Michigan Auto Insurance Reform – Order of Priority

 

Fighting Against The Legislation Changing The Insurance Law 
That Became Effective July 2020
"The new law does not provide the savings equal to the reduction of coverage"
said  30 Year Independent Agent, Ronald Dwyer to the media.

Michigan’s new auto insurance reform law took effect on July 2, 2020, bringing a number of changes to the current no-fault insurance system. An important change involves Order-of-Priority (OOP), which determines the insurer or entity primarily responsible for payment of personal injury protection (PIP) benefits resulting from a motor vehicle accident in Michigan or another state.

Under the old priority, an uninsured occupant injured in someone else’s car or a pedestrian who was injured would seek benefits from the owner/operator of the vehicle involved. This is no longer how these injuries will be covered.

Under the new law, an injured person collects PIP benefits in this order:

Drivers or Passengers of Private Vehicles:

1. Injured person’s own policy
2. Policy insuring any relative resident in the same household
3. Michigan Assigned Claims Plan (MACP)

Employer Provided Vehicles:

1. Insurer of the employer provided vehicle
2. Injured person’s own policy
3. Policy insuring any relative resident in the same household
4. MACP

Motorcyclists:
(Applies to operators or passengers of motorcycles.)

1. Insurer of the owner or registrant of the motor vehicle involved
2. Insurer of the operator of the motor vehicle involved
3. Insurer of the motorcycle operator
4. Insurer of the motorcycle owner
5. MACP

Non-occupants (pedestrians and bicyclists):

1. Insured person’s own policy
2. Policy insuring any relative resident in the same household
3. MACP

Operators of Vehicles for Hire (Including Uber/Lyft)

For Order-of-Priority information regarding operators and passengers of vehicles for hire, please contact your auto insurance agent.

Operators of Vehicles for Hire (Including Uber/Lyft)

Historically, OOP for a Michigan no-fault accident claim has been a bit confusing. Unfortunately, the confusion continues with the new law. While our goal is to provide you with a basic overview of the changes to OOP, the above information may not cover all possible scenarios. That’s why it’s a good idea to talk with your insurance agent if you have questions regarding any aspect of auto insurance reform.

The new insurance laws took effect July 2, 2020. Reading and understanding these materials will help you determine the best option for you and your family. You’ll also find helpful Michigan Auto Insurance Reform Law information by visiting Michigan.gov/autoinsurance. 

Michigan auto insurance law does not guarantee drivers savings, says official

Motorists have been hopeful that the much-needed changes would make a difference, but it’s not assured.

Drivers have been waiting for a new Michigan auto insurance law to help control high and rising premiums in the state. However, according to one official, motorists should not consider the savings to be guaranteed.

The personal injury protection (PIP) system has made Michigan rates the highest in the country.

The new Michigan auto insurance law does not provide any new assurances that the extra costs from additional required liability coverage would be offset by the decreases in the PIP component of motorist premiums. This, according to a leading insurance industry exec as quoted by the Detroit Free Press.

“We sure hope that they don’t wash each other out,” said Insurance Alliance of Michigan executive director, Tricia Kinley. “We simply don’t know how the premiums will shake out.”

That said, Kinley’s appraisal of the new law is in direct opposition to Governor Gretchen Whitmer’s assurances. Before the auto insurance bill was signed on May 30, 2019. Whitmer said she would give her signature to legislation only if it guaranteed that Michigan motorists would enjoy savings as a result.


There is considerable controversy in the state regarding the Michigan auto insurance law.

A spokesperson for Whitmer, Tiffany Brown, said that: “insurance executives are attempting to scare Michiganders,” on the heels of “historic legislation” negotiated by the governor. “We will continue to use the full power of this administration, along with the Department of Insurance and Financial Services, to ensure that insurance companies are enforcing a law that protects consumers, while holding big insurance companies accountable.”

Trial attorneys have expressed their discontent with Kinley’s unwillingness to acknowledge upcoming savings to motorists in the state. The attorneys said that insurance companies will enjoy cost reductions associated with fewer medical claims. Therefore, they say that Kinley should be willing to acknowledge that this savings would be notably greater than any costs associated with liability claims.

Penn State Law insurance law expert Christopher French said he anticipates that the Michigan auto insurance law will bring two increases. The first will be the liability insurance portion of motorist premiums. The second will be in private health insurance costs, which are not a direct part of the law, Michigan Auto Insurance Law - Driver - Steering Wheelbut will be affected by it indirectly. However, French also pointed out that he predicted overall savings in car insurance premiums because health insurance will take on more of the medical costs.

Signs that an online romance is actually a catfishing fraud

The FBI says that in 2018, more than 18,000 people fell victim to catfishing scams, with estimated losses exceeding $362 million.

Romance is not completely dead, but the days of wining and dining a potential love interest have given way to kissy-face emojis, lurid emails and sexting.

Nearly half of Americans age 18 to 29 now use dating sites and apps to search for their next crush, according to the Pew Research Center, and roughly one in 10 are in committed relationships with people they met that way. Online daters say it’s an easy and fast way to meet someone with similar interests.

The sheer volume of people looking for love online means the captive audience for catfishing has never been so crowded. These deceptive digital crooks lure in would-be romantics using fake identities with the intention of tricking or defrauding them. The FBI says that in 2018, more than 18,000 people fell victim to catfishing scams, with estimated losses exceeding $362 million.

What are the most common online romantic scams?

According to the FTC’s 2019 Consumer Sentinel Network Data Book, romance scams increased by roughly 50% from 2017 to 2019, reaching a record total of 25,147 reported romance scams last year. Scarily, the median reported loss to romance scams is seven times higher than for other frauds. Ultimately, like other fraudsters, romance scammers’ end goal is purely to profit from their victims. Below are some of the most common tactics to look out for so you don’t fall prey to these romantic swindlers this Valentine’s Day:

• They’re coming on really strong. You, of course, want your online dating endeavors to be successful, but could it be this easy? You’ve barely engaged with this person, and he’s already declaring his undying love for you. It’s difficult not to get wrapped up in it, and he even wants to meet this week. Unfortunately, he cancels last minute because something tragic has come up; his mother is in the hospital and the family needs money ASAP. He pops the question (but it’s the one you were hoping he wouldn’t ask): “Could you please wire money so that my mother can get the care she deserves?” This is a classic tale of romance scamming, and yet millions have fallen for it — and will continue to.

• They sound like a robot. (Hint: It’s because it is!) If their responses aren’t matching up to what you said, or they’re spamming you with messages directing you to another site, report the profile immediately — and definitely don’t click on any links they’ve sent. These other sites will either try to trick you into entering your personal information, including payment data, or they’ll install malware on your computer, which will then harvest your sensitive information. The good news is that these “bots” are fairly easy to spot: their profile pictures tend to be low quality and are pulled straight from Google. Also, most times their profile pictures aren’t even of the same person — a clear red flag!

• It seems too good to be true. She looks like a model; her profile bio seems to describe the perfect catch, and, lo and behold, she wants you! The nonstop flattery feels nice, and for a person that’s been lonely for a long time, it’s difficult not to indulge. But then propositions for gifts are made — or worse, credit card information. Unfortunately, there are plenty of people who give in because they don’t want this newfound “relationship” to end.

 Let’s face it: almost everyone wants to find love, and today’s digital age has made it easier than ever to do so. As with most things, scammers have found ways to get in on the fun — or rather, take advantage of it. When people are lonely or feeling hurt from a past relationship that didn’t pan out, it’s a bit easier to overlook warning signs (no matter how glaring they may be). Unlike other scams, the reward is potentially a lifetime of happiness if their suitor is indeed the real deal — and most people want to believe that more than anything. Some scammers even home in people that are recently divorced or who are in a particularly vulnerable situation (i.e., just got out of an abusive relationship). They can learn this information via social media if you don’t have your account set to private and you’re prone to sharing this type of information on your profile. This is just another reason to ensure you’re not publicly oversharing on social networking sites; otherwise, you’re making fraudsters jobs all the easier as they can learn tidbits about you which will help them curate the perfect “pick-up.”

Outside of trusting your gut when your intuition tells you something is off (even if you can’t put your finger on it), there are some other telltale warning signs that should never be ignored.

• Her profile pictures all look like they’re from professional photoshoots, and she can’t provide a single candid.

• He’s canceled in-person plans last minute — over and over again.

• She says she’s local but seems to have no knowledge of the area.

• And despite growing up here, her messages contain more than just typos — there’s definitely a language disconnect.

• He wants to keep your conversation strictly on the phone and refuses to use Skype or FaceTime, despite saying he wants to see you.

If you can check off just one of these red flags, that doesn’t necessarily mean you should sound the alarms, but proceed with extreme caution and do your due diligence. Below are some additional tips to keep in mind as you navigate the sometimes scary world of online dating, which can help keep your heart (and money) out of the hands of scammers.

• Stick with using larger, established dating websites, which have safeguards in place to catch and block fraudulent profiles.

• If your love interest is asking for personal information that seems too sensitive, say no — and this especially goes for credit card information.

• If you have an identity protection plan in place, see if they have any kind of scam assistance service, like Generali Global Assistance. These types of services will do all the research for you to let you know if the person vying for your attention is legitimate or not.

Ultimately, if you keep your financial information to yourself — as you should do in any budding relationship — you’ll stay scam-free on Valentine’s Day.

Helicopter Sikorsky crashes north of Los Angeles | Kobe Bryant

FAA Recording Of The Last Minutes Of Kobe Bryant's Fateful Flight

The cause of the helicopter crash that killed retired Los Angeles Lakers basketball player Kobe Bryant, his 13-year-old daughter and seven other people, remains unknown. The National Transportation Safety Board is investigating the crash, which occurred on a foggy Sunday morning in a hilly area in west Los Angeles.

Could there be a lawsuit?

Our colleagues at The Recorder reached out to former U.S. Department of Transportation Inspector General Mary Schiavo, a partner at Motley Rice, whose firm brought a lawsuit over a crash of the U.S. Army’s Black Hawk helicopter, a Sikorsky similar to the one that was taking Bryant and the other passengers to his daughter’s basketball game.


What follows is an excerpt from that conversation.


What can you tell us about this helicopter?


This one was a 1991 helicopter, so it’s got some years on it. To me, it was interesting it was circling downtown Los Angeles at a very low altitude. To me that says fog, or some kind of problem. Then they headed to Calabasas. Then they turned left and headed to a wooded non-populated area. Those [movements] might suggest you’re having mechanical [problems], or they were desperately trying to get out of the fog.


When you look at maintenance records, what it was used for in the meantime, what was the reason they went “visual flight rules,” instead of IFR [instrument flight rules]? In the Black Hawk Sikorsky case, there were everything from problems with the rotor, the rotor pitch failed, one problem was the seat came loose.

What about the pilot?



It’s looking bad at this point for the piloting, but we don’t know yet. But taking off in limited visibility on a visual flight rule plan, that call will be questioned by the NTSB. Why didn’t they go instrument flight rules, which means air traffic control? So here, the second avenue of examination will be the pilot’s performance and whether this is pilot error, which brings us to the third thing lawyers will look at: What is this holding company?



…So which holding company is it?



This aircraft was titled, or owned, by a company called Island Express. Island Express is [based] south of Los Angeles in Orange County, and runs visual tours, air tours. They take people out over Catalina Island. They have a few dozen employees, and they were looking for more employees when this happened… They took their website down.

They have a number of pilots and do tours. Some media reports said this was Kobe Bryant’s helicopter, but the registration does not say that. It says it belongs to Island Express. That will bring us into the legal conundrum of:


Were the pilots also Island Express pilots?

What kind of coverage does Island Express have? and

Were there any special circumstances? Did Kobe or anyone on that plane put pressure on the pilot?

They’ll be looking at what kind of flight control Island Express had on this flight. It looks like they owned it, it looks like it’s their pilot, so why weren’t they more careful? Does Mr. Bryant’s estate have any financial interest in this Island Express, or did he turn over ownership of his helicopter to maintain it?


What do you make of the air traffic controller’s conversation with the pilot?


I’ve only heard snippets of air traffic control. The U.S. government runs air traffic controls. They said they were going to follow the aircraft on radar. But then they said, “No, you’re way too low.” They said, “We can’t climb any higher because we’re in the clouds.” They were really low for LA. That’s a little surprising. So they said, “We can’t provide you flight forwarding anymore. We can’t watch you on radar; you’re too low.” What we need to hear is the next few sentences. What came next? Did they give them any more instruction?


Why is that important?


That’s really important because it is possible air traffic control made a mistake. If that’s the case, the U.S. of America foots the bill.


…We don’t know what the FAA told them next. If they said climb to 2,000 feet and turn left, and there was a mountain in their path, the government is liable. If the next thing is you are not legal, you are in the clouds, you are flying VFR without visual reference, you have to get out of there, you are flying illegally, it’s on the pilot. Those next sentences could be billion-dollar words.

Is there any circumstance here in which there might not be a lawsuit?



I don’t see it.



This article has been edited for length and brevity.

The original version of this story was published on The Recorder

Scammers are upping their game, trading fishy phone calls for believable text messages

Scammers are upping their game, trading fishy phone calls for believable text messages masquerading as shipping and delivery confirmation messages from companies like FedEx according to web security firm How-To Geek.

While fake text messages are nothing new in the realm of scamming, more people have reported receiving text messages written to look like package delivery confirmations. How-To Geek opened one such message to see what they could find, but warned others not to repeat the practice. They instead advise blocking the sender.


Following the link, How-To Geek reported being taken to a fake Amazon listing and being asked to take a customer satisfaction survey. For their efforts, the fake listing offered a reward for completing the survey; an "expensive" product for free.

The "free" reward still required a credit card (as well as an address) to pay for shipping. The process also involved signing up for a 14-day trial to the company selling the too-good-to-be-true products.

After the trial, the company charges the listed card a whopping $98.85 every month, and will send a new supply of whatever reward was claimed from the survey.

It is never safe to click on an unknown link, and you should never click one you suspect coming from a spammer. If clicked, it is all the more important to not enter personal information or banking information to a site you aren't certain of.

Below are text messages: one legitimate, one fake. The differences are nearly imperceptible.

Notice this one does not have a true domain name nor does it start with https://

This one is legit because it starts with https://
 and if you research narvar.com you will find it to be a legitimate website

6 Near-Genius Ways to Fool Burglars Into Thinking You’re Home

Your home: You love it, but sometimes you have to leave it.

Whether it's the eight hours a day or eight days on a dreamy beach, allowing your biggest investment to fend for itself can be stressful. And it's a legit concern; when your home looks empty, break-ins happen. A lot. Ugh.

You could deter burglars by never leaving your house again. Or you could do the next best (OK, way better) thing, and just make it look like someone is there all the time. Here's how.

#1 Light Up a Room (From the Road)
Your parents may still rely on their lighting timer — on at 8 p.m., off at 7 a.m. That old-fashioned option still works, but apps are more fun. They not only turn your lights on and off, but can do so randomly for a more realistic effect. And you can decide to flip on your porch light while sipping a mojito in Fiji.


#2 Fake a Netflix Binge
Nothing says "we are definitely home" like the colorful glare of a television dancing in the window.

Put the little FakeTV gizmo where it can project light onto a curtain, and that's exactly what your home will say to passersby.

The device (which runs between about $20 and $40 depending on size) plugs into an adapter and can either work on a timer or with a light sensor, so it can switch on when it gets dark.

#3 Change Up Your Shades Remotely
Leave your window shades down while you're gone and you might as well put out a "Gone Fishin'" sign.

Check out wireless options to throw some shade on the go. Several companies have systems — including Hunter Douglas PowerView, Pella Insynctive, and Lutron Serena — that allow shades to go up and down at your command for about $300 to $500 a window.

#4 Make Some Noise
Burglars can change plans in a hurry at the first sound of life inside a home — they're a bit tetchy that way. So one option when you're just gone for the day is a noise app, like Sleep And Noise Sounds that can play on a homebound phone, tablet, or computer. With noises like vacuuming and a boiling kettle, it can deter a thief who cracks open a window.

#5 Make Them Ring And Run
"Burglars will often ring your doorbell, and if no one answers, they'll go around back and kick in the door," says Deputy Michael Favata with the Monroe County Sheriff's office in New York. Now you can answer the door with the Ring Video Doorbell ($180 for the basic model).

If someone pushes the doorbell, you can talk to them through an app on your phone. Whether it's your nosey neighbor or a sketchy stranger, you can say, "I'm in the basement" while you're really on the slopes. They'll never know. And even if they don't believe you, they know they're being watched (insert devilish laugh here).

#6 Try a No-Tech Technique
Not everything requires a gadget. Here are ways to up your home security without downloading a single app:

Hire a house sitter. Then someone will be home.

If there's snow, have a neighbor walk up and down the path to your door, shovel a passage up to the garage door and drive in and out of the driveway. If it's hot out, ask them to keep your plants looking fresh with regular waterings. And don't forget to bring them a nice gift from your getaway.

Ask friends, family, or neighbors to just be present on your property — use your patio, play in your yard, or bring in the mail.

Invite a neighbor to keep a car parked in your driveway. During the holidays, they may be happy if they need overflow for visitors.

Install a fake security camera for as low as $8. Burglars may not notice these fakes don't have all the wiring necessary to be real. And their blinking red lights offer reasonable doubt.

Get a dog. A real dog. While you're at work or running errands, nothing deters bad guys and gals like a barking security guard. And when you go away, having a pet sitter stay can be as economical as some boarding facilities (especially if you have multiple dogs), and you'll get the benefit of a human and canine sentinel.

INSURANCE 101: Long-Term Care Insurance

Although the financial burden associated with medical expenses can be alleviated through the utilization of Medicare and Medigap programs, they do not offer coverage for long-term ‘custodial care.’  Costs related to this type of service are usually very expensive and often result in a considerable depletion of an individual’s retirement funds.

Evaluations to Make Before Purchasing
LTC insurance provides important financial protection against the cost of long-term care for individuals who stand the chance of losing accumulated income or wealth in paying for such care.  However, not all individuals need to purchase LTC coverage, especially those individuals who are eligible for financial assistance through Medicaid.

Determining whether not an LTC policy should be purchased, individuals should take the following into consideration:

• Health history
• Family assistance
• Cost of required care
• Savings and Assets that may be lost

Long-Term Care (LTC) Insurance provides coverage for expenses associated with custodial care and assisted living for individuals who have lost the ability to remain completely independent.  LTC coverage provides care, usually for a period 90 days or more, and can be provided by an adult care center, nursing home or at an individual’s home.  While some LTC policies offer unlimited lifetime coverage, most plans limit coverage periods from 3 to 5 years, often with limited benefit amounts.

Upon deciding to purchase LTC coverage, determining the conditions, benefits and cost of the policy are also important to evaluate, as well as any elimination periods, policy limitations, policy rate increases and the overall financial health of the LTC insurer.

