Do you know any senior who has bought a deferred annuity? Chances are that elder was the victim of an unscrupulous sales agent. Americans aged 65 and older collectively own $15 trillion in assets, the largest pool of assets ever amassed by Americans in this age group. Insurance companies are trying to siphon off this money through independent sales agents who use unscrupulous scare tactics to sell investments that experts say most retirees should never own, according to a recent article in the New York Times.

In fact, improper sales of annuities make up one-third of all cases of financial abuse, according to the article. Seniors are attracted to annuities because they are concerned about running out of savings before they die. Annuities guarantee fixed monthly payments for the life of the investor, in exchange for an initial lump-sum investment. Unlike non-deferred annuities, where the monthly payment begin immediately, deferred annuities don't begin payouts until five to ten years after the investment, potentially leaving the elder destitute during the period where no payments are made, and raising the possibility that the elder may pass away before they ever see a dime from the insurance company. The article describes how insurance companies pay agents huge commissions to sell deferred annuities to the elderly because these policies are so profitable for the company.

Insurance companies hope that by using "independent" sales agents that they will avoid their own responsibility for the unscrupulous tactics these agents predictably use. Sales agents with bogus, but impressive-sounding credentials like ''certified elder planning specialist” are paid hefty commissions from insurance companies to target elders. They set themselves up as authorities on elder finances, and then use scare tactics to trick elders into turning over their savings for unsuitable investments.

One victim, 72-year-old Mary Ann St. Clair (pictured here) told the reporter her story. ''[The agent’s] office was filled with things saying he was certified to help seniors. . . . [But] the only one he really helped was himself.'' Yes, to her life savings of $75,000! In exchange,the sales agent, Michael DelMonico, sold her a deferred annuity which didn’t pay out for five years.

''All these insurance companies had trusted him, so I knew that I could trust him, too,'' she said (Definitely a non-sequitor, Mary Ann, as now you know!). ''And when he became a certified senior adviser, I felt good, because he had gone to school for a long time.'' (Right, he didn't tell you that it was just a mail order correspondence class, did he?)

After entering into the contract, Mrs. St. Clair had unexpected bills for dental work and repair work on her home but no money now to pay them. She contacted the insurance company, Old Mutual, and asked them to cancel the contract, telling them that DelMonico hadn’t fully explained them to her and that she had never intended to buy the annuities.

Shamefully, the insurance company refused to give her money back, and stood by DelMonico until he was sued by the Attorney General of Massachusetts for using improper sales tactics with other elderly buyers. Old Mutual is itself now the subject of a U.S. Senate investigation into the sales tactics used by their “independent" sales agents.

The Times’ article quotes Jim Nelson, an assistant secretary of State in Mississippi as saying, ''If insurers would cut off these companies, this behavior would end tomorrow. Instead, they just close their eyes or say it's not their fault when a supposedly rogue sales agent misbehaves.. . .It's scandalous that the insurance companies are working with these marketing organizations.''

DelMonico, who is still selling insurance for dozens of companies, told the Times reporter "I did what I was told. . . .If it was so wrong, why did everyone let me do it for so many years?''

That, Mr. DelMonico, is no excuse, but it is the very thing that we would all like to know.

For the New York Times article, click here..


Felicia Curran
www.ElderAdvocacyLaw.com

Elderly consumers are increasingly being victimized by insurance companies selling private fee-for-service Medicare plans, according to Robert Pear of the New York Times. In 1997, Congress set up private Medicare plans -- so-called “Medicare Advantage Plans” -- allowing seniors to replace traditional Medicare health coverage with enrollment in a fee-for-service health insurance plan. Insurance companies are milking these plans for all they are worth, with aggressive marketing. Almost one-fifth of the 43 million Medicare beneficiaries are in some type of private plan, and they are the fastest growing segment of the private Medicare plans.

But some of these seniors who wind up in private plans didn’t even sign up for the plan. Take the case of Bobbie Whatley, pictured here. Wellcare insurance company sent an agent to her doorstep in Columbus, Georgia last November. When she declined to buy the private insurance, the Wellcare agent, forged her signature and a month later she received mail thanking her for joining the plan. As Bobbie says, “It turned into a nightmare... I have all my mental faculties. If I let somebody like this come into my home and take advantage of me, then I am really concerned about older people who are more debilitated and not able to take care of themselves.”

Agents pushing the private Medicare plans sign up unwilling or unwitting seniors, who are not exactly sure what they have bought. Some think that they have just bought prescription drug coverage. Insurance agents often do not explain to elderly consumers that these private plans have hefty co-pays that traditional Medicare does not charge - such as $100 a day co-pays for nursing home stays and hundreds, or even thousands of dollars in co-pays for prescription medications.

Seniors also aren’t told that their doctors or hospitals may not accept these private plans in place of Medicare.

