Category Archives: Business

Protecting Your Retirement Income – Part 1

Graded Lifetime Benefits Rider

In previous posts we’ve talked about the importance of protecting your investment in your education and your career with an individual disability insurance policy. A vast majority of doctors and dentists purchase individual disability insurance policies to protect their financial security and standard of living in the event they become disabled and can no longer practice. However, one factor that many healthcare professionals may not take into account is the effect that a disability may have on their retirement. Most standard disability insurance policies pay benefits until the policyholder reaches retirement age – often age 65. However, that is where the financial protection of a standard individual disability insurance policy ends.

As long as you have an adequate individual disability insurance policy, your income will be sufficiently replaced during your employable years. However, many people overlook the fact that even with adequate income protection during the term of your policy, a disabling condition can still seriously derail your efforts to financially prepare for your retirement years. If you had the foresight to obtain an individual disability insurance policy early in your career, you’ve likely been planning for your retirement as well by contributing to a qualified 401(k) plan or similar retirement vehicle.

However, you may not have considered the following scenario: at 50 years old you are suddenly no longer able to continue practicing dentistry due to debilitating back and neck pain. You’ve been contributing to your 401(k) for the last 20 years with employer-matched contributions. Your claim is approved by your disability insurer, but because you had to quit your job, not only is your employer no longer matching your contributions, but you can no longer contribute either because IRS rules prohibit contributions to a qualified 401(k) plan if you are not working. Your 401(k) is 15 years short of where it needs to be for retirement, and your disability insurance benefits stop at age 65. How do you continue planning for your “retirement” years?

Fortunately, there are several options available to you. First, many disability insurance companies offer a graded lifetime benefits rider. In exchange for an increased monthly premium, this rider extends your benefits from the standard policy term of age 65 or 67 to lifetime. With this rider, if you become disabled, you will receive your full policy benefits until age 65 or 67 (depending on your policy). After that, you will receive a certain percentage of your full benefits for the remainder of your lifetime, based upon the age at which you became disabled.

With many policies, the baseline age for graded lifetime benefits is 45 years old. Meaning, if you become disabled at or before age 45, your monthly benefits after age 65 will still be 100% of the monthly benefits you received before age 65. If, however, you become disabled after age 45, you will still receive 100% of your monthly benefit until age 65, but your monthly benefit amount after age 65 will be reduced by 5% for each 5-year period after age 45 that the disability began.

Using the example above, if you had a policy that pays $10,000 in monthly benefits and became disabled at age 50, you would receive $10,000 a month from age 50 until age 65, and $9,500.00 a month for the remainder of your lifetime. If you became disabled at age 55, you would receive $10,000 per month until age 65, and then $9,000 per month for the remainder of your lifetime.

This rider is one solution for the difficulties that a disabling condition can pose to your retirement planning. It offers a secure source of income to supplement any retirement savings you’ve already amassed. However, it is not the only solution to the retirement income issue created by a disability. In the next few posts, we will evaluate two additional options: the lump sum rider and retirement protection insurance.

New Genetic Testing Predicts Most Effective Medications

In today’s pharmaceutical market there are countless prescription drugs marketed to people suffering from disabling conditions, and many of these drugs promise breakthrough relief not offered by their competitors. Individuals suffering from chronic pain and mental health disorders such as anxiety, PTSD, depression and bipolar must often take potent drugs for prolonged periods of time to get relief from their symptoms. But the search for relief can be incredibly frustrating – every person responds differently to the same drugs, and oftentimes powerful side effects can overshadow any relief.

For an individual suffering from the chronic and disabling pain brought on by severe spinal stenosis, there are several forms of treatment available – many of which are non-invasive. If other non-invasive treatments are unsuccessful, suffering through the side effects of several drugs in search of relief can be demoralizing. Powerful opioids can cause severe nausea, vomiting, dizziness, and/or constipation in certain individuals. The compounding effects of trying several different drugs can have a significant effect on one’s physical and mental health.

Recently, however, a genetic testing company has developed a simple test that will help countless individuals avoid dealing with unwanted side effects while cycling through different medications in their quest for relief.

Genesight has developed breakthrough genetic tests for both narcotic analgesics (pain medications) and psychotropic medications (treating mental health disorders). By taking a simple cheek swab, the company is able to analyze your DNA and determine which medications are match for your specific genetic profile. A clinical study of Gensight’s testing and analysis showed that patients were twice as likely to respond to the recommended medication.