Ways to Issue Contracts

Individual
LTC insurance can be purchased on an individual basis where the policy is paid for by the individual and provides coverage directly to the individual for whom the policy is written, or can be written as an endorsement (rider) to a life insurance policy.  LTC premiums are determined by the age and medical history of the applicant. Generally speaking, the younger the individual, the lower the LTC premium required.

Group
LTC insurance can also be provided to members of a group.  As with life and health insurance, a group LTC policy is issued to by the insurer to the sponsor of the group who serves as the master policyholder and issues certificates of LTC coverage for participating members of the group.  Upon termination from the group, an individual must have the right to continue or convert to an individual LTC policy without requiring evidence of insurability.

LTC Benefit Payments
Long-term care insurance policies provide benefits through either fixed dollar amounts or expense-incurred amounts. LTC benefit payments are based on a per-day basis to cover the daily LTC expenses incurred by the insured individual.

Fixed Payments
As an example, if an insured’s fixed LTC indemnity payment is $150 per day, but the insured’s LTC costs are only $120 per day, the insurer still pays the insured the entire $150 daily benefit amount as long as LTC coverage is needed.

Expense-Incurred Payments
Some insurers now follow an expense-incurred basis that covers the actual charges that were incurred in comparison to a fixed dollar amount.

Long-term care provides coverage when physical or mental conditions, whether acute (such as pneumonia) or chronic (such as heart disease), impairs an individual’s ability to perform the basic activities of everyday life such as feeding, toileting, bathing, dressing and walking.

Types of Long-Term Care
Dependent on the severity of an individual’s medical needs, LTC coverage provides for various types of care, from around-the-clock physician’s care in a nursing home to basic living services performed by medically trained individuals in the patient’s home.

Skilled Nursing Care
Usually administered at nursing homes, this type of long-term care involves around-the-clock care by a licensed medical professional under the supervision of a certified physician.

Intermediate Nursing Care
Similar to skilled nursing care, ‘intermediate’ long-term care is also offered at nursing homes by registered nurses under the supervision of a physician, but without around-the-clock care.

Custodial Care
Although it must be given under a doctor’s order, this category does not require services to be performed by a medically trained individual.  These services include bathing, dressing, getting out of bed and toileting, to name a few services.  Long-term care assistance can be administered within a nursing home or adult day-care center; however, most long-term care is administered at the home of the patient, also known as ‘custodial,’ or residential care.

Qualified vs. Non-Qualified LTC Plans
Qualified LTC plans are federally qualified for tax benefits when such plans stipulate that covered individuals must be diagnosed as chronically ill, whether such illness is physical or cognitive, unless prior hospitalization occurred and the individual is considered acutely ill.

Chronic physical illness includes the inability of two or more of an individual’s daily activities for a period of at least 90 days, such as feeding, toileting, bathing dressing and mobility.  In order to qualify as cognitively impaired (a deficiency in the ability to think or reason), an impairment diagnosis must be certified by a physician within the previous 12 months.

Non-qualified LTC plans do not require such diagnosis, nor any other specific requirement since it is not mandated under the federal tax code, unlike a qualified LTC plan.  While such plans do not receive favorable tax treatment, individuals who do not qualify for a qualified LTC plan, based on the individual’s medical diagnosis, often do qualify for a non-qualified LTC plan.

Types of Contract Limits
Although there are numerous LTC plans available for those in need, similarities can be found throughout which enable us to discuss basic provisions and limitations found in many of these plans.  As an outcome of the Health Insurance Portability and Accountability Act (HIPAA) of 1996, all long-term care plans must contain provisions that enable their benefits to qualify for tax-exempt treatment as well as adopting specific provisions of the NAIC’s long-term care insurance model regulation.

Elimination Periods
The elimination period in an LTC policy is often referred to as a ‘time deductible,’ and can range from zero to 365 days.  Generally speaking, the longer the LTC’s elimination period, the lower the LTC’s premium, as well as, the longer the LTC’s benefit period, the higher the LTC’s premium.

Daily Benefit Limits
Whether fixed or expense-incurred, payments provided by an LTC policy are limited to a daily maximum.  Expenses that exceed policy maximums are the responsibility of the insured.  Determining the correct daily maximum benefit level is commonly based on the average LTC costs within the geographic area of the insured.

While most states mandate a minimum daily benefit amount, daily maximum levels coincide with the amount of premium paid by the policyholder.

Lifetime Maximum Limits
Also directly correlated with premium is the amount of time in which benefits are payable by the insurer.   It is important to choose a policy that is both affordable and provides enough LTC coverage for what an individual might expect in the future.  An insurance agent’s job is to help determine the correct amount of coverage based on his or her evaluation of the applicant.

Guaranteed Renewable and Non-Cancellable
As a requirement of HIPAA, as long as premiums are paid, all LTC plans must be guaranteed renewable and non-cancellable. An insurer cannot make any other changes to a LTC policy once it becomes effective.

The insurer has the right to increase premium rates on an LTC policy over time only if it increases the overall premium of a large group, or ‘class’ of individuals, but not on an individual basis.

