant credibility, because no client would know that you had nothing to do with writing the book, or that the magazine article is purchased.  These "ghostwritten" marketing efforts promise much, are extremely high quality, and as a result, are tempting.

Beware!  The Financial Industry Regulatory Authority (FINRA) warns that sales representatives for member firms should take care when using ghostwritten books and articles in marketing their services.   A rule established by the National Association of Securities Dealers (NASD)  "prohibits false, misleading or exaggerated communications with the public and the omission of material facts or qualifications that would cause a communication to be misleading," FINRA officials write in Regulatory Notice 08-27.   Many of the ghostwritten books, pamphlets and newspaper advice articles may violate that rule and other rules established by the NASD and FINRA's other predecessor organization, the regulatory arm of the New York Stock Exchange, the notice states.

Avoiding Census Fraud

With the U.S. Census process beginning, the Better Business Bureau (BBB) advises that people be cooperative, but cautious, so as not to become victims of fraud or identity theft. The first phase of the 2010 U.S. Census is under way as workers have begun verifying the addresses of households across the country. Eventually, more than 140,000 U.S. Census workers will count every person in the United States and will gather information about every person living at each address including name, age, gender, race, and other relevant data.

The big question is - how do you tell the difference between a U.S. Census worker and a con artist? The BBB offers the following advice:

• If a U.S. Census worker knocks on your door, they will have a badge, a handheld device, a Census Bureau canvas bag, and a confidentiality notice. Ask to see their identification and their badge before answering their questions. However, you should never invite anyone you don't know into your home.

CitiMortgage Program to Aid Borrowers Avoid Foreclosure Costs

According to an article written by Les Christie, and published on CNNMoney.com, CitiMortgage, one of the nation's largest mortgage servicers, launched a pilot program Friday designed to ease the pain of some homeowners heading for foreclosure.  The program, a modification of a traditional deed in lieu of foreclosure, gives borrowers new and substantial  incentives to avoid the legal and administrative costs of foreclosure.

Instead of borrowers falling further and further behind on their mortgages, leading to an eventual foreclosure sale, they can stay in their homes for up to six months, if they agree to then hand over the deed to the lender. 

CitiMortgage will then, additionally, pay the borrowers a minimum of $1,000 to help with relocation expenses.  CitiMortgage will also provide relocation counseling, and may even cover some monthly property expenses while the borrowers remain in their homes, if Citi determines the borrowers can't afford the expenses.Citi will also forgive any difference between the value of the home at time of repossession and what the borrower owes. Once the deed goes back to the lender, the borrowers walk away free and clear.

Doctors Avoid End-of-life Counseling with Patients

According to researchers publishing a report in the journal Cancer, most doctors don't talk about end-of-life issues with their cancer patients when those patients are feeling well. Nor do they talk about them until treatments have been exhausted. Those delays might mean patients are unable able to make truly informed choices early in their treatment.

The study, published online, by Nancy L. Keating, MD, MPH, of Brigham and Women's Hospital in Boston, and colleagues, surveyed 4,188 physicians about how they would talk to a hypothetical cancer patient with four to six months to live. A majority of respondents (65%) said they would discuss prognosis, but only a minority said they would discuss do-not-resuscitate status (44%), hospice (26%) or preferred site of death (21%) at that time. Rather, they would wait until symptoms were present or until there were no more treatments to offer. An abstract and the full text of the study are available here.

Current guidelines, from the National Comprehensive Cancer Network, a not-for-profit alliance of 21 of the world's leading cancer centers, say that such conversations should be initiated whenever a patient has been given less than a year to live, if not at diagnosis.  The survey suggests that these guidelines are not being observed in practice.

The survey did not ask physicians to explain their answers, but the researchers offered several possibilities.

Alzheimer's: Type 3 Diabetes?

I don't usually include information regarding health care, but some of you might remember that the first incarnation of my website had a page devoted to health and prescription drug information.  But, this article, available online on the Canadian version of Healthzone, is so compelling, I thought I would share it.

Some experts are now calling  Alzheimer's, "Type 3 diabetes" or diabetes of the brain. Here are a few links between the two diseases: