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GOP making another attempt to overturn Obamacare

After legislative failures, Republican lawmakers are turning to the courts again

After trying and failing twice last year to overturn the Affordable Care Act, also known as Obamacare, Republican leaders are turning once again to the courts.

GOP representatives from twenty states have joined together to sue the U.S. government, claiming the health care law is unconstitutional.

Republicans made this argument once before, stating that the individual mandate for consumers to buy health insurance is unconstitutional. But the U.S. Supreme Court upheld the law, finding that the fine consumers faced for not buying insurance was actually a tax.

Last year, the Trump Administration removed the fine for not buying health insurance, so Republicans argue that the removal of the threat of that "tax" now makes the law unconstitutional.

Removing the fine a key issue

According to Texas Attorney General Ken Paxton, the high court pinned its Obamacare ruling on the "tax." Now that the provision has been removed, Paxton says the law doesn't meet the constitutional standard.

“Obamacare’s irrational design wreaks havoc on health insurance markets,” said Wisconsin Attorney General Brad Schimel. “Obamacare causes premiums to rise and coverage to fall, forcing Wisconsin and other states to take extreme, costly measures to protect their citizens’ health and pocketbooks."

The National Federation of Independent Businesses (NFIB) brought the original court challenge to Obamacare in 2012. While the Constitution does not allow Congress to force individuals to purchase a product, the court narrowly interpreted the penalty for not purchasing health insurance as a tax, which Congress is authorized to levy.

Senate refused to repeal

The GOP-led House had no difficulty passing legislation last year that repealed Obamacare, but the measure faced obstacles in the Senate, where Republicans held only a two seat advantage. A handful of Republican lawmakers balked at repealing a law that resulted in more consumers being covered by health insurance.

The final attempt failed in late July when Sen. John McCain (R-Ariz.), who was battling cancer, dramatically returned to the capital to cast a deciding vote to allow a vote on the Senate's latest effort -- a straight repeal of the Affordable Care Act.

But on Twitter, McCain made clear he was only voting to allow debate on the GOP bill. He wasn't going to support the measure itself.

After trying and failing twice last year to overturn the Affordable Care Act, also known as Obamacare, Republican leaders are turning once again to the cou...

Chain retailers, restaurants want relaxed rules on group health insurance

Who benefits from cheaper healthcare plans and a more flexible definition of 'employer?'

In the Affordable Care Act’s early days, chain stores and restaurants predicted chaos. The CEO of Carl's. Jr. famously claimed that millions of part-time service industry jobs were getting cut.

Restaurants across the country tacked on an “Obamacare” surcharge, and a leaked memo from Forever 21 detailed plans to reduce employee hours to 29.5 a week -- just low enough to avoid the 30-hour full-time designation as laid out by the Affordable Care Act.

Retailers and restaurant owners have been some of the loudest voices complaining about Obamacare, or in particular the law’s mandate that employers provide full-time workers with health insurance. They are now embracing a Trump proposal that would dramatically change the way that employer-sponsored group health insurance is provided.

The Department of Labor is taking comments on a rule that would allow small business owners, people in different states, and sole individuals to form their own “associations” to obtain group coverage across state lines, essentially changing the definition of “employer” that has been in effect since the 1970s.

These plans would likely be cheaper and less comprehensive than typical employer-sponsored group coverage and attract younger people with less healthcare needs, experts say.

“Empowering” small employers

The DOL issued the proposal last week in response to an Executive Order that Trump had signed in October, which asked the agency to provide Americans with insurance options that are “exempt from the onerous and expensive insurance mandates” stipulated by Obamacare.

The Trump administration is framing its proposed new rules on group health plans as a solution to making healthcare more affordable for the estimated 28 million Americans who remain uninsured.

The National Restaurant Association and the National Retail Federation, the trade groups representing many of the nation’s chain stores, are among the few business associations that are lobbying in support of the  measure.

Relaxing the definition of what qualifies as a group “would empower small employers,” according to the The National Retail Federation.

Fewer consumer protections

However, that claim doesn’t pass the muster with either independent proponents of affordable health care or with the actual health insurance industry.  

So-called association health plans or multiple employer welfare arrangements, as they are called, “would not be subject to state patient protections” argues America’s Health Insurance Plans (AHIP), the health insurance industry’s lobbying group.

The insurance industry says that these plans would offer fewer consumer protections and destabilize the market by taking healthy people out of the individual Affordable Care Act risk pool.

Such plans, in the individual states where they are already legal, are also prone to fraud and abuse at the hands of unscrupulous insurance agents, research from independent think-tanks such as the Commonwealth Fund has found.

“Insolvencies by self-insured MEWAs have left thousands of Americans with millions of dollars in unpaid medical bills,” the nonprofit wrote in 2004.

In a statement, an AHIP spokesman tells ConsumerAffairs that “we are concerned that the changes proposed would lead to higher prices and weaker consumer protections in the small group and individual markets, where nearly 40 million Americans get their coverage.”

A race to the bottom

Physicians who want to expand access to affordable healthcare are also doubtful that the latest Trump healthcare proposal will actually do that.

Dr. Adam Gaffney, a pulmonologist and who advocates for a single-payer healthcare system on his blog The Progressive Physician, says that association health plans may seem temptingly cheap. But he predicts that such plans will promote a race to the bottom in terms of quality.

"You can always make insurance more affordable by making insurance worse. Plans that have less coverage are going to be less expensive,” he tells ConsumerAffairs. “But you're not really bringing down healthcare costs” in a meaningful way.

So why even bother rolling out a healthcare reform that is prone to fraud and not particularly popular with the health insurance industry? Gaffney compares the issue to Trump’s efforts to reverse Obamacare’s birth control-mandate and individual mandate.

"I think this is part of the larger Trump agenda to sort of dismantle some of the protections of the Affordable Care Act in a way that could have detrimental effects,” he said.

In the Affordable Care Act’s early days, chain stores and restaurants predicted chaos. The CEO of Carl's. Jr. famously claimed that millions of part-time s...

Obamacare Open Enrollment bringing higher premiums

But one study finds more generous subsidies for many consumers

Consumers purchasing healthcare policies under the Affordable Care Act (ACA) are finding higher premiums and, in some cases, fewer options, according to an analysis by the Kaiser Family Foundation (KFF).

Consumers also have less time to make a decision this year. The Open Enrollment Period started November 1 and ends December 15 -- about half the time of the last Open Enrollment period.

In its report, KFF says premiums are going up for two main reasons. The first is that the Trump Administration has ended the government's payments to insurance providers for cost-sharing reductions, which passes more of the burden onto consumers.

The second reason is that some large insurance providers have withdrawn from the Marketplace in some areas, meaning consumers in some counties have only one provider. KFF says the lack of competition most likely boosted premium costs.

Rising costs across all tiers

All ACA policies must provide some coverage of what are deemed "essential services," but some policies provide more coverage than others. The least expensive policies, which generally provide the least coverage, are called bronze policies.

The middle level policies -- more expensive than bronze but with more coverage -- are silver policies. The top tier of coverage is in the form of gold policies.

KFF's cost breakdown shows the premium for the cheapest bronze plan in the ACA Marketplace is going up an average of 17 percent next year while the average premium for silver plans has jumped a whopping 35 percent. The premium for the lowest-cost gold policy has gone up 19 percent.

Why silver plans cost more

“Premiums for silver plans are rising much more than those for bronze or gold plans because in many states insurers loaded the cost from the termination of the cost-sharing reduction payments entirely on the silver tier,” the authors explain.

Depending on location and income, some consumers will receive subsidies to reduce monthly premiums, and the KFF report says these subsidies will help some policyholders offset the much higher premiums.

For many consumers who receive tax credits to help pay premiums, the out-of-pocket cost will be lower in 2018. Since tax credits are calculated using the cost of the second-lowest-cost silver plan in each area, the rising cost of silver plans results in more generous tax credits.

That will make the cost of bronze and gold plans, which are not increasing in cost as much as silver plans, more affordable for consumers receiving subsidies.

“In fact, after these increases, the lowest-cost gold premium is lower than the lowest-cost silver premium in 478 counties,” the authors write.

Market is stabilizing

Despite rising costs, KFF senior vice president Larry Levitt says the individual insurance market has recently stabilized. Insurance companies lost a lot of money in the first few years of the ACA's operation, but premiums rose sharply this year and most insurance companies have made a profit.

However, challenges remain for consumers trying to choose a policy during the shorter Open Enrollment period. Levitt says the Trump Administration has reduced resources to help consumers select health insurance policies. It cut outreach advertising budgets and reduced grants to navigators -- people hired to answer consumers' questions about available healthcare policies.

Consumers purchasing healthcare policies under the Affordable Care Act (ACA) are finding higher premiums and, in some cases, fewer options, according to an...

Survey shows millennials don't always understand their life insurance policies

Here are some things you should know

A Canadian survey has uncovered some gaps in what millennials know about life insurance. The poll of young adults in Ontario, between the ages of 25 and 35, found that fewer than half said they fully understand their life insurance policies.

"I cannot imagine the U.S. market being much different," Bob Bland, CEO of online life insurance marketplace LifeQuotes, told ConsumerAffairs.

Bland says these knowledge gaps are likely due to the complexity of certain life insurance products and the fact that the industry has changed so much that consumers never talk to a salesperson when they buy insurance.

However, he says millennials who are starting families need to understand life insurance and how it fits into their lives.

Term life insurance and income replacement

"The purpose of life insurance is to replace the income of the family breadwinner," Bland said. "That includes not only the person earning the money but a spouse who is taking care of young or old family members at home. In this day and age, we absolutely recommend that a stay-at-home parent have life insurance."

But how much life insurance coverage do you really need? Bland says financial planners typically recommend 10 to 15 times your annual earnings. If you earn $50,000 a year, that means $500,000 in coverage is a good starting point.

Bland advises young families to consider term life insurance, which he says is very inexpensive. But just how inexpensive it is will depend on the amount of coverage, the term, and the health and lifestyle of the policyholder.

Term insurance can be taken out for a specified term -- usually 10, 20, or 30 years. Most of these policies don't require a medical exam and, best of all, the rate stays the same over the life of the policy.

"It's easy to understand, it covers death by any cause, at any time, at any place, except for suicide in the first two policy years," Bland said.

Option to convert to permanent insurance

At the end of the term, a policyholder may choose to convert the policy to permanent insurance. The premiums will be significantly higher than for the term policy, but Bland says many conversions can be done without a medical exam, an important detail if the policyholder has developed a chronic illness.

The Canadian survey, conducted by the Financial Services Commission of Ontario, found only 47 percent of older millennials have life insurance. Anatol Monid, a commission director, says most people don't want to think about what might happen, but it's important to ask questions so you can make good financial decisions.

Bland agrees, saying the more you know how life insurance works, the better protected you will be. You can start by comparing reviews of life insurance companies here.

A Canadian survey has uncovered some gaps in what millennials know about life insurance. The poll of young adults in Ontario, between the ages of 25 and 35...

Employers urged to help workers manage rising healthcare costs

Survey suggests employees are unaware of some helpful tools

Just because you have a good job with health benefits doesn't mean your healthcare costs aren't going up.

In its Workplace Benefits Report Healthcare Supplement, Bank of America Merrill Lynch says employees are paying higher deductibles and more out-of-pocket costs that could affect their other long-term financial goals.

Seventy-nine percent of employees said they saw their healthcare costs go up last year. That's up from 69% who reported higher costs in 2016.

The findings are in line with a Kaiser Family Foundation report published last year, which found the cost of the average employer-sponsored healthcare plan rose 3% in 2015, with employee contributions rising to $5,277.

Employees need help

"I think employers are now recognizing that their employees need help," Bob Kaiser, a senior vice president at Bank of America Merrill Lynch, told ConsumerAffairs. "There's stress on the job. There seems to always be confusion over the amount of benefits that are offered -- which ones do I use, how do I use them?"

Employees in the survey expressed some uncertainty over what steps they should be taking when it came to their healthcare benefits. Kaiser says focusing on the future and ensuring that you're using all of your benefits is a good place to start. He points out that one way employees can achieve both goals is by opening a health savings account (HSA).

"If you put money in an HSA account, it is just as good as your 401 (k) money if you don't use it for medical," he said. "When you turn 65 and haven't used your HSA money, you can take it out for whatever purpose, just like a 401(k). You can take it out and treat it as ordinary income."

Tax advantages

Opening an HSA can be a solid financial investment, since the money is tax deductible when it goes in. If you need it to pay a medical expense, there is no tax when it comes out.

But if you are 65 or older, you can withdraw the money for non-medical reasons. You'll have to pay taxes on the withdrawal, just like you would with a 401(k), but there are no minimum distributions you have to take, like with a retirement account.

Kaiser says he thinks employees are under-using HSAs because they don't really know much about them. It's up to employers, he says, to educate employees about all the tools they can use.

The survey suggests rising healthcare costs are putting a strain on long-term financial goals. Researchers found 56% of workers with rising healthcare costs reported spending less or contributing less to their financial goals. They were less likely to put money away for retirement or pay down debt.

Bank of America Merrill Lynch offers a suite of online tools for managing HSAs and health benefits, geared to both employees and employers.

Just because you have a good job with health benefits doesn't mean your healthcare costs aren't going up.In its Workplace Benefits Report Healthcare Su...

Is it too late to buy travel insurance for a Florida trip?

Cancel For Any Reason policies may be an answer for a few

After years without a major hurricane landfall in the U.S., travelers might have forgotten how a major storm can throw a money wrench into travel plans.

If you have travel insurance, and you bought it well ahead of time, you may well be able to avoid losses on prepaid trips and deposits. But as we pointed out earlier this week, a traditional travel insurance policy only pays if you purchased it before a storm was named.

The travel insurance agents at report a high volume of calls about any other options that might be available, and it turns out there is one. The agents say that it's too late to buy traditional insurance to cover trips sidelined by Irma, or even the two other named storms -- Jose and Katia -- but you still may be eligible for what's called a Cancel For Any Reason (CFAR) policy.

Cancel For Any Reason

A CFAR policy is an add-on to a traditional travel insurance policy, raising the cost, but it offers coverage if you cancel for reasons other than those covered in a traditional policy. According to InsureMyTrip, here are the requirements:

  • You usually have to purchase it within 10 to 30 days of your initial payment for your trip.
  • You have to cover all of your prepaid and non-refundable trip costs
  • The trip must be canceled within 48 to 72 hours of scheduled departure

Typically, these plans will reimburse up to 75% of your trip costs, with some plans refunding less.