One state insurance commissioner who fields complaints about these private Medicare plans says that the problem is that the law does not require insurers to make disclosures to consumers about the increased costs associated with these plans. “This is a prime example of what happens when the federal government passes a law without proper safeguards,” says Mr. Dale, Mississippi Insurance Commissioner.

To add insult to injury, Congress actually pays these private plans huge subsidies, paying 19% more on average per senior. Is it any wonder that the Medicare trust fund is projected to go broke by 2041??

Wellcare Insurance Company denies it authorizes improper sales tactics, but the Centers for Medicare and Medicaid Services says that Wellcare’s oversight of unscrupulous sales agents is “inadequate and unacceptable.” CMS vows to “step up supervision of private plans.”

You have to wonder if CMS is up to the job. CMS has been operating with only an acting director since October 2006. CMS is the same agency that is in charge of oversight of nursing homes. As described in yesterday’s Elder Advocacy Blog entry, the General Accountability Office has just issued a stinging critique of CMS’ oversight of nursing homes.

It’s a safe bet that the insurance companies don’t have much to fear from CMS. If CMS won’t act, Congress must. It’s time for Congress to pass mandatory disclosures for private Medicare policies and to stop providing subsidies to these insurance companies for these plans.

To read Robert Pear’s excellent article, click here.


Felicia Curran
www.ElderAdvocacyLaw.com

The blog's March 27th entry related to the New York Times article, “Aging, Frail, and Fighting Insurers to Pay Up,” describing the despicable practices that some long-term care insurance companies use to avoid paying for long-term care for their elderly policyholders. Remember Mary Derks, pictured here with her daughter? Well, put your hands together for Senator Barack Obama, who, after reading the Times article, wrote a letter to the head of the Government Accountability Office calling for an investigation into long-term care insurance. This is the text of his letter:

"April 5, 2007

The Honorable David M. Walker
Comptroller General
U.S. Government Accountability Office
441 G Street, NW
Washington, DC 20548

Dear Mr. Walker:

A March 26, 2007 article in the New York Times investigated the
practices of several long-term care insurers and reported a number of
troubling findings about practices that "make it difficult - if not
impossible - for policyholders to get paid." According to the article,
nearly 1 in every 4 long-term care claims in California was denied in
2005.

Nearly 9 million long-term care policies had been sold as of 2002, the
most recent year for which data were available, with about 80 percent
purchased through the individual market and the remaining 20 percent
purchased through the group market. These products provide elderly
Americans with coverage for care in their homes, assisted living
facilities, and nursing homes. This range of services is critical for
the health and financial well-being of seniors, 70 percent of whom
will require long-term care at some point in their lives.

Long-term care is a problem of national significance. As the baby
boomers age, policymakers are struggling to design a long-term care
system that meets the needs of Americans with disabilities. While
progress has been made, the long-term care system is heavily biased
towards institutional care, and the quality of care is often poor.
Moreover, nursing home and home care are very expensive, and Medicare
coverage for both is limited. As a result, catastrophic out-of-pocket
expenses for nursing home and home care by American's older people are
routine, forcing many to rely on Medicaid to finance the care they
need.

The federal government has taken steps to promote the use of long-term
care insurance. The Long-Term Care Partnership Program, a
public-private partnership between states and private insurance
companies, is one such example. The Federal Long-Term Care Insurance
Program, sponsored by the Office of Personnel Management for federal
employees, is a second example. In addition, the Health Insurance
Portability and Accountability Act has profoundly shaped the long-term
care market by establishing standards regarding the characteristics of
policies whose premiums can count towards the tax deduction available
for health care costs that exceed 7.5 percent of income.

I have a number of serious concerns about the long-term care insurance
market and its ability to fulfill its promises to its policyholders.
First, I am concerned about the possible arbitrary denial of insurance
benefits to seniors at their time of need. Second, I am concerned that
some insurers may be enticing individuals to buy policies by offering
low premiums, and then sharply increasing premiums if lapse rates are
not as high as assumed in the premium calculations. Third, a
substantial percentage of policies do not offer inflation adjustments,
resulting in a significant erosion of purchasing power in later years.
Even worse, some companies offer "inflation coverage," which allows
policyholders to purchase additional coverage at a later date, but at
the price charged to older purchasers. Premiums increase dramatically by
age, and individuals who elect to buy coverage later may not realize
that such coverage will be extremely expensive, which may be
financially infeasible.

Given the role of the federal government in long-term care financing,
I request that GAO investigate these allegations and the adequacy of
state and federal regulation. Specifically, I request that GAO review
the practices of these insurers in order to assess the following:

-- Rate of denial of claims, and as feasible, the extent to which
denials were justifiable;

-- Types of policies purchased, including the percentage of policies
that do adjust and do not adjust for inflation and those that allow
for purchase of additional coverage at a later date;

-- Estimated loss of purchasing power for those individuals that have
policies without inflation adjustment provisions;

-- Frequency and amount of premium increases in already purchased
policies, average lapse rates of policyholders, and the correlation
between premium increases and lapse rates;

-- Extent to which long-term care policies are marketed to individuals
that would likely qualify for Medicaid or may not have substantial
assets to protect; and

-- What, if any, additional federal regulation is needed.

