Universal Life Insurance Policy Holders Face Premium Hikes

Over just the last two years, tens of thousands of universal life policyholders have been hit with double-digit premium increases from companies such as Axa Equitable, Voya Financial, and Transamerica.  

Universal life is a permanent and somewhat flexible hybrid life insurance policy that is intended to combine the reasonably affordable aspects of term insurance with a savings element similar to whole life. Universal life insurance typically offers policyholders a “cash value” savings account that earns tax-exempt interest along with the flexibility to adjust premiums and to increase or decrease death benefits. The policy’s investment account accumulates cash when interest rates are high, but can plummet when rates are low. In the 1980s and ’90s, the most common guaranteed rate in universal life contracts was 4%; some insurers guaranteed more.  Many new policies are tied to the stock market and don’t guarantee returns at all.  

Life insurers blame the economy for the premium increases. Interest rates began to slowly decline in the 1980s, but then plummeted during the 2008 recession as the Federal Reserve tried to improve economic conditions by making money cheap to borrow. But low interest rates are bad for the investment.  Low interest rates mean  lower profits.  In response, life insurers have begun to raise premiums on older universal life policies.

Understandably, universal life policyholders, many of whom were assured by agents that their premiums would never increase, are angry.   There are now a dozen lawsuits against insurers who sold those policies

Of course, regulatory reforms are suggested to help minimize the impact of these premium increases.  The New York Department of Financial Services, for example, proposed a rule that would require insurers to notify the agency at least 120 days before an “adverse change” in “non-guaranteed elements of an in-force life insurance or annuity policy.” This rule would also force insurers to notify consumers at least 60 days before the change. The regulation could be used as a precedent for other state insurance departments.  The Consumer Federation of America last year sent a letter to all state insurance commissioners asking them to study and prohibit any unfair price increases being imposed on consumers owning universal life policies.  Regardless, these reforms don't offer insureds a financial solution- only time to react.

Scott Hanson, a senior partner and founding principal of Hanson McClain,  a financial advisory firm in Sacramento, California,  offers the following advice to insureds holding universal life policies:

• Get ahead of the curve by contacting your insurer to find out just how much your policy’s cash reserves are worth.  Depending on the amount you have accrued over the years, you might be able to afford future premium hikes.

• Alternatively, consider working with your insurer to lower the policy’s death benefit, and by extension, your costs.

• You could also inquire about changing policies. What else does your insurer have to offer you? Fair warning: It can be hard to get approved for a life insurance policy when you’re in your 60s or older.

• If all else fails, you could look for a life insurance agent or company who would buy the policy from you now in exchange for receiving the death benefit later.

For more information regarding life insurance in estate and financial planning, go here.

Oregon Court Orders DHS to Restore In-home Care- An Object Lesson in a State's Lack of Commitment to Home and Community Based Care

When state and federal agencies proclaim support for aging in place and home based care, there is reason to doubt their resolve.  A recent example can be found courtesy of a court case against the Oregon Department of Human Services (DHS).  A court has ordered Oregon DHS to restore previous levels of in-home care services, at least temporarily, to people with intellectual and developmental disabilities in a federal lawsuit contesting recent cuts.

DHS determines every year how many hours of in-home care someone with an intellectual or developmental disability is eligible to receive.  Disability Rights Oregon, an advocacy organization that filed the suit last week, objects to how those decisions are made, saying the process lacks clarity.

The lawsuit alleges that under federal law, the agency violated the civil and due process rights of Oregonians receiving these services, as well as the Medicaid requirement that the Office of Developmental Disabilities Services must provide such services “as needed.”  Last year, the agency implemented a new assessment method on a rolling basis, which the lawsuit argues resulted in a reduction of in-home care hours for many people — although the amount of help they needed at home had not changed.  Not all people receiving in-home care services have yet felt reductions, because the changes have been implemented gradually.

In 2013, after the expansion of Medicaid under the Affordable Care Act, and a specific federal funding option called the Community First Choice Plan that provided funds so people with disabilities could access community-based services, there were significant increases in those eligible for in-home care — and in costs to the state.  In 2015, Oregon legislators agreed to pay for the unanticipated costs in the upcoming budget cycle, but asked DHS to come up with a way to contain the rate of cost growth in the future. That became the method that advocates are now contesting in court.  Cost of care

The Department of Human Services makes up a significant chunk of the state’s approximately $20 billion general fund budget, which lawmakers are busy trying to balance in the face of an approximately $1.6 billion shortfall.  Reducing in-home care for people with intellectual and developmental disabilities by 30 percent, as DHS had planned prior to the court order, would have saved the state’s general fund a comparatively paltry  $6 million in the upcoming two-year budget.  