Timing is everything

If you purchased a traditional travel insurance policy weeks ago, before any of these hurricanes were named, your policy should take care of you if flights or cruises are canceled or your hotel or other accommodations are damaged or destroyed.

According to InsureMyTrip, travelers who did not purchase travel insurance may still be able to recoup a small part of their losses if their trip is canceled. Some airlines will issue travel vouchers if a flight is canceled.

Cruise lines may change itineraries or cancel with little notice but refund policies are typically limited. Also, some fare codes are non-refundable.

The credit card you use to pay for the trip may offer some measure of protection. According to personal finance site WalletHub, the Chase Sapphire Preferred card covers trip cancellations for up to $10,000.

After years without a major hurricane landfall in the U.S., travelers might have forgotten how a major storm can throw a money wrench into travel plans....

Realtors alarmed as flood insurance expiration looms

Congress urged to act quickly on package of reforms

Hurricane Harvey caused widespread flooding that was only covered by flood insurance. And now Hurricane Irma is bearing down on Florida, where homeowners are bracing for flooding as well.

Since homeowner's insurance does not cover flood damage, homeowners who want protection must purchase flood insurance through the government's National Flood Insurance Program (NFIP). In fact, buyers of homes in flood-prone areas cannot get a mortgage unless they also purchase flood insurance.

But the NFIP expires in another month and the National Association of Realtors (NAR) is expressing alarm that Congress does not appear to view the situation with urgency.

'We've been here before'

"The country has been here before, and we know what happens if the National Flood Insurance Program expires," said NAR President William Brown.

Brown said homebuying activity would grind to a halt, with as many as 40,000 lost or interrupted sales each month.

"Meanwhile, existing homeowners as well as commercial entities may find their largest asset unprotected if the Federal Emergency Management Administration can't renew NFIP policies that expire," Brown warned.

Brown said the Realtors organization worked closely with the House Financial Services Committee to craft renewal legislation. The bill allows insured property to be grandfathered, so that the buyer receives roughly the same rate quote, and rate increases in general are reduced.

"Consumers and homeowners alike deserve certainty," Brown said. "With Congress returning from August recess, extending the NFIP to avoid a lapse should be a top priority."

Congressional action may only be one problem, however. The Congressional Budget Office has reported the NFIP is facing a financial shortfall of some $1.4 billion.

Hurricane Harvey caused widespread flooding that was only covered by flood insurance. And now Hurricane Irma is bearing down on Florida, where homeowners a...

Consumers spending more on travel insurance

The rise coincides with an increase in the cost of travel

A report by Squaremouth, a travel insurance comparison site, shows U.S. consumers are spending more for travel insurance. The authors suggest there's a simple explanation: it costs more to travel these days and consumers are taking more expensive trips.

The report says that for the first time since 2013, U.S. consumers spent more per trip from one year to the next. The average amount consumers spent on a trip last year was close to $4,000, with the most expensive trip insured in Squaremouth costing over $146,000.

South Carolina consumers spent the most per trip, with an average of just over $5,000. Arkansas consumers spent the least per trip -- $2,351.

Since travel costs more, and consumers are taking more expensive trips, Squaremouth says more people are seeking protection through travel insurance. Consumers in nine states spent 30% or more on travel insurance last year than the year before.

What it covers

Before buying travel insurance, consumers should understand what it covers and what it doesn't. According to Investopedia, there are five main areas where travel insurance may prove useful. It will cover trip cancellation, though the reasons for covered cancellation may vary from company to company.

Many travel policies will pay if the traveler has a sudden business conflict and is unable to travel; there is a delay in processing needed paperwork; the traveler is injured or gets sick; or if there is a weather-related delay. Some policies even pay if the traveler changes their mind.

Most policies will provide extensive medical coverage for injury or illness while on a trip. This can be important for international travel, since many healthcare policies don't cover their policyholder outside the U.S.

Other common areas of coverage include emergency medical evacuation insurance, which covers ambulance services, and accidental death and flight accident insurance. It pays a benefit to surviving beneficiaries, just as life insurance does.

There are also different terms of coverage. Most policies are sold on a per-trip basis, but multiple trip policies are also available for frequent travelers, covering travel made during a 12-month period.

A report by Squaremouth, a travel insurance comparison site, shows U.S. consumers are spending more for travel insurance. The authors suggest there's a sim...

Senate fails again to undo Obamacare

Straight repeal of the healthcare law loses 43-57

Obamacare is the Timex watch of laws.

For those not old enough to recall, watchmaker Timex once ran an advertising campaign subjecting the inexpensive watch to all manner of torture, only to show it emerge unscathed, with the ad's tag line declaring Timex "takes a licking and keeps on ticking."

With control of the House, Senate, and White House, Republicans have made several attempts to repeal the health care law, only to come up short. At this point, Obamacare is still ticking.

The latest attempt in the Senate failed Tuesday after Sen. John McCain, battling cancer, dramatically returned to the capital to cast a deciding vote to allow a vote on the Senate's latest effort -- a straight repeal of the Affordable Care Act (ACA).

But on Twitter, McCain made clear he was only voting to allow debate on the GOP bill. He wasn't going to support the measure itself.

'Shell of a bill'

"It's a shell of a bill right now, we all know that," McCain tweeted. "I have changes urged by my state's governor that will have to be included to earn my support for final passage of any bill."

When it came time to vote Tuesday, McCain and eight other Republicans joined all Democrats in voting against the repeal legislation, despite a plea from Senate Majority Leader Mitch McConnell. McConnell expressed his frustration on the Senate floor before the vote.

“The American people elected a House with a vision of a better way on health care, then a Senate, then a president. Now, we have a duty to act," McConnell said. "The president is ready with his pen. The House has passed legislation already. Today, it’s the Senate’s turn."

But the repeal measure lost badly, 43-57. And a former high-ranking GOP congressional leader predicts it will keep on losing.

Mission impossible

The Washington Post has posted video of former House Speaker John Boehner (R-Ohio), speaking to a trade show audience in Las Vegas suggesting the GOP Congress faces a nearly impossible task.

"Here we are, seven months into this year, and yet they've not passed this bill," Boehner said. "They're not going to repeal and replace Obamacare. It's been around too long and the American people have gotten accustomed to it."

There is a longstanding truism in American politics that you don't remove an entitlement once people are benefiting from it. According to Boehner, it's too late.

Politics has also complicated the Republicans task. Politico boils down the problem for Republicans in two sentences.

"Moderates oppose repealing Obamacare without a replacement, and conservatives don’t like the idea of significantly replacing it," the political website notes. "Both policies are expected to get a vote, but both are expected to fail."

And so Obamacare is likely to keep on ticking for a while longer.

Obamacare is the Timex watch of laws.For those not old enough to recall, watchmaker Timex once ran an advertising campaign subjecting the inexpensive w...

Minnesota fines Farmers for auto rate-setting policies

State says company charged renters more for car insurance than homeowners

Auto insurance companies have different ways of assessing risk and assigning rates, but in Minnesota, the state charges one method Farmers used violated state law.

Minnesota Commerce Commissioner Mike Rothman said his office found that Farmers was charging a higher auto insurance rate to drivers who did not own their home. He says state law prohibits that.

“You should not be forced to buy a house in order to get a fair price on your auto insurance,” said Rothman. “It is not only unfair, but in Minnesota it is also illegal for an insurance company to charge more or discriminate against drivers simply because they happen to rent their homes.”

$315,000 in refunds

As a result, Rothman says Farmers will pay a $75,000 penalty and refund $315,000 to more than 1,600 Minnesota drivers, while changing its policy.

The Consumer Federation of America (CFA) says Minnesota is not the only state where this was happening. The consumer group produced a report last year showing that drivers in a number of states often pay a surcharge for being renters.

J. Robert Hunter, CFA’s director of insurance and former Texas Insurance Commissioner, said the Minnesota official was correct to take action.

"It is critical that he and commissioners around the country make it clear that auto insurance prices must be based on real risk factors and not personal or economic characteristics such as whether or not you can afford to buy a home,” Hunter said.

Renters pay 7% more

In its report last year, CFA documented that consumers paid, on average, 7% more for the same auto insurance coverage if they were a renter instead of a homeowner. The group says that hurts lower-income consumers who already have less disposable income.

CFA suggests such a measure has the effect of basing rates on income, since the average income of renters in 2013 was $27,800 but $63,400 for homeowners.

In the past, the insurance industry has generally defended the use of non-driving criteria used in setting rates, citing studies showing a correlation with risk.

In recent years, CFA has tried to focus attention on various non-driving risk factors that insurance companies use to set rates. For example, in all but three states, many insurers use a customer's credit score as one way to assess risk. California, Massachusetts, and Hawaii specifically prohibit the practice.

While the Minnesota law specifically bars the use of homeownership in setting auto rates, CFA says most states have laws that could be reasonably interpreted to ban the practice.

Auto insurance companies have different ways of assessing risk and assigning rates, but in Minnesota, the state charges one method Farmers used violated st...

Types of boat insurance and what they cover

Skippers should always know where they stand when it comes to their insurance

For some consumers, there’s nothing that beats taking the boat out on the water during a hot summer’s day. But just as with any other vehicle, accidents can happen – and when they do, it’s important to know what your insurance will cover.

With this in mind, the Insurance Information Institute (III) has provided an overview of what kind of insurance policies are out there and how they work. Consumers should keep in mind that the type and value of their water craft will largely determine how much they pay for insurance coverage and what benefits they receive.

Levels of insurance

For smaller types of boats, such as canoes, small sail boats, and small power boats with less than 25 miles per hour of horse power, III says that coverage can usually be provided under a homeowner’s or renter’s insurance policy. The coverage is usually either $1,000 or 10% of the home’s insured value and protects the boat, motor, and trailer combined.

This kind of policy usually doesn’t have any liability coverage, but consumers can often elect to add it as an endorsement to their homeowner’s policy. However, be sure to check with your insurance representative to see what the limits are.

Consumers who own larger and faster boats, such as yachts, jet skis, or wave runners, will generally not be covered by their homeowner’s or renter’s policy and will need to acquire a separate boat insurance policy. Generally, there are two types of policies to choose from.

An actual cash value policy pays for replacement costs less depreciation at the time of an accident or loss. If your boat is completely lost, then this kind of policy will use boat pricing guides and other resources to determine its market value. Partial losses are handled by taking the total cost of the repair and subtracting a percentage for depreciation.

An agreed amount value policy is different because it’s based on a value that you and your insurer agree upon before an accident or loss. When this event occurs, you’ll be paid that amount. This kind of policy also replaces any old items on your boats for new ones in the event of a partial loss and does not deduct anything for depreciation.

Exclusions and liability limits

Certain types of physical damage may be excluded from these policies, such as normal wear and tear, damage from insects, mold, animals, zebra mussels, defective machinery, or machinery damage. However, they will often provide coverage for several scenarios, including:

  • Bodily injury – for injuries caused to another person;
  • Property damage – for damage caused to someone else’s property;
  • Guest passenger liability – for legal expenses incurred by someone using the boat with the owner’s permission;
  • Medical payments – for injuries to the boat owner and other passengers; and
  • Theft.

Most insurance companies will offer liability limits on a policy starting at $15,000, but consumers can choose to increase them up to $300,000 or more by checking with their insurance representative. III says that common deductibles may include $250 for property damage, $500 for theft, and $1,000 for medical payments.

Certain discounts for policies are also available and may provide umbrella coverage for a consumer’s boat, car, and home.

Boating safety

While having good boat insurance is important, not having to rely on it in the first place is the best-case scenario. III suggests that consumers take the following steps to ensure proper boat maintenance and safety.

  • Check weather forecasts before heading out;
  • Let someone know where you’re going and when you expect to return;
  • Check engine, fuel, electrical and steering systems, especially for exhaust-system leaks;
  • Carry one or more fire extinguishers, matched to the size and type of boat and have them readily accessible in case of emergency;
  • Equip your boat with required navigation lights and with a whistle, horn, or bell; and
  • Carry additional safety devices, such as paddles or oars, a first-aid kit, a supply of fresh water, a tool kit and spare parts, a flashlight, flares, and a radio.

Consumers should also follow these steps to ensure their safety and the safety of their passengers:

  • Make sure all passengers wear a life-jacket while on-board;
  • Obey marine traffic laws and learn about various distress signals;
  • Stay alert for other watercraft, swimmers, shallow waters, and any floating debris;
  • Load your boat carefully so that weight is evenly distributed and within certain limits; and
  • Do not operate your boat if you’re under the influence of alcohol or drugs.
For some consumers, there’s nothing that beats taking the boat out on the water during a hot summer’s day. But just as with any other vehicle, accidents ca...

Second Senate healthcare bill draws more opposition

Interest groups attack increased costs, reductions in coverage

The U.S. Senate's second attempt at legislation to repeal and replace the Affordable Care Act (ACA) may not have any brighter prospects than the first measure.

Two GOP senators have already said they will vote against it, meaning Republican backers have no wiggle room at this point. Meanwhile, groups that have a stake in the outcome continue to line up against it.

AARP Executive Vice President Nancy LeaMond says the second bill is nearly the same as the first when it comes imposing what she called an "age tax" on older consumers.

"We urge the Senate to vote 'no' and start from scratch on a new health bill that lowers costs and maintains vital protections and coverage that millions of Americans count on," LeaMond said in a statement.

Medicaid cuts

LeaMond also blasted the bill for what she termed drastic Medicaid cuts. She said those cuts would put 17.4 million poor seniors and people with disabilities, at risk of losing health coverage.

The American Psychological Association (APA) called the second healthcare bill worse than the first. The group said the second draft of the bill creates a two-tiered system with policies that don't provide mental health and substance abuse treatment.

"This bill will not only irreparably damage Medicaid, like the first version, but it will also fracture the private insurance market,” said APA President Antonio E. Puente. “We urge the Senate to reject this measure and instead focus on making improvements to the Affordable Care Act to strengthen the state health insurance exchanges and cover more people.”

Numbers crunchers

Actuaries, the people in the insurance industry who evaluate the likelihood of future events, are also finding fault with the legislation. The American Academy of Actuaries has sent a letter to Congress and the nation's governors, pointing out what they see as flaws.