This testing will likely be welcome news among those for whom relief is elusive. For many individuals suffering from disabling conditions, medications are very rarely the magic bullet that brings complete relief.  Symptoms may be so severe that no drug will ever be one hundred percent effective. More often, relief means alleviation of one’s symptoms just enough to get through the day without interminable pain or crippling anxiety while suffering only the more mild side effects. Genesight’s testing may offer hope for these individuals – people who will likely never be able to return to their previous career or their own occupation, but are in search of just enough relief from their symptoms to lead and enjoy a normal life.

Unum Outsourcing Jobs to India?

In past posts, we have discussed Unum’s track record of wrongfully denying disability claims and Unum’s bad faith efforts to avoid paying legitimate claims.  Unum was again in the news last year when it made significant changes within the upper echelons of company management.   Unum is now making headlines again, due to speculation that it is in the process of outsourcing hundreds of jobs overseas.

Unum is apparently currently in talks with several information technology (IT) firms to outsource up to 350 jobs to India.  A Unum employee, who spoke to the Portland Press Herald on the condition of anonymity, told the newspaper that as many as 200 jobs could be cut at Unum’s Portland, Maine offices, and estimated that the cuts could affect up to 350 jobs company-wide.  The employee reported that Unum was meeting with several vendors to discuss different levels of sourcing.  Florida attorney Sara Blackwell, who operates the website ProtectUSWorkers.com, claims that Unum has met with Cognizant and HCL – two multinational IT consulting firms – to discuss the potential move.  In an interview with the Times Free Press, Ms. Blackwell expressed concerns that policyholders’ personal medical information may be compromised by outsourcing to countries that don’t have strict provisions such as HIPAA to protect the medical records of policyholders.

It will be interesting to see if Unum’s outsourcing efforts end with its IT department, or whether this is the first step towards Unum outsourcing positions that play key roles in the disability claims process, such as claims managers and in-house medical consultants.

References:

http://www.pressherald.com/2016/06/16/sources-unum-in-talks-to-outsource-hundreds-of-jobs/

http://protectusworkers.org/2016/06/stop-unum-now-is-the-time-you-can-make-a-difference/

http://www.timesfreepress.com/news/business/diary/story/2016/jun/16/chattanooga-based-unum-criticized-outsourcing/371288/

Should Women Pay More for Disability Insurance? Part 2

In a previous post, we discussed how a woman with the same age, job and health history as a man can end up paying an average of 25% (and in some cases, 60%) more for the same level of disability insurance protection.  We also discussed how some insurance companies raise premiums based on conditions unique to one’s sex, such as pregnancy.

When we first addressed this issue, the Massachusetts legislature was considering a bill that prohibited insurers from charging higher rates to women than to men.  At the time, Massachusetts law prohibited insurance companies from using race and religion as rating factors when determining the cost of insurance, but there was no law against using gender as a rating factor.

Recently, the Massachusetts Senate voted to approve a budget amendment adding gender to other rating factors that insurance companies are not allowed to consider when determining the cost of premiums.  The bill passed by a wide margin:  32 senators in favor of the amendment, and only 6 senators voting against the amendment.

It will be interesting to see if, in the future, other states follow suit and start to pass laws requiring insurance companies to give men and women the same premium rates for the same level of disability coverage.

References:

http://www.masslive.com/politics/index.ssf/2016/05/senate_votes_to_exclude_gender.html

MetLife to Exit Individual Disability Insurance Market

MetLife, Inc. the fourth largest provider of long-term disability insurance by market share[1], is suspending sales of its individual disability insurance policies.  In an internal memorandum to producers, MetLife Client Solutions Senior Vice President Kieran Mullins announced that the company would be suspending the individual disability insurance block of business effective September 1, 2016.  In the memo, Mr. Mullins cites the goal of creating a new U.S. Retail organization for its insurance products and the “difficult, but strategic” decisions that led to the shutdown of their individual disability insurance product:

This was not an easy decision to make, given the growth and strength of our IDI business. However, we believe it is the best course of action for the immediate future. While there is tremendous opportunity in this market, the suspension provides us with the time and resources needed to properly separate the U.S. Retail business from MetLife. There is a significant amount of work to be done to retool existing systems – and implement new systems – that will ultimately provide the most value to our customers and sales partners in the years to come.