Cost considerations, i.e., saving $6 million of a $1.6 billion shortfall, could send people with intellectual and developmental disabilities currently being treated at home to foster care, group homes, and skilled nursing facilities.  To put this in context,  a state audit found that Oregon Health Plan caseworkers were “knowingly” extending benefits to illegal immigrants and unqualified people. Also, 4,400 people who were above the income limits still received benefits. The total cost to Oregon taxpayers is $4.3 million a year.   Further, an Oregonian survey helped to unveil $1.4 billion in uncollected debts to the state. It appeared that most state agencies have a collection problem and the actual cost may be even higher than $1.4 billion. Among the examples was a business that bought $50,000 of supplies made by blind workers under the State Commission for the Blind, for which they never paid. 

Home and community based care, it would seem, is a too-easy target for money-grubbing administrators.   

This article is heavily reliant upon the article found here.

May is Older Americans Month

May is  Older Americans month. The Administration for Community Living (ACL)  has a website dedicated to older Americans month.  The theme for 2017 is Age Out Loud.  Need ideas for events? ACL offers that here.  Helpful hints for using social media are offered as well.

The following comes from ACL:

Getting older doesn’t mean what it used to. For many aging Americans, it is a phase of life where interests, goals, and dreams can get a new or second start. Today, aging is about eliminating outdated perceptions and living the way that suits you best.

Take Barbara Hillary, for example. A nurse for 55 years who dreamed of travel, at age 75 Hillary became the first African American woman to set foot on the North Pole. In 2011, at age 79, she set another first when she stepped onto the South Pole. Former president George H.W. Bush celebrated his 90th birthday by skydiving. Actress Betty White, now 95 years old, became the oldest person to host Saturday Night Live in 2010, coincidentally during May—the same month recognized as Older Americans Month (OAM).

Since 1963, OAM has been a time to celebrate older Americans, their stories, and their contributions. Led by the Administration for Community Living (ACL), the annual observance offers a special opportunity to learn about, support, and recognize our nation’s older citizens. This year’s theme, “Age Out Loud,” emphasizes the ways older adults are living their lives with boldness, confidence, and passion while serving as an inspiration to people of all ages.

Our firm will use OAM 2017 to focus on how older adults in our community are redefining aging—through work or family interests, by taking charge of their health and staying independent for as long as possible, and through their community and advocacy efforts. We can also use this opportunity to learn how we can best support and learn from our community’s older members.

Throughout the month, I and my paralegals will conduct activities and share information designed to highlight changes in care giving and long-term care than empower aging Americans to age in place.  We encourage you to get involved by sharing this post and other articles from this blog, referring a client to suitable social, financial, or legal services that s/he might protect themselves from medical, legal, and financial threats.  Later this month, we will post a video regarding Aging in Place, and its importance in medical, legal, and financial planning. 

Join us and ACL as we speak up for #OAM17 and #AgeOutLoud this May!

Health Care Ageism And Senior Profiling

Those of us who regularly work with and for the elderly are painfully aware of pervasive latent ageism that often adversely impacts decision-making  concerning them.   Dr. Val Jones has penned an excellent article in the blog, better health warning of ageism in the health care industry.  Dr. Jones is  board certified in Physical Medicine and Rehabilitation,  and serves as a traveling physician to hospitals in 14 states.  She is a graduate of Columbia University College of Physicians and Surgeons and an award-winning writer.  She writes:

 Over the years I’ve become more and more aware of ageism in healthcare – a bias against full treatment options for older patients. Assumptions about lower capabilities, cognitive status and sedentary lifestyle are all too common. There is a kind of “senior profiling” that occurs among hospital staff, and this regularly leads to inappropriate medical care.

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Hospitalized patients are often very different than their usual selves. As we age, we become more vulnerable to medication side-effects, infections, and delirium. And so, the chance of an elderly hospitalized patient being acutely impaired is much higher than the general population. Unfortunately, many hospital-based physicians and surgeons — and certainly nurses and therapists — have little or no prior knowledge of the patient in their care. The patient’s “normal baseline” must often be reconstructed with the help of family members and friends. This takes precious time, and often goes undone.

Years ago, a patient’s family doctor would admit them to the hospital and care for them there. Now that the breadth and depth of our treatments have given birth to an army of sub-specialists, we have increased access to life-saving interventions at the expense of knowing those who need them. This presents a peculiar problem – one in which we spend enormous amounts of resources on diagnostic rabbit holes, because we aren’t certain if our patients’ symptoms are new or old. Was Mrs. Smith born with a lazy eye, or is she having a brain bleed? We could ask a family member, but we usually order an MRI.