"With legislation of this scope affecting millions of people and highly complex markets, assuring stable and sustainable markets is no simple feat," said Academy Senior Health Fellow Cori Uccello. "We provided a nonpartisan, actuarial examination of the BCRA component-by-component, and drew lawmakers' attention to critical issues."

Blue Cross Blue Shield of Massachusetts has also come out against the measure, with CEO Andrew Dreyfus expressing the concern that it would result in the loss of coverage for millions of Americans.

Dreyfus also criticized the proposed legislation for creating what he said would be a "new divide between those who are seriously ill and those who are healthy."

The Senate's vote on the measure has been delayed, due to the illness of Sen. John McCain (R-Ariz.). Republican moderates who are on the fence has also said they are waiting for a report from the Congressional Budget Office (CBO), expected this week, which will detail the expected impact of the legislation.

The U.S. Senate's second attempt at legislation to repeal and replace the Affordable Care Act (ACA) may not have any brighter prospects than the first meas...

Senate urged to 'start over' on health care

'Deeply flawed' bill can't be salvaged, AARP tells lawmakers

During the 2016 political campaign, the idea seemed simple. Republicans up and down the ticket generally supported "repealing and replacing" the Affordable Care Act, also known as Obamacare.

But in practice, the process has been far from simple. Democrats, of course, are unified in their opposition to any of the Republican proposals so far. It's the GOP that is divided.

In its second attempt, the GOP-controlled House has passed a measure to replace the Affordable Care Act with the American Health Care Act, which keeps some of the ACA's components but has changed other parts, which a large number of health organizations have said would reduce or eliminate coverage for millions.

The measure now resides in the U.S. Senate, where the outcome is far from certain. Instead of tweaking the House-passed bill, AARP, which has announced its opposition to the replacement legislation, is urging the Senate to simply toss the House's work and start over.

'Age tax'

“The deeply flawed House bill would add an age tax, increasing health care costs by thousands of dollars each year we grow older, and put millions of American families at risk of finding health care unaffordable or unavailable,” said AARP executive vice president Nancy LeaMond.

In a letter to members of the Senate, LeaMond urged lawmakers to start from scratch. The goal, she said, should be health care legislation that "ensures robust insurance market protections, controls costs, improves quality, and provides affordable coverage to all Americans.”

AARP contends that under the House bill, insurance providers could jack up rates on older Americans five times or more for their coverage. The group notes that the median annual income for people 50 to 64 years-old is less than $25,000.

The group representing seniors also says the pending legislation would in essence remove protections for consumers with pre-existing conditions because it would allow insurance companies to charge a lot more for that coverage.

Compensating for risk

Supporters of the House legislation point out their bill simply returns health coverage to an insurance-based footing. When there is an element of higher risk -- and policyholders with pre-existing conditions increase the risk to the insurance provider -- the insurance company is compensated for that risk in the form of higher rates. That's the way it works for auto and homeowner's insurance. The more claims there are, the higher the rates go.

Critics, however, say no one is required to have a car or to own a home. It's different, they say, when it comes to healthcare.

So that may be one reason Washington is having such a hard time with this issue. One side sees health care as an insurance product, the other views it as an entitlement. A law that straddles those two diverging outlooks is indeed a challenge.

During the 2016 political campaign, the idea seemed simple. Republicans up and down the ticket generally supported "repealing and replacing" the Affordable...

How your credit score may affect what you pay for home insurance

Consumers with poorer credit may be paying much more than others

Most financially literate consumers know how important it is to have a good credit score. This three-digit rating lets lenders know how likely you are to stick to your financial commitments and make timely payments; basically, it’s a way for them to measure risk. But did you know that it also has a large bearing on the rates you pay for home insurance?

In a recent insuranceQuotes study, researchers found that policyholders with only fair credit paid an average of 36% more on their home insurance than those who had excellent credit. And, depending on where you live, those figures could change drastically.

“Many consumers aren’t even aware that, in most states, credit plays a significant role in determining how much they pay for home insurance,” said insuranceQuotes senior insurance analyst Laura Adams.

Home insurance premiums by state

When we use the term  “drastically,” that isn’t just an idle buzzword. The study found that a drop in credit from excellent to poor could have home insurance premium implications ranging from 0.2% to 288.1%.

The researchers say that the following states have the greatest home insurance premium increases when credit scores drop from excellent to poor:

  1. South Dakota – 288.1%
  2. Arizona – 268.6%
  3. Oklahoma – 248.0%
  4. Nevada – 235.3%
  5. Oregon – 234.9%

You can contrast that list with the states that have the smallest increases when credit scores drop from excellent to poor. While North Carolina is far and away the most forgiving of the states, consumers living in the other four won’t feel the financial pain nearly as much as their counterparts in South Dakota.

  1. North Carolina – 0.2%
  2. Florida – 25.7%
  3. New York – 29.3%
  4. Wyoming – 43.1%
  5. Hawaii – 53.1%

Note that California, Massachusetts, and Maryland are excluded from the list because it is prohibited in these states to set home insurance rates based on credit.

Differences by insurance companies

To make matters more confusing, the researchers say that different insurance companies also use credit score data in different ways. So, a consumer who is covered under one carrier may have their credit score reflect on them much more heavily than another consumer under a different carrier.

The bottom line, the researchers say, is that consumers should do everything they can to build and maintain their credit score.

“My advice to consumers is do everything you can to build and maintain excellent credit so you pay less for credit accounts and home and auto insurance. To maintain good credit make payments on time, keep balances low, and avoid opening many new accounts,” said Adams.

The full study has been published in the Insurance Journal.

Most financially literate consumers know how important it is to have a good credit score. This three-digit rating lets lenders know how likely you are to s...

Mobile homes may face increased tornado risks

Insurance executives say there are more mobile homes and more tornadoes

Whenever you read a news report about a tornado touching down, it's a safe bet there will be some mention of damage to a mobile home park.

It isn't because these destructive storms have an attraction to mobile homes, it's because strong winds anywhere near a mobile home have a good chance of causing damage. After all, these homes aren't secured on foundations – there isn't as much holding them down.

Now, there's concern that mobile homes are even more susceptible to damaging winds. The Insurance Journal warns damage to mobile homes is getting worse, mainly for two reasons. There are more tornadoes than there used to be, and a lot more mobile homes. Sooner or later, their paths are likely to cross.

More common in the last six decades

The Journal reports mobiles homes have become more common over the last 60 years, and today there are about nine million of them. At the same time, it calls the U.S. “the most tornado-prone country in the world.” Meanwhile, it counts about 1,200 twisters in the U.S. each year and most climatologists say the number is rising along with average temperatures.

Insurance executives predict the tornado impact on mobile homes will increase threefold over the next few decades as mobile home parks proliferate.

Texas has the most tornadoes each year, about 150, followed by Kansas, which has 80, and Oklahoma, which has an average of 64.

Tornado damage and deaths also occur the most in areas of high income disparity. Mobile homes are more likely to be occupied by lower income families. As home prices continue to rise, insurance executives expect this trend to continue.

Whenever you read a news report about a tornado touching down, it's a safe bet there will be some mention of damage to a mobile home park.It isn't beca...

House votes to repeal Affordable Care Act

Bill would make sweeping changes to current healthcare system

On the second attempt, House Republican leaders mustered the necessary votes to repeal the Affordable Care Act (ACA), also known as Obamacare, and make changes to the healthcare system that has been in place for the last six years.

The measure passed 217 to 213, with 20 Republicans joining all 193 Democrats in voting against it. The bill now goes to the Senate where it faces an uncertain future.

For people who get their health insurance from the ACA exchanges, here's how the House bill affects you:

Proposed changes

If you now have health coverage because of an expansion of Medicaid in your state, your coverage could be at risk. The measure would roll back expansion of Medicaid in states that received money under the ACA to provide coverage to more low-income consumers.

Consumers who receive a federal subsidy to help pay their health insurance premiums could see an adjustment. The House bill would do away with the current subsidies and replace them with tax credits of between $2,000 and $4,000 a year. The amount of the subsidy would largely depend on age.

It would also depend on income levels. The amount of the tax credit would be reduced for people earning $75,000 or more a year, or families earning $150,000 or more.

To placate members of the House Freedom Caucus, the bill's authors also added language allowing states to reduce or eliminate "essential services" coverage. Under the ACA, maternity coverage is considered essential and must be included in every policy. Under the House bill, it is not.

States would also be empowered to allow health insurance companies to charge higher premiums for policyholders with pre-existing conditions, something the ACA does not allow them to do.

'Political suicide'

While Democrats opposed the repeal, they also predicted Republicans who voted for it will pay a high price at the polls next year. Rep. Louise Slaughter (D-N.Y.) told The New York Times she had never seen so many lawmakers commit "political suicide."

AARP also opposed the repeal. In a letter to lawmakers, AARP's Nancy Leamond said the House bill repeals parts of the law that have made Medicare financially stronger, specifically, the repeal of the additional 0.9% payroll tax on higher-income workers.

"Repealing this provision would remove billions from the Hospital Insurance trust fund, hasten the insolvency of Medicare, and diminish Medicare's ability to pay for services in the future," Leamond wrote.

The repeal of the ACA is far from a done deal. Republicans have only a small vote cushion in the Senate and several Republican senators have said they have serious questions about the House bill.

On the second attempt, House Republican leaders mustered the necessary votes to repeal the Affordable Care Act (ACA), also known as Obamacare, and make cha...

Consumers cautioned on the use of insurance company apps

Consumer group says they might not be appropriate for every claim

Judging by television commercials for major insurance companies, nearly every one of them now has an app you can use to report a claim.

Minutes after an accident, you can take pictures of the damage and upload it to the company, getting the claims process started almost immediately.

At first glance that appears to be a big advantage, and perhaps it is. But the Consumer Federation of America (CFA) is beginning to raise questions. Why, it asks, is the policyholder doing all the work?

"Insurance companies will use industry buzz words like cycle-time and customer satisfaction but the real reason they are going to encourage you to use this technology is because it saves them claims handling expenses,” said Mark Romano, Director of Insurance Claims Projects at CFA.

According to Ramano, when you call the insurance company to report an accident, the customer service representative is likely to say something like "we can do this together now, if you download the app and I’ll walk you through it or it will take a few days to get someone out to look at the damage.”

What to do

CFA doesn't rule out the possibility that this could be useful, but says it's going to depend on the circumstances. If it's just a fender-bender, with limited, isolated damage, a smartphone app might well be an efficient way to handle your claim. It might also come in handy in a liability situation where the adjuster wants to see where someone fell on your property.

But here's where CFA has some concerns: if the damage is extensive or complex, then it requires a thorough in-person inspection by a professional claims adjuster. It recommends policyholders insist that the insurance company send someone out right away. After all, it points out, you are paying for this service in your monthly insurance premium.

Watch what you say

Here's something else to consider when using an app: CFA cautions that if you use the voice capability portion of the software, whatever you say will be recorded and go into your claims file. If you say the damage doesn't appear that extensive, or even that you don't see much damage at all, CFA warns that could affect your claim.

“It’s recommended that consumers be either very careful what they say or insist upon no voice recording,” Romano said.

CFA says it's not surprising that technology is impacting the insurance industry, just like it is about every other phase of modern life. CFA says government regulators need to catch up, developing guidelines for the use of insurance company apps.

Judging by television commercials for major insurance companies, nearly every one of them now has an app you can use to report a claim.Minutes after an...

Realtors sound alarm over expiring flood insurance program

Group warns it could expose property owners and halt sales

As many homeowners have learned the hard way, homeowners insurance policies don't cover flood damage.

The damage caused by rising water, whether from a hurricane storm surge or an overflowing creek, is covered by flood insurance, which in recent years has become increasingly expensive.

The National Flood Insurance Program (NFIP), administered by FEMA, is supposed to make flood insurance more affordable for homeowners, but the program is scheduled to expire at the end of September. The National Association of Realtors (NAR) worries that there will be nothing to replace it.

NAR President William Brown says the elimination of NFIP would not only pose financial risks to homeowners living on or near bodies of water, it would bring sales of those properties to a standstill.

It's happened before

"When the NFIP expired in 2010, over 1,300 home sales were disrupted every day as a result," Brown said. "That's over 40,000 every month."

If property is located in a 100-year floodplain, mortgage lenders require the homeowner to have flood insurance. So if there is no NFIP, Brown says buyers simply won't be able to get a mortgage.

A rash of hurricanes in the early 2000s took a massive toll on the flood insurance program. Even with the program, homeowners have seen premiums surge. Brown says the problem doesn't just affect coastal communities.

22,000 communities need flood insurance

"Policyholders in over 22,000 communities across the country depend on the NFIP to protect homes and businesses from torrential rain, swollen rivers and lakes, snowmelt, failing infrastructure, as well as storm surges and hurricanes," he said. "When that lifeline is cut off, the NFIP can't issue new policies or renew existing residential or commercial policies that expire. That means current home and business owners may find their most important asset unprotected."

And even though last year was a relatively calm one for hurricanes, it was the third largest in claims payments in the history of the flood insurance program, costing the goverment more than $4 billion. There were five billion dollar floods last year, with four of them occurring inland, away from coastal areas.

As many homeowners have learned the hard way, homeowners insurance policies don't cover flood damage.The damage caused by rising water, whether from a...

California crisis shows value of flood insurance

Homeowners insurance does not protect against flood damage

You sometimes hear about homeowners being "underwater" -- meaning they owe more on their home than it's worth. But you can also be literally underwater, a prospect homeowners in parts of northern California are currently facing.

If the Lake Oroville Dam's spillway fails, as disaster officials fear it may, more than 100,000 homes could potentially be flooded.

“The potential for flooding poses a significant threat to life and property in these ... northern California counties and has forced the evacuation of tens of thousands of residents,” said Janet Ruiz, the Insurance Information Institute's California Representative. “Standard homeowners, renters and business insurance policies do not cover flood-caused damage. A separate flood insurance policy is needed.” 

Read that again: Standard homeowners and renters insurance does not cover flooding. 

Or as California Insurance Commissioner Dave Jones puts it: "Flood insurance may be all that stands between you and devastating financial losses. ... I urge homeowners to review their coverage needs and consider a flood insurance policy. Consumers need to know their risks and prepare before disaster strikes."