Thank you.
Sincerely,
Barack Obama
United States Senator”

To read the New York Times article, click here.

Future editions of Elder Advocacy Blog will track both the talk and the walk of the 2008 Presidential Candidates on issues of elder medical care and nursing home abuse and elder abuse prevention. We need to make elder advocacy part of the national debate in electing a new president.


Felicia Curran
www.ElderAdvocacyLaw.com

In 1990, a traveling salesman knocked on Mary Derks’ door in Conrad, Montana, and sold her a long-term care insurance policy. She was 65 years old, and at the time it seemed like a good way for her to avoid becoming a burden on her family, in case she were ever to become too frail to continue living in her own home. “She was terrified that she would bankrupt us or get sent to a public nursing home” her son-in-law said, as quoted in the New York Times. So Mary bought a policy from an insurance company which promised to pay the bill at an assisted living facility for her if and when her doctor made an order for that placement. Every month, Mary scrimped together $100 out of her grocery money to pay the premiums, trusting that the insurance company would pay up when the time came for her move.

Little did she know that she, along with thousands of other elderly policy holders, are the insurance industry's newest gold mines. Long term care policies, which cover the costs of assisted living facilities, nursing homes, and at-home care, are the insurance industry’s newest cash cows. Insurance companies are banking on their elderly policy holders passing away before a claim can be made, and they have no compunctions about delaying paying a claim in order to run out the clock.

Look what happened to Mrs. Derks. In 2002, at her physician’s behest, she moved to an assisted living facility near her daughter. When her daughter submitted the $1,900 monthly bills to Conseco Insurance Company, the long term care insurer, she was initially told there would be no problem. Then she was told that her mother was not “infirm” enough to qualify for assisted living. Mary was 82 years old, took 39 different pills a day, and had been hospitalized 24 times over the past four years. Mary had set multiple fires in her own home by forgetting to turn off the stove, and had even lain unconscious in her living room for a day and a half before moving to assisted living. Yet, the insurance company said she didn't really need assisted living.

Mary’s daughter made nearly 100 calls to Conseco, trying to get them to pay up before hiring a lawyer and filing suit last October 2006. “We did everything they asked and they just treated us like dirt,” says her daughter, Jacqueline.

The Times article describes how Conseco and other long term care insurance companies turn their claims processing centers into profit centers by using business practices that make it difficult or nearly impossible for their elderly policyholders to get paid. Insurance company allegedly send the wrong types of forms to their elderly policy holders, and then deny the claim based on the incorrect form that they themselves requested the elder to complete. They require irrelevant documentation. They prohibit their own employees from contacting each other by phone to discuss the claim, preventing the quick exchange of information about the claim. They continue to write the elder at their old home address, knowing that the elder has moved to assisted living, and then deny the claim because the elder did not respond to letters they never received. And other horrendous practices.

The Times describes how state “watch dog” agencies which are supposed to protect elderly consumers like Mary Derks seldom respond to requests for their help.

“How many other people are out there who don’t have a family to fight for them and have just given up?” asks Mary’s daughter.

In California, Mary could sue the insurance company under the California Elder Abuse and Dependent Adult Civil Protection Act. Conseco’s victimization of Mary Derks and other senior citizens is just another form of elder abuse.

The Times ( click here to read the article ) describes Conseco Senior Health Insurance Company, Bankers Life and Casualty, and Penn Treaty as having an inordinately high number of complaints. Nationwide, Conseco has more than 1 complaint per 383 policyholders. To get a hold on what that number means, consider that Genworth Financial, the largest long-term care insurer, has only one complaint for every 12,434 policies.

Before you buy a long term care policy, check out the insurance company’s track record with the state Insurance Commissioner. The California Department of Insurance has a website, www.insurance.ca.gov, with detailed Company Comparison and Performance Data. The website uses a measure called an “Index.” The index measures the insurer's share of “justified complaints,” that is, complaints made against the company that are substantiated, against the amount of business the company writes in California, per calendar year. For example, an index of 1.00 means the insurer’s share of all complaints received is equal to its share of all the business written in California. An index of 2.00 means that the insurer’s share of complaints is twice as large as its share of business written in California. An index of 0.50 means that the insurer’s share of complaints is half as large as its share of business.

For 2005, Conseco's justified complaint index is 26.94, meaning that their share of complaints is a whopping 26 times their market share! Click here to go to the Insurance Commissioner’s page on Conseco. You can bet that the traveling salesman didn't give Mary THOSE figures.


Felicia Curran
www.ElderAdvocacyLaw.com