My plea is for healthcare staff to be very mindful of the tendency to profile seniors. Just because Mr. Johnson has behavioral disturbances in his hospital room doesn’t mean that he is like that at home. Be especially suspicious of reversible causes of mental status changes in the elderly, and presume that patients are normally functional and bright until proven otherwise.

Dr. Jones gives examples of ageism impacting elderly care.  She describes the plight of an elderly woman admitted to a local hospital where it was presumed, due to her age, that she had advanced dementia. Hospice care was recommended for the woman at discharge. The woman had been leading an active life in retirement, serving  as the chairman of the board at a prestigious company, and caring for her disabled adult son.  She was physically fit , and an "avid Pilates participant."   It turns out that a new physician at her practice recommended a higher dose of diuretic, which she dutifully accepted, and several days later she became delirious from dehydration.  Dr. Jones concludes, "All she needed was IV fluids." 

Dr. Jones explains her recent treatment of an attorney in her 70’s who had a slow growing brain tumor that was causing speech difficulties. The attorney was written off as having dementia until an MRI performed to explore the reason for new left-eye blindness revealed the tumor.  The patient's tumor was removed successfully, but she was denied brain rehabilitation services because of her “history of dementia.”

Another patient, an 80-year-old male, was presumed to be an alcoholic when he showed up to his local hospital.  The patient, had, in fact, suffered a stroke.

These cases, and the countless cases like them, underscore the importance of good health care planning as part of a comprehensive estate plan.   I recommend that every client select and appoint a  trusted primary care physician, by name, in his or her estate planning documents.  I recommend that this person be given the authority to render decisions regarding competency and capacity.  I urge clients to develop a healthy on-going relationship with this physician, so that the physician will be aware of the client's lifestyle, speech patterns, comportment, and the like.  I urge clients to nurture this relationship even during periods during which the client is healthy, and without need for acute care.  Too often, the first time that a medical professional is evaluating a patient is immediately after an acute event or occurrence, inviting erroneous presumptions and judgements.  

Particularly for my clients hoping to Age in Place, this lifetime planning is vitally important. Inviting or acquiescing to a set of circumstances that result in health care decisions being made by professionals without knowledge or experience about you, only increases the possibility that institutional  long term care is your outcome.  Most of my clients work with legal counsel, their families, and their health care professionals to prevent unnecessary and avoidable long term institutional care.  

For more information regarding Aging in Place planning, go here.  For more information regarding LegalVault®, a system through which health care and legal documents are stored, protected and made available to health professionals upon demand, twenty-four hours a day, seven days a week, 365 days a years, go here.  

Filial Responsibility Laws Complicate Estate and Financial Planning

Warning of the challenges created by state filial responsibility laws, Jamie Hopkins, co-director of the New York Life Center for Retirement Income at the American College of Financial Services, has penned an excellent article for advisers entitled,  Family-Responsibility Laws Could Cost Your Clients: Be Aware of Laws Aiming to hold Family Members Financially Responsible for Other Family Members.

The article explains filial responsibility laws which "aim to hold family members financially responsible for other family members," by providing that "children can be held responsible for their mother and father’s nursing-home costs."   The article warns that although these laws have not been applied often because of the prevalence of social programs like Social Security, Medicare, and Medicaid, "with more and more retirees unable to meet their expenses, some providers have turned to filial laws for payment of debts."  

The article continues:

"The most widely cited recent application of filial law is 2012’s Pennsylvania case, Health Care & Retirement Corporation of America v. Pittas, in which the court held that a son was liable for a $93,000 nursing-home bill owed by his mom.

Since 2012, some care facilities have begun using filial laws to entice children of nursing-home residents to make payments or to ensure that the Medicaid application process is properly completed. However, there has not yet been a major uptick in lawsuits applying filial laws to recover unpaid bills.

Perhaps more interesting than the Pittas case is Eori v. Eori, in which the Superior Court of Pennsylvania upheld a monthly filial-support obligation of $400 from one brother to another in order to pay for long-term-care support for their seriously ill mother. The plaintiff son, who himself provided a lot of the care at home, was able to demonstrate that his mother could not pay all of her costs and needed financial assistance.

This case helps show the far-reaching potential of filial-support laws, as siblings can be required to help support their parents even if they are not in a nursing home or other professional facility.

This blog last warned about filial responsibility in the article Filial Responsibility Laws Lead to Chaos.  Many conclude that it is not a question of whether filial responsibility laws will find widespread application to long term care cases, it is a question of when.

To read more about filial responsibility, go here,  go here, here, here, here, and here.