Federally-subsidized flood insurance is available from FEMA’s National Flood Insurance Program (NFIP) and a few private insurance companies. It's important to note that NFIP policies have a 30-day waiting period before the coverage is activated, so you can't wait until it starts raining to sign up. 

Excess flood insurance policies are also available from some private insurers if additional coverage is needed above and beyond the basic FEMA NFIP policy. To learn more about flood insurance, visit

What to do

Jones suggests consumers, including those in low-risk areas, assess their need to purchase coverage well before big storms hit. Even areas that have never experienced floods may be at risk after years of severe drought and devastating wildfires in California and elsewhere.
Jones also advises consumers to prepare for potential disaster by using their smartphone to record a home inventory to catalog their belongings and store them in their cloud account. Residents should also consider scanning deeds, insurance policies, and other important documents and store them in the cloud for easy access after the storm.
You sometimes hear about homeowners being "underwater" -- meaning they owe more on their home than it's worth. But you can also be literally underwater, a...

Judge blocks Anthem-Cigna merger

The merger would have significantly lessened competition, the court held

A Federal judge has blocked Anthem’s $54 billion takeover of rival insurer Cigna Corp., saying it would substantially lessen competition. The ruling came in response to a challenge by the U.S. Department of Justice, 11 states, and the District of Columbia.

“Today’s decision is a victory for American consumers,” said Acting Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division late Wednesday.  “This merger would have stifled competition, harming consumers by increasing health insurance prices and slowing innovation aimed at lowering the costs of healthcare."

Snyder said the court "has protected consumers and the competition on which they rely."

The decision by Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia concluded that Anthem’s acquisition of Cigna would violate federal antitrust laws. 

Consumer choice impact

In blocking the merger, the court ruled that the proposed merger is likely to substantially lessen competition and impact consumer choice in the sale of health insurance to “national accounts” – customers with more than 5,000 employees, usually spread over at least two states – within the fourteen states where Anthem operates. The court’s order will also preserve competition in 35 regional markets where both companies operate.

“Health insurance competition is an inherently local concern,” said Colorado Attorney General Cynthia Coffman. “Colorado residents, businesses, health care providers, and third party payors all have a vested interest in ensuring that the quality, quantity, and price of health care services remains competitive. Today we have successfully maintained that vital competition.”

The decision follows a trial that ran from Nov. 21, 2016, to Jan. 3, 2017. In July 2016, the Justice Department along with 11 states and the District of Columbia sued to stop the merger.  

Joining the Justice Department and the District of Columbia were California, Colorado, Connecticut, Georgia, Iowa, Maine, Maryland, New Hampshire, New York, Tennessee, and Virginia.

A Federal judge has blocked Anthem’s $54 billion takeover of rival insurer Cigna Corp., saying it would substantially lessen competition. The ruling came i...

Court blocks Aetna-Humana merger

Still pending is a decision on Aetna's takeover of Cigna

A U.S. District Court Judge has blocked Aetna's acquisition of rival insurer Humana Inc. Judge John D. Bates of the D.C. Circuit held that the $34 billion deal woud stifle competition and violate federal antitrust laws.

It was the last major antitrust case brought by the Obama Justice Department. Still pending is a challenge to Aetna's takeover of Cigna Corp. A ruling in that case is expected any day. 

“Today’s decision is a victory for American consumers – especially seniors and working families and individuals,” said Deputy Assistant Attorney General Brent Snyder, who is currently heading the Justice Department’s Antitrust Division. “Competition spurs health insurers to offer higher quality and more affordable health insurance to seniors who choose Medicare Advantage plans and to low-income families and individuals who purchase insurance from public exchanges."

Snyder said the merger "would have stifled competition and led to higher prices and lower quality health insurance." He said the ruling would "save customers and taxpayers up to $500 million per year" based on evidence entered in court showing that direct competition between Aetna and Humana led the companies to offer more generous benefits at lower prices.

"Aetna attempted to buy a formidable rival, Humana, instead of competing independently to win customers," Snyder said. "Millions of consumers have benefited from competition between Aetna and Humana, and will continue to benefit because of today’s decision to block this merger."

13-day trial

The decision followed a 13-day trial in December 2016. In July 2016, the Justice Department along with eight states and the District of Columbia sued to stop the merger. The complaint alleged that a combined Aetna and Humana would substantially reduce competition for the sale of Medicare Advantage – a form of Medicare coverage provided by private insurers –and health insurance to individuals through the public exchanges. 

Joining the Justice Department in the lawsuit were the District of Columbia and the States of Delaware, Florida, Georgia, Illinois, Iowa, Ohio, Pennsylvania and Virginia.

A U.S. District Court Judge has blocked Aetna's acquisition of rival insurer Humana Inc. Judge John D. Bates of the D.C. Circuit held that the $34 billion...

Aetna fudged reason it pulled out of Obamacare exchanges, court finds

Judge finds the company made the decision partly because of a blocked merger

Consumers may remember back in August when Aetna, a health insurance provider, said it would be pulling out of Obamacare exchanges in many states in 2017. At the time, CEO Mark Bertolini expressed regret over the decision, saying that the company had faced increased pressure and was concerned about the sustainability of its exchange business.

However, new details about the company’s withdrawal from these exchanges seem to paint a very different story.

A new report by the Los Angeles Times shows that Aetna’s reasons for pulling out of the exchanges may have had less to do with losing too much money and more to do with following through on its threats. Federal judge John D. Bates found that the company made the decision at least partly because of an antitrust suit that blocked its $37 billion merger with Humana.

Bates found that Aetna had threatened federal officials with pulling out of the Obamacare exchanges if the suit went forward. When it did, Aetna followed through on its threat and announced pullouts in 11 of the 15 states it previously covered. Bates made these observations as a part of a ruling he issued on Monday that blocked the merger between Aetna and Humana.

“Aetna tried to leverage its participation in the exchanges for favorable treatment from the DOJ regarding the proposed merger,” Bates said in his decision.

“Outside of normal business practice”

Aetna allegedly did all that it could to keep its real reasons for pulling out of the exchanges quiet; executives elected to exclusively talk about the matter over the phone instead of email in order to not leave a paper trail. Anything that was written down was covered by client-attorney privilege, something Bates said came close to malfeasance.

When Aetna announced that it was pulling its coverage of many states and counties, it surprised quite a few people because many of the areas had actually shown profitability. In fact, Bates said that the move was “so outside of normal business practice” that one top executive couldn’t make heads or tails of the decision.

“I just can’t make sense out of the Florida dec[ision],” said Christopher Ciano in a message to Jonathan Mayhew, Aetna’s head of the national exchange business. “Based on the latest run rate data . . . we are making money from the on-exchange business. Was Florida’s performance ever debated?”

Mayhew quickly told Ciano to discuss the matter over the phone with him, ending the written dialogue.

Improving litigation position

Aetna’s rationalization for pulling out of the exchanges is degraded further by a letter that Bertolini sent to the Justice Department in July. In the message, the CEO plainly ties the company’s future support of the exchanges with whether its Humana merger was successful.

Additionally, at least 17 of the counties that the company pulled out of were areas that the DOJ claimed had “unlawfully low levels of competition in individual exchanges.” By pulling out of the areas, Aetna could claim that it had no ties to the areas to strengthen its merger argument.

“The evidence provides persuasive support for the conclusion that Aetna withdrew from the on-exchange markets in the 17 complaint counties to improve its litigation position. The Court does not credit the minimal efforts of Aetna executives to claim otherwise,” said Bates.

Cause and effect

While Bates conceded that Aetna’s claim of losing money on the exchanges may be valid, he questioned the company’s claims that it was the only reason for pulling out. Exchanges with Aetna executives provided evidence that the merger deal and the pullouts were linked for the company, despite claims to the contrary. But what does that decision ultimately mean for the rest of us?

In its report, the Times points out that Aetna’s departure from the exchanges gave Republicans a platform from which they could cast doubt on the stability of Obamacare, strengthening the case for repealing the act.

Depending on how much you’re willing to heap on the company, one could allege that its actions put the health coverage of over 20 million Americans who rely on the program at risk. However, whether its decision will ultimately help the company achieve its own ends is now less sure. 

Consumers may remember back in August when Aetna, a health insurance provider, said it would be pulling out of Obamacare exchanges in many states in 2017....

Anesthesiologists explain those surprise medical bills

The cheaper your insurance policy, the more likely you are to receive them

We reported last week on new research from Johns Hopkins that looked at how consumers with health insurance are often blindsided by huge bills from out-of-network providers.

It often happens when a patient goes to the emergency room, or has surgery and the surgeon is in-network but the anesthesiologist isn't. In fact, the Hopkins researchers singled out anesthesiologists as the most expensive out-of-network providers.

Now the anesthesiologists are weighing in on the subject. Dr. Jeffrey S. Plagenhoef, president of the American Society of Anesthesiologists (ASA), says it's a real problem, explaining that his wife recently got a surprise medical bill, and she's a doctor who researched her health insurance policy ahead of time.

“Health insurance plans are extremely complicated, and even savvy consumers face uncertainty about what is covered by their health insurance,” Plagenhoef said.

Reasons for the surprise bills

The reason for these huge bills, he says, is because these out-of-network providers may be paid at a lower rate than those in the network. The patient then makes up the difference. These out-of-network payment issues, he says, are caused by gaps in insurance coverage.

Plagenhoef says there are two things patients should know about these surprise insurance gaps.

The first may seem obvious. Before a medical procedure that will involve more than one provider, ask who will be involved and whether they are part of your health plan's network. Inform your insurance company about who is participating and whether there will be any gap issues.

The second needs to be done when selecting a healthcare plan. If the premiums are low, it may not be the bargain you think it is. Seek details about what the plan does and does not cover and whether the network of physicians is narrow.

The low monthly premiums, then, have to be measured against potential gap liability when services are required by more than the patient's doctor. Plagenhoef says patients need to know that insurance plans with narrow networks remove or reduce patient choice. If the network isn't adequate, he says, it limits insurance companies’ costs and shifts them to patients.

We reported last week on new research from Johns Hopkins that looked at how consumers with health insurance are often blindsided by huge bills from out-of-...

Researchers find unintended result of health insurance

Study shows insured households are better at paying rent and mortgage

House and Senate lawmakers took the first step last week toward repeal of the Affordable Care Act (ACA), better known as Obamacare.

While there is no doubt of a major fight ahead over what happens next, researchers from the Brown School and Olin Business School at Washington University in St. Louis have given lawmakers something to think about.

They have published a study that shows households covered by Obamacare are more likely to pay their rent or mortgage payments on time than households that don't have health insurance.

The researchers reached their conclusion after looking at administrative tax data from about 5,000 low to middle income tax filers who live in one of the 18 states that did not expand Medicaid during the most recent tax seasons.

Unintended welfare benefits

Study co-author Radhakrishnan Gopalan, associate professor of finance at Olin, says the findings highlight some of the unintended welfare benefits from having health insurance.

“Mortgage delinquencies can be very costly, not only for the household but also for the local community,” she said. “These benefits should be kept in mind when drafting a law to replace the ACA.”

Lead author Emily Gallagher, postdoctoral research associate at the Center for Social Development and at Olin, says it appears families with health insurance aren't hit with huge, unexpected medical bills. Therefore, she says, their finances are more stable, and as a result they have more money available to meet housing expenses.

Gallagher says she's concerned about an estimated 2.6 million consumers in the U.S. who remain in what she calls “insurance limbo.” They earn too much money to qualify for Medicaid but not enough to get subsidies to pay for private health insurance through the ACA healthcare exchanges.

Substantial opportunity

“Put together, our findings spotlight a substantial opportunity to improve the financial stability of these households through assisted enrollment in the ACA’s health insurance programs,” she said.

The takeaway, she says, is that in just three years expanded health insurance coverage for consumers in the low to middle income range has reduced the likelihood of rent or mortgage hardship.

Meanwhile, President-elect Donald Trump told The Washington Post over the weekend that he's putting the finishing touches on his own healthcare plan to replace Obamacare. Without revealing any specifics, Trump said his plan would provide “healthcare for everyone.”

Trump also renewed his criticism of pharmaceutical companies over drug prices. “They're politically protected, but not any more,” Trump told The Post.

House and Senate lawmakers took the first step last week toward repeal of the Affordable Care Act (ACA), better known as Obamacare.While there is no do...

High-deductible health plans can be costly for the chronically ill

Patients often spend 10% or more of total income on out of pocket expenses

Just like auto insurance, most health insurance plans have deductibles – the amount the policyholder pays before the insurance coverage kicks in.

For the most part, these deductibles are set on an annual basis, so that you have to spend the entire deductible amount in a calendar year. At the beginning of each year, the deductible goes back to zero.

In recent years, more consumers have been covered by high-deductible plans purchased through the Affordable Care Act (ACA) exchanges. Just as with auto insurance, a high deductible keeps the premiums affordable because the consumer is assuming more of the risk.

When high deductible plans are a benefit

For people in good health, who are making little use of health services, a high-deductible plan might be a good thing. They pay low premiums but are covered in the event of a catastrophic illness or injury.

The problem comes in when the insured is not in good health and suffers from a chronic disease. These consumers might spend thousands of dollars of their own money each year before their health plans begin to pay.

Researchers writing in JAMA Internal Medicine explored the impact of high-deductible health plans, which they say now cover 40% of consumers who buy their insurance through the exchanges or get it through an employer.

Costs 10% of total income

For consumers under age 65, the researchers found that having a high deductible health plan means someone with a chronic condition is likely to pay 10% or more of his or her total income for health-related costs.

Despite that, the researchers said the subjects in the study said their out-of-pocket costs had not prevented them from obtaining needed medications.

“Increasingly, these plans have become woven into the fabric of health insurance in America, so it’s important to look at the impact of deductibles on people who need care on an ongoing basis,” says senior author Dr. Jeffrey Kullgren, of the University of Michigan medical school. “Not only on how they spend their money on care for their day in, day out health needs, but also how that affects spending in the rest of their lives.”

In 2013, during the study period, a health plan was considered high-deductible if patients were required to pay the first $1,250 in care costs for an individual or $2,500 for a family.

High deductible plans offered through employers and the ACA Marketplace now commonly required deductibles of $6000 or more.

Just like auto insurance, most health insurance plans have deductibles – the amount the policyholder pays before the insurance coverage kicks in.For th...