Insurance news websites are already speculating that the shutdown could put pressure on the remaining thirty-one companies selling individual disability insurance to raise premiums.  Because MetLife controls such a substantial share of the individual disability insurance market, their departure effectively reduces the size of the pool in which the risk can be spread.  Cyril Tuohy, writing for Insurancenewsnet.com, points to the move as an opportunity for the remaining companies in the market to innovate and attract the business MetLife will be leaving behind.  The company’s departure will favor the insurers whose individual disability policies cater to physicians, dentists, and other high-income professionals, such as Guardian, Principal, The Standard, Ameritas and Northwestern Mutual.[2]

In an accompanying FAQ, MetLife assured producers that existing policies would not be affected by the change, and that they would continue to support policy increases by the terms of the Guaranteed Insurability Option, Automatic Increase Benefit, and Life Event riders.  The memo also noted that MetLife would continue sales of its group, voluntary, and worksite disability products.

It is important to remember that even though MetLife must continue to service its existing policies, shutting down sales of new policies can still affect current policyholders.  Absent the need to sell new policies, an insurer may have less incentive to provide customer service or avoid a complaint from the state insurance board.  Additionally, once a block of business closes, the easiest way to maintain profitability of that product is through claims management.  In real terms that is typically accomplished through claims denial and benefits termination.  We discussed these very tactics in a 2012 blog post about Unum’s management of its closed block of individual disability insurance products.

If you have a MetLife individual disability insurance policy, pay close attention as the business focus shifts away from selling new policies and toward the management of existing policies.  If you have a question or concern regarding your MetLife policy, contact our office.

[1]http://www.statista.com/statistics/216499/leading-long-term-disability-insurance-carriers-in-the-us/

[2]“Will MetLife’s Suspension Send DI Prices Soaring?” Cyril Tuohy, insurancenewsnet.com. http://insurancenewsnet.com/innarticle/agents-split-di-pricing-wake-metlife-suspension

Are Insurance Companies Discriminating Against Mental Health Claims?

In previous posts, we have noted that disability policies often limit the disability benefits available for claimants who suffer from mental health disorders. For example, many policies limit recovery under a mental health disability claim to a 2 or 3 year period. In contrast, most policies provide benefits for physical disability claims to age 65, and some policies even provide lifetime benefits for physical disability claims.

Recently, Representative Ruth Balser has introduced a bill in the Massachusetts state house that would prohibit insurance companies from treating behavioral health claims differently from physical impairment claims. According to Representative Balser, offering shorter benefit periods to claimants with mental health disorders is discrimination.

Supporters of the bill contend that the way that disability insurers currently handle mental health is based on stigmas and ignores available treatments options.  Supporters of the bill also argue that the bill will reduce government costs because individuals with mental health issues will no longer need to rely on Social Security or government welfare programs.

The insurance industry’s response is that requiring insurance companies to provide more coverage will cost businesses money because it will limit available options when buying insurance and force them to buy coverage that they do not want. The insurance companies also argue that the bill will actually result more people relying on government programs because they will not be able to afford the increased levels of coverage.

At the moment, the bill is still being considered in committee, so it has not yet become law. However, if the bill is ultimately passed, it could significantly alter the way insurance companies treat mental health disability claims, particularly if other states pass similar laws.

For more information, see http://www.milforddailynews.com/article/20151016/NEWS/151017038.

Should Women Pay More for Disability Insurance?

Massachusetts is currently considering a bill that would prohibit disability insurers from charging higher rates to women than to men. Even if a woman is the same age, has the same job, and has the same health history as a man, she pays on average 25% more for the same protection, according to Massachusetts State Representative Ruth Balser.

This bill would prohibit discrimination in premium costs or benefits based on sex in individual disability, accident, or sickness insurance policies. It would also bar disability insurers from making any distinction in insurance policies based on conditions unique to one’s sex, such as pregnancy.

The disability insurance companies, on the other hand, say that the difference is necessary, due to the fact that women account for 70-80% of long-term claims nationwide. While they do purchase more policies than men (60% as compared to 40%), insurers argue that this isn’t enough to make up the difference in revenue. Insurers are in the business of making money, and paying out more in benefits than the amount of premiums coming in isn’t good for business.

According to the Affordable Care Act, health insurers can’t charge a woman more solely because she is a woman. Yet, Montana is the only state with a law requiring disability insurance to be gender neutral, and Massachusetts has a bill in the works. It remains to be seen whether Massachusetts will pass this bill, and other states will follow suit. With some of the major disability insurance carriers (such as Unum and Guardian/Berkshire) keeping corporate offices in Massachusetts, we doubt the bill will be passed without a fight.

What’s your opinion? Should women pay more in disability premiums than men with the same characteristics? Are the disability insurance companies’ arguments in favor of the disparity justified?