Waiver of Premium
Most LTC policies include a waiver of premium provision that waives an individual’s need to pay premium while receiving LTC benefits.  This option is usually effective once a patient has been under the care of a licensed physician for a period of at least 90 days of confinement.

Specified Exclusions
The following are almost always excluded from LTC policies: acts of war, self-inflicted injuries, and drug and alcohol dependency.

Skilled vs Non-Skilled Nursing Care
Skilled nursing care requires the care of a licensed nurse under the orders of a physician; whereas, non-skilled nursing care pertains more to the personal daily living assistance, known as the Activities of Daily Living (ADL) of a patient including bathing, feeding, administering medicine and general maintenance of the patient.

Long-Term Care Facilities

Home Health Care
Medically-necessary care conducted by a registered nurse is often performed within the home of the patient, in comparison to care within a hospital.  This type of rehabilitative service is designed to help patients readjust to everyday living, commonly provided after a stay in the hospital.  This type of in-home skilled nursing care provides both rehabilitation, as well as daily living assistance, if necessary.

Nursing Facilities – Adult Day Care and Assisted Living
Assisted living centers, also known as ‘nursing homes,’ are available for individuals who require substantial assistance in daily living activities and provide a variety of healthcare services, as well as a group living environment, versus seclusion for individuals who are ‘homebound,’ or have lost the ability to live alone.  The difference between nursing facility care and skilled nursing care is dependent on the type and extent of care required by a patient.

Hospice Care and Respite Care
Considered an optional benefit of LTC, it provides for the control of pain and provides a comfort of living for terminally ill patients.  Respite care allows for the temporary medical care of a dependent that allows for the primary caregiver, usually family member, to receive a short period of time ‘off’ from providing care, whether for a few hours per day or for a period of a few weeks. The dependent is either cared for within their residence or at a medical institution.

LTC Partnerships

Traditional LTC vs. Partnership Policy
Both traditional policies and Partnership policies provide long-term care coverage; however, in comparison to a traditional LTC policy, a Partnership policy is more highly regulated by the state, it provides a tax deduction to consumers and it includes an additional benefit known as ‘Medicaid Asset Protection.’

Medicaid Asset Protection
To qualify for Medicaid, an individual’s income and personal assets determine his or her eligibility.  Low or no income individuals who cannot afford to cover long-term care costs after LTC coverage has been exhausted typically qualify for Medicaid; however, since eligibility is also based on an individual’s personal assets, in cases where an individual’s assets exceed state Medicaid eligibility levels, such assets prohibit the individual from Medicaid eligibility.  As a result, in order to qualify for coverage, an individual would need to sell off his or her assets in an attempt to ‘spend down’ to a level low enough to qualify for Medicaid.

However, through Medicaid Asset Protection in a Partnership policy, an individual can disregard, or will not have to ‘spend down,’ his or her personal assets.  As an added benefit of a Partnership policy, and at no additional cost, Medicaid Asset Protection provides financial protection against personal asset loss in the event that an individual, based on insufficient income, needs to apply to Medicaid for long-term care coverage after he or she has exhausted private coverage.  Referred to as Asset Disregard, Medicaid eligibility is adjusted for enrollees in a Partnership policy, disregarding personal assets in determining Medicaid eligibility.  Medicaid Asset Protection is a benefit of a Partnership policy, but is not included in a traditional long-term care policy.

It is important to note that although the personal assets of a Medicaid applicant are disregarded, income from social security, interest income and income from a pension are not protected from Medicaid eligibility rules and can determine Medicaid eligibility. Assets that are disregarded under a Partnership policy include items such as cash, savings and checking accounts, stocks and bonds, certificates of deposit, money market certificates, IRAs and real property.  Under Medicaid Asset Protection, these same personal assets are protected from Medicaid ‘estate recovery.’

Both the federal and state governments mandate Medicaid Estate Recovery in which the state reimburses itself for the costs it incurs by a Medicaid recipient through the recovery of the recipient’s personal assets and savings.  States mandate such recovery of costs for all individuals age 55 and older who receive Medicaid benefits such as nursing facility services, home and community-based services, and related hospital and prescription drug services.

Estate recovery includes the state’s taking possession of a Medicaid recipient’s personal assets, excluding the proceeds of a life insurance policy or annuity contract, or the recipient’s personal effects and family keepsakes.  Recovery of an individual’s estate after his or her death is also common unless such recovery creates an undue hardship for the recipient’s surviving spouse, dependent children under the age of 21, or disabled or blind dependent children of any age.

Again, in addition to ‘asset disregard’ in determining Medicaid eligibility, Medicaid Asset Protection also prohibits the recovery of a Medicaid recipient’s estate up to an amount at least equal to the amount of benefits used through the Partnership policy.  It is important to note again that an individual’s income from social security, interest income and income from a pension are not covered by Medicaid Asset Protection and, if eligible for Medicaid, this income would ultimately be used to reimburse the state for the cost of the Medicaid recipient long-term healthcare.