States where drunk driving will cost you the most

Besides huge fines, your insurance rates could skyrocket

Got a lot of holiday parties on your calendar this month? There are plenty of good reasons not to over-indulge at the punch bowl, especially if you plan to drive yourself home afterward.

Not only is impaired driving extremely dangerous to you and others on the road, but a Driving Under the Influence (DUI) ticket is costly. A study by the personal finance site NerdWallet shows it's more costly in some states than others.

It should first be noted that alcohol was a contributing factor in 41% of fatal crashes on New Year's Day in 2015 and 44% on Christmas last year. The National Highway Traffic Safety Administration (NHTSA) says speed is always a major factor, and an impaired driver is more likely to have a heavy foot.

Unpleasant consequences

When a police officer pulls you over and tickets you for DUI, you could face a lot of unpleasant consequences, including an expensive fine and even jail. Should you be in an accident where alcohol was a factor, you could face more serious criminal charges and even higher fines.

But NerdWallet says there is another financial cost of a DUI ticket – what it does to your insurance rates. Nationwide, just one DUI conviction will raise your auto insurance rates an average of 62%. If you're speeding, tack on another 14%.

North Carolina is the toughest state

North Carolina is the toughest state on drunk drivers. There, a DUI conviction can raise your insurance rates 362%, from $872 to $4,077 a year. A simple speeding ticket can make your rates go up 62%.

At the other end of the scale, a DUI ticket is less costly in a handful of states. In Louisiana, rates will go up around 17%. The same infraction in Maryland will raise rates 19%, and in Utah the mark-up is around 21%.

The authors of the study point out that you might not see the rate hikes immediately. Rather, they'll show up in your bill when your policy comes up for renewal.

If your license is suspended after a DUI conviction, keep in mind that your insurance company might not even give you the option of renewing it.

So during holiday merry-making, it's always prudent to limit your alcohol intake, or use a designated driver, taxi, or ride-sharing service to get home.

Got a lot of holiday parties on your calendar this month? There are plenty of good reasons not to over-indulge at the punch bowl, especially if you plan to...

Trump vows to bring down drug prices

Health insurers warn that they need relief from constantly rising pharmaceutical costs

Drug company stock prices soared last month when Donald Trump won the presidential election, but they plunged today when Trump declared himself an opponent of high drug prices and vowed to take action to bring them down.

“I’m going to bring down drug prices. I don’t like what’s happened with drug prices,” Trump said, according to Time Magazine, which named him its "Person of the Year."

EpiPen maker Mylan NV and Valeant Pharmaceuticals International have been the public face of high drug costs in recent months, but they are far from the only drugmakers to aggressively increase prices.

Recently published research from the U.S. Centers for Medicare and Medicaid Services show that spending on prescription drugs "outpaced all other services," increasing 9 percent to $324.6 billion nationwide in 2015.

Trump has already shown himself ready and willing to go after individual companies, berating Carrier for initially planning to close a plant in Indiana and calling on Ford to back off plans to move some operations to Mexico. He has also lambasted Boeing for the price of new presidential jets and threatened to cancel Boeing's contract.

Repeal and replace

Trump didn't make drug prices a major part of his campaign, although he has vowed to repeal and replace the Affordable Care Act -- "Obamacare" -- with something more palatable to the healthcare industry. Controlling drug prices is an essential part of forging an affordable care plan, whatever it is called and however it is financed.

It has not escaped notice that Trump has previously said that consumers should be allowed to import drugs from Canada and other countries where they are cheaper than in the U.S. He has also spoken favorably of having Medicare negotiate drug prices directly with manufacturers, as the Veterans Administration already does.

Interestingly, those ideas are stridently opposed by many Republicans, most notably including Rep. Tom Price, the Georgia congressman Trump has chosen to lead the Department of Health and Human Services, which manages Medicare and the Affordable Care Act.

Insurers speak

Health insurance companies are trapped in the middle of the debate. They are regularly excoriated for rising premiums and declining coverage but have begun speaking out publicly, warning Washington that without government support, it will not be possible to continue providing coverage to low-income Americans.

America's Health Insurance Plans, a leading industry trade group, cautioned yesterday that insurers are already losing money in many of the Obamacare state exchanges because of high costs and lower than expected enrollment by younger, healthier consumers. If Obamacare is repealed without a replacement, some 22 million Americans could be left without health coverage.

Controlling drug costs is essential to maintaining affordable insurance plans, the group said. 

"Health plans continue to work to protect their customers from these increasing drug prices. Through cost sharing limitations and more comprehensive coverage, health plans are working hard to ensure that consumers continue to have affordable access to their prescriptions," the group said in a blog posting.

"With no end in sight for skyrocketing drug prices, health care providers and consumers will continue to ask the pharmaceutical industry: When will they become part of the solution to this huge problem?" AHIP asked.

Drug company stock prices soared last month when Donald Trump won the presidential election, but they plunged today when Trump declared himself an opponent...

Auto insurance claims tend to rise during the holidays

Drivers need to use extra caution, especially in parking lots

The holiday season is filled with more hustle and bustle than usual. More people are driving on roads and highways and shopping mall parking lots are full.

With more vehicular traffic in the month of December, the law of averages would suggest that more cars are going to run into one another.

To prevent your car from being one of them, the Property Casualty Insurers Association of America (PCI) reminds consumers to be extra careful, especially in parking lots. It says more than 60,000 people are injured each year in parking lot accidents, and distractions are a major factor.

“During the holidays, parking lots can pose a major problem and lead to vehicle accidents,” said Bob Passmore, PCI’s assistant vice president of personal lines. “It’s important to pay close attention to your surroundings and use extra caution while driving or walking in parking lots.”

Claims rise 20% in December

The Insurance Institute for Highway Safety has found that collision claims jump 20% in the month of December. Aside from leaving your car in the garage and taking the bus for the rest of the month, there's only so much you can do to reduce your odds of being in an accident. However, being a more attentive driver is a good start.

“While Americans know distracted driving is a problem, too often, making a quick call, firing off a text, adjusting the navigation system, or turning our attention to kids and pets in the back seat, results in a short lapse of focus that can lead to a crash,” Passmore said.

To reduce your risk of being in a holiday season smash-up, slow down and take your time. Don't give into the pressures and stress of the season, especially when you're driving.

Stay alert. Assume everyone else is distracted and not paying attention. Also keep a watchful eye out for distracted pedestrians.

Ignore your cell phone

Ignore your cell phone while you're driving. Let calls go to voicemail and texts go unread until you can safely pull over to see what you missed.

Accidents aren't the only source of increased holiday season insurance claims. Be sure to lock packages and other valuables in the trunk, and not in the backseat in plain view.

Vehicle theft is also a holiday season risk. If it happens to you, report it to police immediately and contact your insurance company or agent.

The holiday season is filled with more hustle and bustle than usual. More people are driving on roads and highways and shopping mall parking lots are full....

Insurance broker Zenefits gets its wings clipped

California regulators imposed a $7 million settlement for licensing violations

High-flying human resources and insurance start-up Zenefits has been hit with $7 million worth of penalties by California insurance regulators who accused it of allowing unlicensed employees to sell insurance. Half of the amount was suspended, pending continued compliance with state regulations.

San Francisco-based Zenefits has previously settled investigations with Tennessee, Arizona, and Minnesota, paying much smaller fines in the tens of thousands of dollars.

"Businesses and consumers should have confidence that anyone selling insurance to them in California is doing so in compliance with our consumer protection laws," said Insurance Commissioner Dave Jones. "Our enforcement action has resulted in Zenefits paying substantial monetary penalties for their licensing violations and ensures Zenefits complies with all of California's insurance laws and regulations or they will face additional automatic penalties and sanctions."

It's one of the largest penalties for licensing violations ever assessed in the department's history, Jones said.

Zenefits said it was pleased with the settlement and said it now has a "clean bill of health" from California and 16 other states.

Software as a service

A 2013 start-up, Zenefits is a San Francisco based company whose business model was to provide online HR services to businesses and then encourage those same businesses to use Zenefits as an insurance broker. 

Zenefits sees itself as a software-as-a-service company, providing software that automates much of the tedious work involved in human resources and employee benefits operations. The California investigation centered around a piece of software that enabled Zenefits staff to complete prelicensing coursework in less than the amount of time required by the state, which tightly regulates insurance sales.

Regulators opened an investigation in 2015, after receiving complaints that Zenefits employees were transacting insurance sales without a license. Shortly after the investigation began, the company announced publicly that it was not complying with insurance laws and regulations, which was followed by the resignation of Zenefits CEO, Parker Conrad.

"In California, we value innovation and new business models, including Internet based start-ups, but we also insist that consumer protections laws are followed," said Jones. "Zenefits is an example of an Internet based start-up whose former leaders created a culture where important consumer protection laws were broken -- a bad strategy that placed the company at risk and that other start-ups should not follow given our strong consumer protection laws and the Department of Insurance's rigorous enforcement of those laws."

Half of the penalty was suspended, pending Zenefits' continued compliance with licensing rules.

High-flying human resources and insurance start-up Zenefits has been hit with $7 million worth of penalties by California insurance regulators who accused...

Trump's presidency puts Obamacare in limbo, but insurance industry is optimistic

There are no clear answers about what will happen to Marketplace coverage this January

One week ago on the campaign trail, President Elect-Donald Trump repeated his campaign promise to repeal and replace Obamacare, adding: “No one ever read … the 2,700-page bill.” He may have a point there. As I hesitated about signing up for Marketplace insurance coverage that seems costly, unnecessary, and possibly disappearing soon anyway, one insurance agent I consulted with assured me that the Affordable Care Act would remain in effect for at least one year into Trump’s presidency.

According to my agent, Obama had actually passed a bill into law that will guarantee that the Affordable Care Act remains “up and running” for a full year after he leaves office. Except, the agent couldn’t actually name what that bill was, instead advising me to go to Google.

Asked if such a law existed, David Merritt, executive of the health insurance industry trade group America's Health Insurance Plans, responded that it was news to him. And Bob Laszewski, a policy expert and a consultant for the health insurance industry, agreed that no such law existed, and that even to ask about it made no sense. Both men however gave assurances that Americans who depend on the Affordable Care Act for their health coverage have no reason to panic.

“Obamacare is the law of the land,” Laszewski tells ConsumerAffairs. He pointed to comments that soon to-be Vice President Mike Pence made last week ensuring that there would be a transition period between the likely repeal of Obamacare and its replacement with a different plan. The GOP has already flouted the idea of a two-year-transition period.

“We will create a transition period for those receiving subsidies to ensure that Americans don’t face disruption or other hardship in their coverage,” Pence said.

“We didn’t elect Trump the dictator. Nobody has put forward a proposal to take anybody’s health insurance away,” Laszewski adds to ConsumerAffairs.

On Capitol Hill, defenders of Obamacare say they have the votes to block a total repeal on Day One, but they can't stop Trump from using his executive powers to begin nibbling away at the measure on Jan. 20, when he takes office. 

"It's pretty high on our agenda as you know," Senate Majority Leader Mitch McConnell said on Wednesday. "I would be shocked if we didn't move forward and keep our commitment to the American people. Incoming Minority Leader Chuck Schumer (D-N.Y.) said Democrats will fight "tooth and nail" to block a total repeal. 

Industry promises to continue affordable coverage

In a fairly positive, boilerplate statement, America’s Health Insurance Plans has similar sentiments: “We will work across the aisle-with every policymaker and the new administration-to find solutions that deliver affordable coverage and high-quality care for everyone.”

Of course, it’s easy for the health insurance industry to remain calm when they’ve been doing well anyway, and will likely continue to reap financial awards with whatever plan comes next. Among those outside the insurance industry, the mood is nowhere nearly as optimistic.

Dr. John Geyman is the founder and former president of the nonprofit group Physicians for a National Health Program, which advocates for a single-payer program. Geyman has been highly critical of the Affordable Care Act, describing it as deeply unsustainable and beyond fixing. “The 1300 or so private insurance companies are running the show, they’re making huge amounts of money,” he tells ConsumerAffairs.

Still, Geyman is troubled about what will happen to the 20 million people currently using Marketplace insurance once Trump takes office. With a Republican-controlled office, he predicts that the “attempt will be to wipe it out, which I think will be a disaster...the Republicans have no plan that makes any sense” to replace the Affordable Care Act, he says.

Loss of Subsidies

In January, Obama vetoed a GOP bill that would have eliminated subsidies and Medicaid expansion currently part of Obamacare. If such a law is passed once Trump is president, those subsidies could soon be discontinued. As it stands, a clause in the Affordable Care Act already allows insurers to end their policies immediately if government subsidies are gone. Amy Lotven, a reporter for Inside Health Policy/Inside Health Reform, told Money magazine that millions of people could lose insurance overnight in such a situation.

Whatever happens to the Marketplace plans, some policy experts are optimistic that several key provisions of the Affordable Care Act will survive, including the mandate allowing people to remain on their parent’s insurance until they turn 26 and the prohibition against banning customers with preexisting health conditions.

One week ago on the campaign trail, President Elect-Donald Trump repeated his campaign promise to repeal and replace Obamacare, adding: “No one ever read …...

Deer pose special road hazard in November

'Deer season' takes on a whole different meaning for motorists

If you are driving through stretches of wooded areas this month, keep a sharp lookout for deer. A survey by State Farm Insurance shows this month tops the list for vehicle collisions with deer.

November, after all, is prime mating season for deer -- and like humans, deer can make extremely poor decisions when their mind is on sex. They are likely to bound out of the woods and into the path of your on-coming car and not give it a thought.

In many states, November is the start of deer hunting season. If hunting dogs are in pursuit of a herd of deer, the animals are running and not paying much attention to where they are going.

The deer population has exploded nationwide in recent years, even in suburban areas, but it remains a fact that states with wide stretches of rural woodlands are most likely to be the biggest threat to drivers this time of year.

Top five states for deer accidents

According to, West Virginia, Montana, Pennsylvania, Iowa, and South Dakota are the top five states for collisions with deer. The Centers for Disease Control and Prevention reports an average 200 motorists are killed each year from these accidents. Insurance claims, including bodily injury, can easily surpass $10,000.

What does hitting a deer do to your insurance rates? It depends on where you live, but in most states it might not cause an increase.

Pennsylvania is one of those states. State Insurance Commissioner Teresa Miller says insurance companies cannot tack on a surcharge to premiums because a policy-holder hit a deer.