Disability Insurer Profiles: MetLife

Today we’re profiling another popular insurer that issues private disability policies to dentists and physicians: MetLife.

Company: Metropolitan Life Insurance Company, a.k.a. MetLife.

Location: New York, NY.

Associated Entities: MetLife, Inc. (parent company), General American Life Insurance Company, New England Life Insurance Company.

Assets: MetLife, Inc. held over $885 billion in assets as of May 2014, according to Forbes.

Notable Policy Features:  One thing to watch out for in MetLife policies is a limitation on benefits for mental disorders and/or substance use disorder.  Under the Limited Monthly Disorders and/or Substance Use Disorders provision of some MetLife policies, policyholders are only entitled to a total of 24 months of benefits for any mental or substance abuse disorder, such as depression, panic disorder, post-traumatic stress disorder (PTSD), bipolar disorder, and alcohol abuse or dependency.  The 24 month limitation is cumulative.  So, for example, if you have depression that disables you for 23 months, then start suffering from disabling alcohol dependency later in your life, you would only have one month of benefits still available to you.

Claims Management Approach: In its 2013 Annual Report, MetLife, Inc. reported that “unfavorable morbidity experience in our individual income disability business resulted in a $6 million decrease in operating earnings.”  In other words, in 2013, more private disability insurance policyholders experienced disabling illnesses or injuries than in years before, and that hurt MetLife’s profits.  In these situations, where an insurer is facing increased liability for benefit payments, we often see that insurer put additional resources towards managing claims.  In this way, the insurer can spend extra time and effort looking for ways to deny or terminate claims, with the goal of limiting its liability.

In our experience, one way that MetLife attempts to dispose of claims as quickly as possible is by ordering surveillance early on in the claim.  While some companies will wait until they have received more information before starting surveillance, MetLife has started following and videotaping claimants within weeks of the claim being filed.

With respect to its medical investigation, we have found that MetLife often follows a similar strategy to MassMutual’s.  The insurer will often attempt to have its own medical personnel schedule “peer-to-peer” telephone consultations with claimants’ treating physicians, with the aim of catching the treating physician off guard and persuading them into saying their patient isn’t disabled.  However, we have found that, in certain circumstances, MetLife can be amenable to submitting medical questions to the treating doctor in writing instead.  That way, the treating doctor can more carefully consider the issues, without feeling pressured or put on the spot.

 

These profiles are based on our opinions and experience. Additional source(s): MetLife’s 2013 Annual Report; Forbes.com

Disability Insurer Profiles: MassMutual

We have written about Unum, arguably the most notorious disability insurance company, in great detail.  However, we realize that many physicians and dentists may not know very much about other disability insurance companies, including those whose policies they own.  In the next few posts, we’ll profile some of the most common doctors’ disability insurers.

Company: Massachusetts Mutual Life Insurance Company, a.k.a. MassMutual.

Location: Springfield, Massachusetts.

Associated Entities: Mass Mutual Financial Group (parent  company), C.M. Life Insurance Company, MML Bay State Life Insurance Company.

Assets: Over $195 billion in 2013.

Notable Policy Features:  As part of its product offerings, MassMutual sells own-occupation disability insurance policies to physicians and dentists.  One notable aspect of some MassMutual policies we’ve seen recently is an especially restrictive definition of “Total Disability,” which we sometimes refer to as a “no work” own-occupation definition.  Under the “no work” own-occupation definition, an insured is Totally Disabled if he or she is unable to perform the material and substantial duties of his or her own occupation and not working in any occupation.  Unlike traditional own-occupation policies that allow a physician or dentist to collect total disability benefits and return to work in a different occupation, this one will not pay total disability benefits if the policyholder is doing any type of gainful work.

Claims Management Approach: MassMutual is a highly successful insurer.  In June 2014, it was ranked number 96 in the Fortune 500.  However, Fortune reports that MassMutual is currently experiencing a dramatic reduction in profits.  If MassMutual follows the current trends in the disability insurance industry, we believe it will increase scrutiny on disability insurance claims in order to try to regain its former profit levels.

In our experience, one of the ways MassMutual aggressively approaches claims is to hire a medical consultant to evaluate claimants’ medical records.  The consultant then tries to insert himself or herself between the claimant and the treating physician, writing or calling the treating physician and suggesting treatment methods that, in the consultant’s opinion, will get the claimant back to work as soon as possible.

 

These profiles are based on our opinions and experience. Additional source(s): MassMutual’s 2013 Annual Report; Fortune 500 2014; Bloomberg.com