Insurance Q&A

February 26, 2010

Obama Showcases Insurance Ignorance

Filed under: Uncategorized — rrroark @ 12:17 pm

Video Link: http://www.youtube.com/watch?v=vmo1rATDE00

From the “Healthcare Summit”:

When I was young, just got out of college, I had to buy auto insurance. I had a beat-up old car. And I won’t name the name of the insurance company, but there was a company — let’s call it Acme Insurance in Illinois. And I was paying my premiums every month. After about six months I got rear-ended and I called up Acme and said, I’d like to see if I can get my car repaired, and they laughed at me over the phone because really this was set up not to actually provide insurance; what it was set up was to meet the legal requirements. But it really wasn’t serious insurance.

Now, it’s one thing if you’ve got an old beat-up car that you can’t get fixed. It’s another thing if your kid is sick, or you’ve got breast cancer.

That statement makes it obvious that he does not understand that the “mandatory insurance law” for driving a car on public roads is not designed to protect the purchaser, but rather the person injured (body or property) by that driver. Obama explained in this clip that he only bought the legal minimum, not collision or comprehensive, which would have covered his damage.  When people buy insurance, it’s made very clear exactly what it covers.  Most drivers can understand it, even the Harvard Law grads. Small wonder he was laughed at.

This anecdote proves that Obama never learned a thing about insurance — so why would we want to have someone who understands so little remaking the entire health-insurance sector.

If he does know better, maybe in his arrogance, he thinks the “great unwashed” (that’s us) don’t. Which way makes you more comfortable?

Crossposted @ Stuck on Stupid Lies

February 25, 2010

Another Medicare Scam

Filed under: Uncategorized — rrroark @ 12:42 pm

It seems every month another state is rocked with a Medicare scam. With these predatory forces out there, it’s time to remind you that these bad apples are out there and what you can do to avoid getting caught by their false promises.

The latest state to issue a warning is North Dakota wher seniors have been receiving phone calls from people claiming they’re from Medicare. The scammers tell the beneficiaries that they owe a penalty for not having Part D prescription drug coverage and that they need to pay the fine immediately. An article in the Jamestown Sun, stated that the scam is preying on “the penalty that is imposed on people who are eligible for Part D coverage but don’t elect it and have no other creditable drug coverage.”  Creditable coverage might include Veteran’s Administration or most employer group health plans.

Insurance Commissioner Adam Hamm added to the announcement saying, “Medicare beneficiaries should never give financial or personal information to anyone who calls and says they are with Medicare.” Hamm went on to remind seniors, “It is against Medicare’s rules to call beneficiaries and ask for that information.”

As part of the statement released by the Hamm’s office, Medicare beneficiaries should remember:

  • Medicare cannot call and ask for financial or personal information over the phone.
  • Medicare numbers should be kept in a safe, secure place.
  • Medicare will not notify beneficiaries of payments by phone. The beneficiary must be notified of the past due premiums via mail.

February 3, 2010

Temporary Estate Tax Lapse Creates Boom for Lawyers

Filed under: Uncategorized — rrroark @ 12:10 pm

National Law Journal, Estate Lawyers Hustle Over Nothing; Expired Tax Leads to Hours of File Review and Still Unknown Questions, by Lynne Marek:

[For lawyers] who specialize in trusts and estates law, the year has started with a rush. Lawyers across the country are scrambling to field calls from clients worried about how the one-year lapse in the estate tax affects their legal documents. They’re sifting through client files to pinpoint those at greatest risk of facing complications and contacting clients by e-mail, phone and letter. They’re preparing to revamp wills, trusts and wealth-transfer documents. …

“It’s almost like a lawyers relief act because clients have to examine their documents to figure out if they’re protected or not,” said Andrew Gelman, a Chicago partner at Holland & Knight. “I don’t want to call it chaos, but everything is in limbo,” he said.

The lapse of the estate tax, and related levies such as the generation-skipping tax, is creating a burst of demand in a legal specialty that has slowed in recent years because higher tax exemptions have left fewer people in need of sophisticated estate-planning advice. The current demand is likely to last at least a year, lawyers say. They also predict a surge of litigation, which could last several years, as family fights break out over the lack of clarity in documents for those who die this year.

Handler pointed to one client couple who face what is probably the most common problem. The couple, including a husband in poor health, have a $35 million estate. In the event of his death, their estate plan grants their children as much money not covered by the estate tax as possible, with the wife receiving the remainder. As of Jan. 1, that means the children will get everything and the wife will get nothing if the husband dies this year. Aside from that key issue, a host of complicated formulas for calculating the most advantageous distribution of funds have been thrown off by the lapsed tax.

Although trusts and estates lawyers generally are seeing longer hours that will result in more billing, most don’t expect there to be enough work in the end to merit hiring more attorneys.

However most states provide for the surviving spouse’s right to enforce a statutory share (normally 1/3) from non-probate assets, like assets in a trust (undoubtedly the planning vehicle of choice for such a large estate).

More importantly, it is unlikely that the $35 million passes outright to the children but more likely that it does so in trust (and changes could be added to make the spouse a discretionary beneficiary of that trust). The real problem is the carryover basis and allocating new basis under the current (confusing and unworkable) scheme – unless the spouse is the sole beneficiary of the new trust, her $3.0 million in new basis will go unused. Any competent financial advisor will have planned for this since 2002, but it is still disquieting and disheartening to have no idea what is going to happen and to be scurrying around with last minute fixes that will only work for 11 months at most. The congress is already bemoaning the “loss” of this tax revenue and may well retroactively (remember Clinton?) include this year in a new estate tax bill by explaining to their constituents that the new bill will reduce future estate taxes based on the old rates returning in 2011.

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