“Under Pennsylvania law, a crash involving a deer is considered a not-at-fault accident, and insurers cannot add a surcharge to your premium for an accident with a deer," she said.

That's because damage from deer-related crashes is handled under a driver's comprehensive coverage, and surcharges are prohibited for accidents with animals or birds. But if you swerve to miss a deer and hit something else, your rates could go up.

Times of greatest risk

The prime time for deer collisions is in the hours just before dawn and dusk. That's when deer are often on the move.

Your best defense against a collision is to slow down while driving through wooded areas. Deer often appear out of nowhere, and the more time you have to slow the vehicle the better your odds of missing the animal. A split second could make a difference.

And when a deer bounds across the road ahead of your car, watch out. Deer usually travel in groups, and the first deer to cross the road is usually not the last. Accident investigators say drivers usually don't hit the first deer they see, but the second or third.

If you are driving through stretches of wooded areas this month, keep a sharp lookout for deer. A survey by State Farm Insurance shows this month tops the...

Obamacare policies increasing by an average of 25% in 2017

But government says taxpayers will pick up much of that

If you have healthcare coverage obtained from a healthcare exchange under the Affordable Care Act (ACA), chances are your policy won't be so affordable next year.

A report from the U.S. Department of Health and Human Services (HHS) shows the premiums for the average benchmark policy sold on the exchanges will go up 25% in 2017. But the report also notes that policy holders who receive government subsidies won't pay all of that – the taxpayers will.

Consumers with ACA policies who do not qualify for a subsidy will have to shoulder the entire increase.

Much higher in some states

Of course, 25% is just the average. As we reported earlier this month, policyholders in Minnesota, which operates a state exchange, face much steeper increases in premiums. Minnesota Commerce Commissioner Mike Rothman, in reporting the average premium would surge as much as 67%, said such increases are not sustainable.

Nationwide, the HHS report says the average benchmark premium is rising from $242 to $302. The government says insurers have adjusted premiums after analyzing two years of data.

As for the insurers, many have said they are losing money under the system, in part because several key assumptions haven't been met. For example, the health care law requires all consumers to purchase health insurance or pay a fine. But many young, healthy people have chosen to pay the fine. Most of those signing up for insurance have been older and in poorer health, requiring more expensive health care.

Cost to consumers still fairly low

Despite the premium increases, the government says the cost consumers actually pay, after receiving a government subsidy, remains fairly low.

“Thanks to financial assistance, most Marketplace consumers this year will find plan options with premiums between $50 and $100 per month,” said HHS Secretary Sylvia M. Burwell. “Millions of uninsured Americans qualify for financial assistance, and so could as many as 2.5 million Americans currently paying full price for off-Marketplace coverage.”

HHS says 85% of consumers with ACA Marketplace health care policies receive tax credits that pay a portion of the monthly premium. Those tax credits, however, add to government red ink.

At the same time, consumers with an ACA policy, may have to make changes during the current open enrollment period, as major insurers have either reduced the number of policies offered or withdrawn from the marketplace altogether.  

If you have healthcare coverage obtained from a healthcare exchange under the Affordable Care Act (ACA), chances are your policy won't be so affordable nex...

What to do after the hurricane has passed

The Consumer Federation of America offers some advice

With Hurricane Matthew roaring up the Florida coast and threatening parts of Georgia and South Carolina, now might be a good time to review what happens when it's over.

Property owners affected by the storm will likely be calling their insurance agents to start the claims process.

Once the storm has passed and it is safe to inspect your property, photograph any damage, then contact your insurance provider right away. Keep in mind many of your neighbors will be doing the same, so get in line as soon as possible.

The Consumer Federation of America (CFA) is offering some advice for making the process go smoothly. It starts with writing down your claim number and having it handy each time you have contact with the insurance company. It makes its job easier and will probably mean you will get better service.

Most homeowner's policies cover “loss of use,” so if your kitchen isn't usable, make sure to keep receipts for meals at restaurants and, if the home isn't habitable, hotel receipts.

Who's making the decisions?

CFA says there is an important distinction between claims adjusters employed by the insurance company and those who are independent contractors, so when the claims adjuster arrives, find out which he or she is. An independent contractor may not be authorized to make claims decisions. Find out who is making the decision and make sure you have a way to communicate with that person.

Insurance companies usually have contractors they use for repairs and will recommend using them for estimates. CFA says you may want to obtain an estimate from that contractor but you are under no obligation to use it for the repairs.

CFA estimates there could be as many as 100,000 claims for wind damage by homeowners but far fewer federal flood insurance claims. Damage payments could exceed $7.5 billion.

Flood damage not covered

Remember that your homeowner's insurance will cover most damage caused by wind but not from flooding. And adjusters will probably be under pressure to attribute as much of the damage to flooding as possible. The result could be some significant out-of-pocket expense.

"Families will have to dig deeper into their pockets because insurers have been steadily increasing hurricane wind coverage deductibles and imposing other policy limitations," said J. Robert Hunter, Director of Insurance for CFA and former Federal Insurance Administrator and Texas Insurance Commissioner. “This liability shift to consumers may take some by surprise, since disclosures are often buried in renewal paperwork that consumers may not understand or even read.”

Hunter says if recent hurricanes are any indication, consumers will have to remain vigilant with their insurance companies, to make sure they receive a full and fair settlement.

What if the insurance company denies your claim? CFA says consumers should ask the company representative to identify the specific language in the policy that served as the basis for the denial.

With Hurricane Matthew roaring up the Florida coast and threatening parts of Georgia and South Carolina, now might be a good time to review what happens wh...

Congress considers bill to reduce risks from flood damage

Its aim is to reduce the impact of properties flooded multiple times

Flood insurance rates for consumers in flood-prone areas have skyrocketed in recent years as floods have increased damage to homes and other property, causing a huge financial drain on the government flood insurance program.

Congress is considering a measure, backed by both Democrats and Republicans, aimed at reducing flood damage and lowering flood insurance rates. Sponsors of the Repeatedly Flooded Communities Preparation Act say it would address issues surrounding properties that are rebuilt after each flood, only to be damaged by flood waters in the future.

Instead of rebuilding, the legislation would require communities containing these continually flooded properties to take steps to reduce the flood risk instead of rebuilding, flood-after-flood.

The measure, should it become law, would require communities to map the areas where floods have repeatedly caused damage and either improve drainage or institute a buyout program, paying property owners not to rebuild. That step was taken in parts of the New York-New Jersey area following Hurricane Sandy in 2012.

The measure would also require repeatedly flooded communities to develop a plan to lower the risks for both property and people. As of now, communities are not required to change their development regulations, no matter how many times they are flooded.

Same properties account for 30% of losses

The Pew Charitable Trusts, which has announced support for the measure, has conducted an analysis of repeatedly flooded properties in the U.S. While it says they are few in number, they have an outsized effect on flood damage costs, accounting for as much as 30% of losses.

Property owners required to have flood insurance have seen their premiums surge in recent years, in part because the government's flood insurance program has been writing so many checks. Pew analysts say the National Flood Insurance Program (NFIP) is now nearly $23 billion in the red, in part because of high-density development in coastal areas that are prone to flooding.

Pew says many of the people with flood insurance have properties that have flooded multiple times and are likely to flood again. It says the best way to end that cycle is to take steps to prevent flooding in the future, or not rebuild flooded properties after they have been damaged.

Flood insurance rates for consumers in flood-prone areas have skyrocketed in recent years as floods have increased damage to homes and other property, caus...

How living with an aging relative or boomerang kid could affect your insurance

Multigenerational living is common, but it can be costly without the right coverage

For baby boomers and Gen Xers, the nest may not stay empty for very long. Many adults in their 40s and 50s are now playing the role of caretaker to both their kids and an elder relative. 

Welcoming an aging parent into your home while also handling the responsibility of raising a child can be challenging. In addition to discussing how household responsibilities should be divided, families should also consider how this modern living arrangement could affect their insurance needs.

"When there is an increased headcount under your roof, there are likely new insurance implications,” says John M. Huff, president of the National Association of Insurance Commissioners (NAIC).

Huff says asking your soon-to-be housemate certain financial questions can help you decide if changes should be made to your existing insurance coverage.

Questions to ask aging relatives

Consumers can stay one step ahead of costly mistakes by asking their parent or senior relative the following questions prior to move-in day:

  • Are you current on health, auto, and life insurance premium payments?
  • Are you covered by Medicare?

  • Should we look into long-term care insurance?

  • What are your end-of-life wishes?

Getting detailed answers to these questions can help stave off future stress by ensuring that everyone is on the same page.  

What to ask adult children

Millennial kids think the nest is best. As we reported, Millennials have become the generation most likely to be living with mom and dad rather than a spouse or partner.

But footing the bill for an adult child isn’t cheap. Experts say allowing a boomerang child to return home can cost anywhere from $8,000 to $18,000 per year.

Welcome Home Contracts and clear expectations can help pave the way for a harmonious cohabitation. To prevent financial misunderstandings, parents should ask their adult kids the following questions:

  • How will health insurance be covered? Who will pay for what?

  • Will we combine auto policies? How will driving records affect premiums?

  • What belongings are you bringing? Will expensive items such as electronics or sporting equipment increase homeowners insurance premiums?

For baby boomers and Gen Xers, the nest may not stay empty for very long. Many adults in their 40s and 50s are now playing the role of caretaker to both th...

Aetna withdrawing from most Obamacare exchanges

Company says rising costs are to blame

If you have an Aetna health insurance policy obtained through an Affordable Care Act (ACA) exchange, you may have to look for new coverage for next year. Aetna has announced it is ending its participation in most of the state exchanges.

Aetna Chairman and CEO Mark T. Bertolini said the company simply can't afford it any longer.

“Following a thorough business review and in light of a second-quarter pretax loss of $200 million and total pretax losses of more than $430 million since January 2014 in our individual products, we have decided to reduce our individual public exchange presence in 2017, which will limit our financial exposure moving forward,” Bertolini said.

One of 40 providers to drop out

Bertolini said the company regrets the move, noting that more than 40 other benefit providers have also stopped selling plans in one or more rating areas in the individual public exchanges in the last two years.

In April, United Health Group, the nation's largest health insurance company, announced it was withdrawing from most ACA exchanges.

When a benefits provider withdraws from an exchange, it not only limits consumers' choices, it throws the risk balance out of whack. And as the risk balance shifts, the remaining providers come under more financial pressure.

“Fifty-five percent of our individual on-exchange membership is new in 2016, and in the second quarter we saw individuals in need of high-cost care represent an even larger share of our on-exchange population,” Bertolini said. “This population dynamic, coupled with the current inadequate risk adjustment mechanism, results in substantial upward pressure on premiums and creates significant sustainability concerns.”

Premiums on the rise

Consumers with ACA policies have already seen this happen. In June the Kaiser Family Foundation issued a report projecting benchmark silver plan premiums may increase by 10% next year in 14 major metro areas.

The foundation analyzed proposed rate filings in 13 states and Washington, DC. The focus of the report centered on how premiums for silver plans, the middle of three categories, would change in 2017. Bertolini said health insurance companies have found it impossible to continue paying for benefits without the rate increases.

“The vast majority of payers have experienced continued financial stress within their individual public exchange business due to these forces, which also are reported to have contributed to the failure of 16 out of 23 co-ops,” he said.

On the positive side, he noted a recent announcement that the Department of Health and Human Services (HHS) that is looking into ways to modify risks.

Aetna is not withdrawing from all the health care exchanges, but the reduction is dramatic nonetheless. The company will lower exchange participation form 778 counties to 242 for the 2017 plan year, maintaining its presence in Delaware, Iowa, Nebraska, and Virginia. No 2016 plans, currently in effect, are affected.

If you have an Aetna health insurance policy obtained through an Affordable Care Act (ACA) exchange, you may have to look for new coverage for next year. A...

Would you drive less if it lowered your car insurance?

Metromile pioneers pay by the mile auto insurance

When gasoline price go up, consumers tend to drive less. It just makes economic sense.

But if your car insurance premium went down when you drove fewer miles, would you also drive less? Metromile, a car insurance start-up, is betting you would.

When you apply for a traditional car insurance policy, you are asked to estimate how many miles a year you drive. If you happen to drive fewer miles than your estimate, your rate doesn't go down.

That's not how it works at Metromile, a company dead set on disrupting the car insurance business the way Amazon has disrupted retail. According to Metromile, customers pay a base rate for insurance, then an additional charge for each mile.

A tracker that plugs into the vehicle's diagnostic port tracks the mileage for Metromile. The company said it only tracks miles and does not look at speed or other driving behaviors.

Road test

In a report last year, Metromile said it analyzed trips made by motorists who started a free test drive program and then later became pay-per-mile insurance customers. It found that, on average, these motorists drove 16.4 miles per day before paying by the mile. After switching, they drove on average 15.5 miles per day, 6% less.

The company says paying for insurance by the mile completely changes the equation.

“Drivers with below average mileage start to save money, whereas drivers with above average mileage pay more,” the company said in a release. “The less you drive, the lower your premium, so there’s a clear incentive to reduce your miles driven.”

Currently Metromile insurance is only available in seven states – California, Washington, Oregon, Illinois, Pennsylvania, New Jersey, and Virginia. However, the company said it is committed to expanding its product to other states.

In a review, NerdWallet says Metromile's advantages are that it does not measure driving habits other than mileage and that motorists who don't drive that much can save hundreds of dollars a year. However, there is no savings for those who regularly drive more than 10,000 miles a year.

Metromile says it provides other benefits besides reduced insurance costs. It says when motorists drive fewer miles, they are also less likely to have accidents. For individual drivers, putting fewer miles on their vehicles reduces wear and tear and slows the rate of depreciation.

When gasoline price go up, consumers tend to drive less. It just makes economic sense.But if your car insurance premium went down when you drove fewer...

Class action says Anthem refuses to cover brand-name medication

Patients are forced to use substitute drugs that are not identical and not effective, suit charges

A class action lawsuit charges that Anthem Blue Cross refuses to cover name-brand medication, even when there is no equivalent generic or the generic is ineffective.

In the suit, K.F. Petty says that in 2007, her doctor prescribed a medication described in the suit as "Drug X" to protect her privacy. There was no generic equivalent for the drug at that time, yet just a few months later, Anthem changed her prescription to a substitute generic that was not pharmaceutically equivalent, Courthouse News Service reports.