Types of Asset Protection
The amount of Medicaid Asset Protection provided to an enrollee is based on the type of protection he or she qualifies for upon initially purchasing a Partnership policy. Two types of asset protection are available: ‘dollar-for-dollar’ and ‘total asset’ protection.  The type of asset protection depends on the amount of coverage initially purchased compared to the State-Set Dollar Amount, which is the minimum initial amount of coverage an applicant must purchase in a Partnership policy in order to earn ‘total’ asset protection.

An applicant who initially purchases a Partnership policy with less than the state-set dollar amount in benefits is provided with an equal amount of asset protection for each dollar of Partnership policy benefits paid out, but does not receive total asset protection.  In comparison, an applicant who initially purchases a Partnership policy with at least the state-set dollar amount and whose policy includes at least a 5% ‘compound inflation factor,’ is provided with total asset protection once the Partnership policy has been exhausted.  The compound inflation factor requires benefits that are mandated by the state to increase annually by 5% or at the inflation rate associated with the consumer price index to keep up with the rising cost of healthcare

A Total Asset policy protects all assets if an individual needs to apply for Medicaid after exhausting all Partnership LTC coverage.  Under total asset protection, all assets (not income), are protected from Medicaid spend down and estate recovery.  In comparison, a Dollar-for-Dollar policy provides asset protection equal to the amount paid out in benefits from the Partnership policy, up to the policy’s benefit limit.

National Reciprocity Compact
The National Reciprocity Compact allows participating states to opt in and out of their reciprocity agreement at any time within 60 days’ notice.  If a state opts out of reciprocity, individuals who have already accessed Medicaid continue to qualify for coverage.  If a state’s Partnership program ceases to exist in the future, a resident who purchased a Partnership policy prior to such date would still be eligible to receive earned asset protection under the state’s Medicaid program.

Asset protection under a reciprocity agreement with another state is on a dollar for dollar basis.  In order to receive total asset protection, an individual would need to move back to the state in which he or she purchased a Partnership policy.

INSURANCE 101: Basic Concepts of an Annuity

An Annuity is a financial vehicle that provides income at a future date in an individual’s life and is commonly used to save up for higher education costs or as a retirement savings fund.  An annuity is considered to be a form of insurance that provides future income to an individual while still alive, instead of when he or she dies.  As a financial product offered by financial institutions and insurance companies, money is deposited either as a lump sum or as a series of payments by the owner of the annuity to a financial institution which then invests the money, tax-deferred, in order to earn interest and accumulate value for the investment.

Later in the annuity owner’s life, payments are distributed back from the financial institution along with the investment’s earned interest.  An insurance company is able to offer annuities because of its ability to guarantee annuity payments for the entirety of the annuitant’s life, regardless of the age of the individual.

4 Parties Involved in an Annuity

• Insurance company (or other financial institution)
• Owner of the annuity
• Annuitant
• Beneficiary
• Annuity Structure and Design

An annuity is a legally binding contract involving an insurance company (or other financial institution), the owner of the annuity, an annuitant, and the annuity’s beneficiary.  Although the owner of the annuity contract is often the same individual as the annuitant, both roles are unique to the contract.

The annuity’s owner is responsible for depositing funds in the form of premium payments into the annuity as well as for all taxes owed from the annuity’s earned interest.  In return, the insurer invests the owner’s premium payments in stocks, bonds or securities, depending on whether the annuity is ‘fixed’ or ‘variable,’ and over time the annuity builds value.

When the annuity matures it ‘annuitizes,’ meaning that the contract begins to distribute both the Invested Principal and Earned Interest to the annuitant to serve as future income.  If the annuitant dies before the contract is annuitized, the contract’s beneficiary becomes the receiver of the contract’s payout.

Both the owner and insurer benefit from an annuity contract because both parties earn interest on the invested payments by the owner.

During the annuity’s growth period, known as the Accumulation Period, interest that is earned by the investment is ‘compounded,’ or reinvested on a tax-deferred basis, thus allowing for a greater accumulation of funds for the annuitant.  By compounding the interest, each year’s returns are re-invested, thus providing the annuitant with an exponential growth rate.

Once the contract annuitizes, a second period, called the Annuity Period, or ‘payout’ period, begins.  During this period, the interest that accumulates is taxed appropriately as ‘gains,’ or earnings, on the investment; however, since the invested funds paid into the annuity using after-tax dollars, only the earned interest, or gains, on the investment are taxed,

The invested funds and earned interest can be distributed back to the annuitant in a variety of ways such as over a certain period of time, at a specific monetary amount per payment, or it can even serve as a death benefit to an annuitant’s designated beneficiary.

Group vs. Individual Annuities
Similar to an individual annuity, a group annuity provides monthly income to members of the group.  Each member of the group is provided with a certificate that defines his or her participation rights in the group annuity.