Petty says her doctor then began specifying that she should receive the name-brand Drug X but Anthem continued to refuse to cover it.

The suit alleges that Petty's experience is typical and says she is representative of a class of Anthem clients who had to use non-equivalent generics "even when the original prescribed drugs are different and medically necessary for proper treatment."

She charges that Anthem's practice violates California law and has harmed her and thousands of others.

The U.S. Justice Department has gone to court to block Anthem's $54 billion merger with Cigna, charging it would reduce competition and harm consumers. It is also challenging the proposed merger of Aetna and Humana.

Not alone

Consumers rate Anthem

Petty is not alone in complaining of Anthem's drug coverage. In a recent ConsumerAffairs review, Janet of Santa Monica said that after switching to Anthem in January, she "quickly discovered that Anthem Blue Cross has by far the most restrictive drug formulary that I have ever encountered."

"I have discovered that five of my medications (three are generics) are considered to be Non-Formulary," Janet said. "Furthermore, my internist went through the Prior Authorization Process for three of my medications and all three requests were denied by Anthem. Now, I have filed three grievances and that process takes at least 30 days. Customer Service has not proven to be helpful in any meaningful way."

Leah of Santa Monica reported a similar experience, saying that "nearly every prescription issued by one of our doctors is rejected, whether brand or generic." She charged that Anthem "makes doctors spend hours fighting with them so their patients can be approved for basic medical care. Usually to no avail."

Rate hikes

Anthem has also come under fire for rate hikes and plan changes that critics say are a disservice to consumers. Legislation introduced by Sen. Dianne Feinstein (D-Calif.) and Rep. Jan Schakowsky (D-Ill.) would give the Secretary of Health and Human Services the authority to modify or block premium insurance increases that are considered unreasonable in states, like California, where insurance regulators do not have the power to do so. The bill is in committee.

"Insurance companies answer to Wall Street, not consumers demanding quality healthcare at an affordable price," said Edward Barrera of Consumer Watchdog, a frequent Anthem critic. "Lawmakers need to give regulators a shield to protect consumers, and we believe Sen. Feinstein’s bill will do exactly that.”

A class action lawsuit charges that Anthem Blue Cross refuses to cover name-brand medication, even when there is no equivalent generic or the generic is in...

Feds sue to block healthcare mergers

Justice Department says deals could hurt consumers

The U.S. Justice Department has announced it has gone to court to block two proposed health insurance mega-mergers.

The suits seeks to stop the proposed merger of Anthem and Cigna, and of Aetna and Humana, arguing that the consolidations of the four giant health insurance providers into just two would upset the marketplace and harm consumers.

“Anthem’s purchase of Cigna likely would lead to higher prices and reduced benefits, and would deprive consumers and healthcare providers of the innovation and collaboration necessary to improve care outcomes,” the Justice Department said in its complaint.

The Anthem-Cigna merger was proposed last year with the expectation that it would close by the end of this year. In a statement, Cigna concedes that outcome now appears doubtful. It said the merger would be delayed until at least 2017 and raised the possibility it might not happen at all. In fact, its statement reads like one from a company that expects to remain independent.

"Since announcing the transaction, Cigna has remained focused on delivering value to our clients and customers, building on our track record of strong financial results and growing our businesses in the U.S. and abroad,” the company said.

The company also said it is currently evaluating its options consistent with its obligations under the agreement.

“Unfortunate and misguided”

Anthem was a bit more combative in its reaction, calling the government's suit “an unfortunate and misguided step backward for access to affordable healthcare for America.”

“Anthem is fully committed to challenging the DOJ’s decision in court but will remain receptive to any efforts to reach a settlement with the DOJ that will allow us to complete the transaction and deliver its benefits at a critical time when American consumers are seeking high quality healthcare services with greater value at less cost,” the company said in a statement.

The Justice Department also sued to stop the proposed merger of Aetna and Humana, pointing to the same issues that have troubled the government about the Cigna Anthem merger. Critics have pointed out that the deals would reduce the number of major U.S. health insurance providers from five to three.

The U.S. Justice Department has announced it has gone to court to block the proposed merger of Anthem and Cigna, arguing that combining the two giant healt...

California Obamacare premiums increasing 13.2% next year

The rate hike is three times bigger than increases over the last two years

California's health exchange has been one of the biggest and most successful state Obamacare programs. But today, Covered California, as it's known, announced an average statewide premium increase of 13.2 percent for 2017, setting off a round of criticism and defensive responses.

“These outrageous premium hikes are the consequence of California’s failure to adopt health insurance premium regulation like the majority of the states and the disappearance of federal subsidies for insurance companies to even out bumps in the road ,” said Jamie Court, president of Consumer Watchdog, which sponsored an unusccessful rate regulation initiative in 2014.

Insurance companies said the rate hikes -- more than three times the increases of the last two years -- were the result of factors beyond their control. 

“In 2017, Covered California prices are influenced by higher spending on medical care, particularly skyrocketing prices on specialty drugs, and the sunset of two federal programs," said California Association of Health Plans President & CEO Charles Bacchi.

“California’s health exchange opened up access to health care for millions, with 11 health plans in Covered California competing over price and quality and in most of the regions of the state," Bacchi said.

“Some rate increases are necessary to cover the cost of care as more and more Californians use medical services that have become increasingly expensive each year. As prices for hospitals, doctors, specialty drugs and other services keep climbing, we cannot lose focus on our goal of affordability,” he said.

"Regulation is the hammer"

But Consumer Watchdog, a nonprofit based in Santa Monica, said the increases could have been avoided if the rate regulation initiative had passed.

“When three health insurance companies control 90% of the market there is no bargaining with them absent a hammer. Rate regulation is the hammer," Court said. "California consumers cannot continue to pay more for very limited doctors and hospital networks. Rate regulation needs to move to the top of the legislature’s list.”

The ballot initiative failed to pass in a record-low turnout election, but it garnered 41% of the vote despite a $57 million insurance company campaign against it, Court noted.

The federal programs that are being phased out were intended to help stabilize the market during the first few years of the Affordable Care Act (ACA).

How much more individual consumers will have to pay depends on whether they are eligible for taxpayer-supported subsidies and whether they choose to switch to lower-cost plans that may have higher deductibles and co-pays.  

California's health exchange has been one of the biggest and most successful state Obamacare programs. But today, Covered California, as it's known, announ...

Even with insurance, your hospital stay will cost you

University of Michigan study finds out-of-pocket cost likely to exceed $1,000

Consumers with private health insurance are paying more out of pocket when they check into a hospital, and the amount has risen in just the last few years.

A study in the JAMA Internal Medicine says even consumers with a “good” benefits policy could end up paying $1,000 or more in out-of-pocket expenses, an increase of 37%.

Researchers at the University of Michigan Institute for Healthcare Policy looked at the billing records for more than 50 million U.S. consumers over a four year period. All of the subjects had health benefit packages offered by four major companies.

The researchers trace the increase to two changes: both deductibles and co-insurance went up.

Deductibles – what you pay out-of-pocket before the insurance company begins to pay – went up 86%. Co-insurance – the percentage of the hospital stay that patients must pay – rose 33%.

“It shows that even people with the most comprehensive insurance are paying thousands of dollars, at a time when they need hospital care and may not have time to shop around,” said first author Emily Adrion.

ACA policies not included

The period under review is 2009 to 2013 and focuses solely on private insurance plans and those offered through employers. It does not include plans offered under the Affordable Care Act (ACA), which tend to have even larger deductibles than private health plans.

It suggests that health plans were beginning to shift more costs to the patient even before the ACA went into effect. The percentage of patients paying deductibles and co-insurance went up by more than 5% during the study period.

Co-payments for hospital stays actually went down during the study period – about the only cost to consumers that declined.

There were also pronounced differences in the expenses paid by people with “consumer-directed” health plans, which are usually the least costly on a premium basis, and people who bought individual private plans.

People with consumer-directed plans paid, on average, $1,200 out-of-pocket for a hospital stay. But for people who had purchased individual private plans, the out-of-pocket expense averaged $1,800.

The researchers say the results underscore the importance of reading the fine print when you choose a health care plan, and understanding what your financial obligation will be if you have to check into a hospital.

Consumers with private health insurance are paying more out of pocket when they check into a hospital, and the amount has risen in just the last few years....

Affordable Care Act policies projected to rise in 2017

Kaiser Family Foundation analyzed projected rates in 14 major metros

One feature of the Affordable Care Act (ACA) is to make health coverage available to all Americans. Another was to keep it affordable.

While availability is not an issue, affordability may be, according to an analysis by the Kaiser Family Foundation. The organization projects benchmark silver plan premiums may increase by 10% next year in 14 major metro areas.

The foundation reached its conclusion after analyzing proposed rate filings in 13 states and Washington, DC. It focused on how premiums for silver plans, the middle of three categories, would change in 2017.

That doesn't mean premiums are going up everywhere – 10% is just the average of the 14 metros. Premiums are projected to go down 13% in Providence, R.I., while the highest projected increase is 18%, in Portland, Ore.

Most consumers pick a silver plan

About two-thirds of consumers with an ACA policy choose a silver plan. However, Kaiser says most of the marketplace customers who receive premium subsidies under ACA could escape the premium hikes if they simply switch to one of their marketplace's lowest cost plans.

In fact, the report's authors say the main takeaway is the importance of shopping around each year during the open enrollment period and making a change if it will save money. The analysis finds that each year there is a significant shift among insurers, and a plan that is lowest in cost one year in a particular marketplace won't be the next.

The savings can add up. The report found in nine of the 14 major metros, at least one coverage provider with one of the two lowest-cost silver plans in 2016 didn't make the cut for the lowest cost plans for 2017.

Need to change plans

“Consumers receiving tax credits in those plans may need to change plans to avoid paying a larger share of their income on premiums,” the authors write.

The report also finds that consumers will likely have fewer choices for 2017. The number of benefit providers in half the 14 metros will remain the same, or even increase. But in the rest, Kaiser projects fewer choices, mainly because of United Health Care's withdrawal from participation.

Kaiser notes that complete 2017 rate information for all metros and states is not yet available and final rates may be different from the projections.

One feature of the Affordable Care Act (ACA) is to make health coverage available to all Americans. Another was to keep it affordable.While availabilit...

Nearly 7 million homes vulnerable to hurricane storm surges

Florida, Louisiana and Texas have the most homes at risk, new study finds

The Atlantic hurricane season is underway and insurance executives will be biting their nails for the next several months, following an updated report that finds more than 6.8 million homes on the Atlantic and Gulf coasts are in danger of hurricane storm surge damage.

The CoreLogic report calculates the total cost for reconstruction of the homes located in 19 states and the District of Columbia at more than $1.5 trillion. There is a little good news in the report, which is that the number of homes in the extreme danger zone is down slightly from last year.

“Using more granular-level data has given us an even clearer picture of which homes are at risk of storm surge damage,” said Dr. Tom Jeffery, senior hazard risk scientist for CoreLogic. “Despite the overall increases in risk, we were glad to see that the number and value of homes in the most extreme, and dangerous, category actually declined. It just goes to show the power of how advanced data can improve risk assessment at the property level.”

At the state level, Florida, Louisiana, and Texas consistently have more homes at risk than other states. Florida ranks first with 2.7 million at-risk homes across the five risk categories.

At the regional level, the Atlantic Coast has just under 3.9 million homes at risk of storm surge and the Gulf Coast has just over 2.9 million homes at risk.

Top 20

Here is CoreLogic's list of the 20 states (and D.C.), showing the total number of homes at risk in each:

1 Florida 2,731,626
2 Louisiana 800,521
3 Texas 531,169
4 New Jersey 468,823
5 New York 458,730
6 Virginia 403,613
7 South Carolina 338,640
8 North Carolina 244,712
9 Massachusetts 161,394
10 Georgia 148,718
11 Maryland 130,872
12 Mississippi 100,166
13 Pennsylvania 83,251
14 Connecticut 67,602
15 Delaware 54,154
16 Alabama 50,965
17 Rhode Island 26,593
18 Maine 18,351
19 New Hampshire 9,516
20 District of Columbia 768
Total 6,830,184

Flood insurance

Besides the rising cost of homeowners' policies, consumers in hurricane-prone regions are already wrestling with constantly rising premiums for flood insurance, although a recent report says Congress could take action to address the issue.

Jamie Gregory, deputy chief lobbyist for the National Association of Realtors, said the Flood Insurance Market Parity and Modernization Act, passed in the House, would clarify that property owners may satisfy the mandatory flood insurance purchase with either a federally-guaranteed policy or private insurance, ensure that consumers can move freely between federal and private insurance coverage without penalty, maintain the federal program as a viable choice, and maintain important consumer disclosures.

“This is not a silver bullet to solve the problem of increasing flood insurance rates but it is a first step to move private insurance into the market to determine if it will work,” Gregory said.

The Atlantic hurricane season is underway and insurance executives will be biting their nails ...

2016 hurricanes could threaten 6.8 million homes

There are 19 states with Atlantic and Gulf Coast risks

Another hurricane season has begun, and homeowners along the Atlantic and Gulf coasts will keep a watchful eye on the sky during the next few months.

The risks to homes in coastal areas include wind and water damage, with water being the bigger threat. In its 2016 Storm Surge Report, CoreLogic estimates that more than 6.8 million homes could be impacted by a hurricane's storm surge. The company puts the cumulative reconstruction value at $1.5 trillion.

The company finds coastal areas of 19 states and the District of Columbia could be in the path of a hurricane this year. Atlantic Coast states have nearly 3.9 million homes at hurricane risk. States along the Gulf Coast have just over 2.9 million lying in the path of a potential storm.

Florida and Texas have the longest coastlines, but states like Louisiana, with less coastal exposure but more low-lying areas inland, also have a large number of at-risk residential properties.

Rising flood insurance premiums

Homeowners whose property lies in a designated flood zone have seen their flood insurance costs skyrocket over the last couple of years. In addition, the Federal Emergency Management Agency (FEMA) has expanded many flood zones, so that more homes now fall within their boundaries.

Some people purchasing homes in coastal areas have been shocked to learn that they must purchase flood insurance, at a cost of several thousand dollars a year. If you want to know what flood insurance will cost, you need to talk to an insurance agency. However, the National Flood Insurance Program offers this calculator to give you an estimated cost.