A group annuity is often purchased to fund ‘defined benefit’ pension plans in which an employer establishes to provide future pension to company employees.  Likewise, individuals purchase annuities to provide a structured future stream of income.

Business and Personal Uses of Annuities

Business Uses
Often set up by employers as part of a retirement compensation package, a qualified annuity is often used to fund pension plans, 401(k) plans, 403(b) plans, SEPs, and other retirement plans on a tax-deductible basis.  Based on the tax-deferred eligibility of the group, funding into the plan by the employer is paid with pre-tax dollars

Personal Uses
On the individual level, an annuity is used to provide a future stream of income for the individual to serve as retirement income, or as a source of funding for higher education, such as through an Individual Retirement Annuity (IRA).

Annuity Riders
As with a life insurance policy, riders can be added to an annuity to provide additional benefits for the annuitant.  While an annuity rider typically requires additional premium, the benefits provided by such rider can greatly benefit the annuitant in the future.

Annuity riders commonly added to an annuity include long-term care riders, guaranteed monthly income riders and death benefit riders, each providing extra benefits to the owner of the annuity as well as extra financial protection for the annuitant.

Insurance Aspects of an Annuity
Although an annuity contract is not the same as a life insurance policy, both contracts can create similar protection depending on the structure of the annuity.  It is important to realize that an annuity is not life insurance, and each is treated and taxed differently.

Most commonly, an annuity provides living benefits for the contract’s owner, who is also the contract’s annuitant; however, some annuities are designed to be similar to the type of financial protection provided by a life insurance policy.  An annuity owner can pay the contract’s premiums and taxes on earned interest and designate another individual as the contract’s annuitant, who receives the distributed funds during the contract’s designated annuity period.


Owner-Driven vs. Annuitant-Driven Structure
An example of when an annuity owner is not the annuitant is in an ‘owner-driven’ annuity structure.  This type of annuity structure involves the owner and annuitant being two separate individuals and is designed to benefit the annuitant upon the death of the annuity’s owner.

In comparison, the more common ‘annuitant-driven’ annuity structure involves the owner and annuitant being the same individual, and at the point of annuitization, payments are made back to the owner/annuitant or the designated beneficiary in the event that the owner/annuitant dies within the contract’s annuity period.

Premium Payment Options
Single (Lump Sum)
The most common premium option is the single, lump-sum option.  This single payment is invested by the contract owner initially and continues to grow as the insurer reinvests the annual earned interest back into the annuity.

Level
This type of premium structure allows an annuity contract owner to make equal premium payments to the insurer on a scheduled basis, such as on a monthly, quarterly, semi-annual, or annual basis.  As premium deposits are made by the contract’s owner, both the invested principal and earned interest continue to build and grow the annuity.

Flexible
This type of premium structure allows an annuity contract owner to vary the annuity’s premium deposit amounts at his or her discretion to better follow his or her budget, although a minimum and maximum premium payment level are enforced by the insurer.

Annuitization Time Frames (Immediate vs. Deferred)
Single Premium Immediate Annuity (SPIA)
Designed as a means of spreading out a lump-sum of money over a specified period of time, an Immediate Annuity begins to distribute funds immediately after the first payment period (depending on payment frequency: monthly, quarterly, semi-annual, or annual), and is used when a single, lump-sum premium is deposited by the contract owner with the intent of distributing it over a specified period of time to the annuitant (again, the annuity owner and the annuitant can be the same person or two separate people).

Single Premium Deferred Annuity (SPDA)
A Deferred Annuity delays payout to allow interest to compound over a period of time.  Again, an annuity is not taxed during the accumulation period to allow interest to build a quicker rate, thus providing a larger investment return for the annuitant.  A deferred annuity can be paid with a single premium, known as a Single Premium Deferred Annuity (SPDA), or through multiple premium deposits.

Flexible Premium Deferred Annuity (FPDA)
Some insurers provide additional flexibility by offering a multiple premium, deferred annuity that allows the contract owner to control the premium deposit amounts and frequency within certain limits stated in the contract, known as a Flexible Premium Deferred Annuity (FPDA).

INSURANCE 101: Health Insurance Portability and Accountability Act (HIPAA)

Enacted in 1997, the Health Insurance Portability and Accountability Act, also referred to as HIPAA, provides for the portability of group insurance between employer group insurance plans and from an employer-sponsored plan to an individual policy if the individual becomes self-employed.

HIPAA includes several common components, one of which is that a new employer must offer continual coverage to a new employee if the employee is switching from a prior employer’s coverage and was insured for at least the previous 18 months on the prior group plan.

Another component of HIPAA includes its length of coverage.  Insurance portability through HIPAA is mandated for 63 days between employment periods to allow sufficient time for an employee to switch insurance coverage. Individual insurance through self-employment is considered portable from group insurance as well.