Limits of homeowner policies

Homeowners who don't live in a flood plain may also suffer severe damage from a major storm. Keep in mind that your homeowners insurance policy will not provide coverage from flood damage.

Bankrate notes that you don't have to live in a flood plain in order to get flood insurance. Any homeowner can obtain it. And it won't just cover you against a hurricane storm surge, but also an overflowing creek.

Storms can cause all kinds of damage, not just flooding. From high winds to falling trees, these destructive storms can cause massive damage that may or may not be covered by your homeowners insurance policy.

With the arrival of the 2016 hurricane season, now might be a good time to review your policy.

Another hurricane season has begun, and homeowners along the Atlantic and Gulf coasts will keep a watchful eye on the sky during the next few months.Th...

Allstate moving into auto service and repair

Insurance company announces partnership with Openbay

Insurance companies are there to write a check when someone runs into your car. But Allstate is expanding its role, teaming with a company to perform routine maintenance and repairs.

The insurance giant has announced a partnership with Openbay, an online source for repairs and maintenance unrelated to collisions. The marketplace matches consumers with service providers in their locality.

This service has been added to Allstate's website, the Allstate mobile app's 'My Rides' section, and the Drivewise app. The tie-up connects drivers to a national network of service centers that take part in the Allstate Dealer Agency program. Consumers can use it to schedule service, from major repairs to an oil change.

The Allstate Mobile app and Drivewise apps are available as a free download in the iTunes App Store or on Google Play.

Multiple estimates to choose from

Once consumers access the app and explain what they need, they receive multiple estimates from local providers. Before making a decision, they can read reviews and look over warranties. A record of any work done through Openbay goes in a digital file, which can be accessed in the future and provided to a buyer when the vehicle is sold.

Besides the obvious connection with automobiles, Allstate sees the collaboration as helping to fulfill its corporate mission.

 "Well maintained vehicles make the road safer for everyone,” said Gary Hallgren, President of Allstate Connected Car. “Consumers consistently indicate that identifying a quality auto-repair facility is a major pain point, which may serve as a deterrent to regular maintenance and repairs. Integrating with Openbay enables Allstate to ease the burden of comparing and booking vehicle service."

Rob Infantino, founder and CEO of Openbay, says the U.S. auto fleet continues to age, increasing the need for quality repair services – not just to increase reliability but also safety.

According to IHS Automotive, the average age of cars and light trucks on U.S. roads hit a record 11.5 years in 2014. Mark Seng, global aftermarket practice leader at IHS Automotive, says cars and trucks are getting older because their quality has improved in recent years.  

Insurance companies are there to write a check when someone runs into your car. But Allstate is expanding its role, teaming with a company to perform routi...

Judge rules Obamacare subsidies are being improperly funded

The ruling came in an unprecedented lawsuit filed by the House of Representatives

A political battle between Republicans in Congress and the White House could cost low-income Americans who rely on the subsidized coverage provided by Obamacare.

A federal judge ruled today that the Obama Administration has been improperly spending money to support the subsidy program. That's because Congress authorized the program but allegedly didn't appropriate any funds to finance it.

"Congress is the only source for such an appropriation, and no public money can be spent without one,” wrote U.S. District Court Judge Rosemary M. Collyer, a George W. Bush appointee, who had earlier heard arguments in an unusual lawsuit brought by the House of Representatives against the White House.

The program, which helps consumers pay out-of-pocket healthcare costs like co-pays, will continue, pending an appeal.

Political feud

Former House Speaker John Boehner filed the lawsuit two years ago, portraying it as a check on the Administration's authority to act without Congressional consent.

"This is not the first time that we’ve seen opponents of the Affordable Care Act go through the motions to try to win this political fight in the court system," White House press secretary Josh Earnest said.

When he filed the House v. Burwell lawsuit two years ago, former House Speaker John Boehner framed it as a check on the executive branch’s ability to change legislation once it was approved by Congress.

Several million Americans are receiving the subsidy. It's estimated that if the subsidies are eliminated, Obamacare premiums would rise as much as 30 percent to make up for the loss of funding.

The lawsuit is the latest challenge by Republicans to the Affordable Care Act. It is thought to be the first lawsuit ever filed by Congress against the White House in a dispute over how to interpret a statute.

A political battle between Republicans in Congress and the White House could cost low-income Americans who rely on the subsidized coverage provided by Obam...

UnitedHealth, nation's largest health insurer, pulling out of Obamacare

The company says the market is smaller and riskier than it had anticipated

UnitedHealth Group is pulling out of Obamacare health exchanges in "most" of the 34 states where it is now participating in the program in 2017, leaving a hole that may be hard to fill.

The nation's largest health insurer, UnitedHealth says it has experienced higher than expected losses in the health exchanges that are a key part of the Affordable Care Act (ACA), the formal name of the Obamacare program. 

UnitedHealth has not released a list of the states where it is bailing out of the program, but the Insurance Journal, an industry publication, identified the following states where regulators say they have been notified UnitedHealth will not write business next year: Alabama, Georgia, Missouri, Pennsylvania, Arkansas, Louisiana, Nebraska, Tennessee, Colorado, Maryland, North Carolina, Texas, Connecticut, Michigan, Oklahoma and Washington. More states are expected to be added to the list as regulators are notified.

New York, Nevada and Virginia, on the other hand, are among the states where UnitedHealth has filed to participate in Obamacare in 2017. California and Wisconsin have said they do not disclose companies' plans until the list of participating companies is published each year.

Not enough people

Consumers rate UnitedHealth

Insurance experts say the problem in some states is that there are not enough people participating in the exchanges to allow insurers to spread the risk over a large group of people. UnitedHealth CEO Stephen Hemsley conceded as much Tuesday on a conference call with Wall Street analysts, saying that the exchange market has turned out to be smaller and riskier than expected.

Others have noted that many Obamacare participants did not have health insurance prior to enrolling in the program and have been "playing catch-up," as one put it, attending to health problems that they ignored for years or even decades.

Some insurers have said that consumers have signed up for Obamacare, taken care of pending health issues, and then dropped their coverage. 

In one sense, UnitedHealth's problems can be seen as good news for consumers: if an insurer loses money, it means consumers have gotten more in return for their premiums than the company expected. The downside, of course, is that UnitedHealth's withdrawal could mean that fewer companies will be competing in the affected states next year.

It's impossible to generalize about the effect because most states are divided into regions. Heavily populated urban and suburban areas tend to have more companies competing for customers' business while more sparsely populated areas have fewer competitors.

The Congressional Budget Office has projected that the ACA will cover about 12 million people this year, providing tax subsidies that help consumers afford insurance offered through the exchanges.

UnitedHealth Group is pulling out of Obamacare health exchanges in "most" of the 34 states where it is now participating in the program in 2017, leaving a ...

Florida governor signs bill requiring life insurance companies to pay up

Insurers must now monitor death records and pay benefits promptly

Florida Gov. Rick Scott has signed a measure that requires life insurance companies to monitor death records to make sure families get their benefits when relatives die.

Florida insurance commissioner Kevin McCarty called it a "monumental win" and said it makes Florida the first state in the nation to have the requirement.

The measure could result in payouts of hundreds of millions of dollars to beneficiaries over and above those who have already recovered about $500 million in a series of court actions in Florida.

Benefits often unpaid

About $8 billion has already been returned to consumers nationwide after a Florida-led investigation found that many insurers had failed to pay up when policyholders died. Ironically, many of the companies were using death records to stop payments on annuities when the annuity holder died but were failing to use the death records to pay beneficiaries.

“This is a monumental win for the state of Florida in addressing an inequitable industry-wide claims practice in the life insurance industry that was uncovered more than five years ago,” McCarty said.

Florida Gov. Rick Scott has signed a measure that requires life insurance companies to monitor death records to make sure families get their benefits when ...

Researchers find out why Americans don't buy more annuities

Simple answer: we don't like to think about death

The idea behind an annuity is that, in exchange for an upfront investment, it guarantees you an agreed-upon income for the rest of your life. But annuities have never sold as well as most economists think they should and no one seems to know why.

Two Boston College marketing professors say they think they have found the answer: people don't like to think about dying. 

This doesn't appear to make sense on the surface. After all, the whole idea of an annuity is that it keeps you from outliving your money -- no small concern in an era when people are routinely living into their 90s. You may be old, tired, sick, or whatever, but at least you have a few bucks coming in each month. But the process of setting up an annuity forces you to think about how long you have left and therein lies the rub, says Gergana Nenkov, Associate Professor of Marketing with the Carroll School of Management at Boston College.

"When you think about an annuity, you have to think about how long you have left to live, how many years you need to finance," says Nenkov. "You have to think about dying -- that's part of the annuity process, and when people do that, it turns them away."

Hoping it goes away

Previous explanations for Americans' poor record of annuity purchases have focused on low retirement savings, unfair pricing, and decreased flexibility in accessing one's money. 

Nenkov and fellow BC professor Linda Court Salisbury say they applied psychological theory to answer the question that's usually posed in economic terms. 

"Nobody has ever looked at it from the psychology of making the decision and going through with the decision," says Salisbury. "Our idea was the averseness of thinking about your own death is enough to make you use what we call 'mortality salience defense strategy,' which is to avoid it."

In other words, by not thinking about death and not planning for it, we're hoping it will go away. The theory was supported in four studies that included 748 adults. 

One study asked participants whether they would rather roll their retirement savings in an Individual Retirement Account, or purchase an annuity.

"When people considered an IRA, very few thought about dying or how long they have left to live," says Nenkov. "But when the people considered an annuity, a big proportion of them had those kinds of thoughts related to death."

Two of the studies presented participants with annuity descriptions that contained subtle differences. One description indicated the annuity "guaranteed payments for as long as you live," while another "guaranteed payments for as long as you live until you die." Whenever an annuity mentioned death, interest plummeted.

"We showed that even those subtle mentions of death decreased further the rate of choosing an annuity and made people stay away from the product even more than if we just talked about years left to live," says Nenkov.

It's not just annuities, of course.

"Wills, life insurance, estate planning -- all of those decisions are sometimes put off, and we think this issue of not wanting to think about death has a role," says Nenkov. "Maybe finding ways to deal with that anxiety could help consumers overcome it and make the important decisions because if they don't, there are devastating consequences later in life."

The idea behind an annuity is that, in exchange for an upfront investment, it guarantees you an agreed-upon income for the rest of your life. But annuities...

Shopping for the best value in healthcare services

Survey finds consumers usually don't select the least-expensive provider

Getting the most bang for your buck from your healthcare spending is not a simple matter. Since what you pay for care goes through an insurance provider, it tends to complicate things.

You have to factor in what you pay for health insurance as well as what you end up paying out of pocket to the provider. In nearly every case, it's more than you think.

There are several things to consider. Most people focus first on the monthly premiums. If you can't afford them, then the coverage doesn't do you much good.

The advisors at suggest that other things are just as important as the monthly premium. You also need to deliberate on what services will cost beyond your coverage.

You also need to consider the type of insurance plan and the provider network. Different plan types provide different levels of coverage for care you get inside and outside of the plan’s network of doctors, hospitals, pharmacies, and other medical service providers.

High deductible plans

Getting a health insurance plan with a high deductible will lower your monthly cost but can add a significant cost in the event of expensive medical care. New research shows consumers on high-deductible plans are no better at price shopping for health care professionals or services than people on traditional insurance.

“The main message of our research is this: Giving skin in the game or giving people financial incentives is not enough to prompt people to become better consumers of health care,” co-author Neeraj Sood, director of research at the University of Southern California (USC), said in a release.

More and more Americans are enrolled in high-deductible plans. Sood said about one in four U.S. employees are enrolled in high-deductible plans while about 80% of the people insured through the health care exchanges are enrolled in some sort of high-deductible plan.

Price differences

Since consumers with high-deductible plans pay much of their initial health care costs out of pocket, you would think they would be better at choosing lower-cost providers. The USC survey, in fact, found that most people with high-deductible plans aren't convinced that high cost providers provide better care. So why use them?

Yet the survey found only about 10% of consumers with high-deductible plans did comparison shopping for providers. Sood says there may be two reasons for that.

“For one, it’s a hassle and very difficult to get good information about the prices and the quality of care by doctors, labs or other services,” he said. “And two, when it comes to doctors and services, people are concerned about quality of care, but there is not much information available about quality.”

The way consumers with high-deductible plans usually save money on health care is by reducing the number of visits to the doctor. In some cases, that's counter productive if preventive care or early detection could have prevented major complications later on.

Getting the most bang for your buck from your healthcare spending is not a simple matter. Since what you pay for care goes through an insurance provider, i...

New Yorkers pay the most for health insurance

New Mexico consumers pay the least, in survey

The Affordable Care Act (ACA) is a national health insurance plan, but costs can vary significantly depending on where you live.

Recently, set out to determine which states are the costliest when it comes to health insurance premiums. It found that consumers who live in New York pay the highest rates while those in New Mexico pay the least.

The study focused on the cost of Silver Plans, which the Department of Health and Human Services says are the most popular type of coverage offered under ACA. The study looked at the lowest-cost Silver Plans for each state, ranking them on these factors:

  • The plan's monthly premium
  • The deductible
  • The emergency care copay
  • The copay for care from a primary physician

Factors determining cost

A number of factors, it turns out, can affect the cost consumers pay for coverage.

"Higher insurance costs in many states are tied to high costs of living or being in rural areas," said Elyssa Kirkham, the lead GOBankingRates reporter on the study. "Where costs of living are high, like New York or South Carolina, care is also likely to be more expensive, a cost which insurers pass to enrollees through higher premiums."

But competition can enter into the mix, making some low cost of living areas surprisingly expensive when it comes to health insurance.

"In rural states like Wyoming and Oklahoma, fewer residents means a smaller health insurance market with fewer options, where insurers can charge more without losing customers,” Kirkham said. “Of course, subsidies can offset these costs, but this form of assistance also varies widely from state to state.”

Most expensive and cheapest

Here are the top 10 states where consumers pay the most for health insurance:

  1. New York
  2. South Carolina
  3. Alabama
  4. New Jersey
  5. Mississippi
  6. Oklahoma
  7. Indiana
  8. Delaware
  9. Wyoming
  10. Colorado

Here are the states where consumers pay the least:

  1. New Mexico
  2. Utah
  3. California
  4. Texas
  5. Pennsylvania
  6. Michigan
  7. District of Columbia
  8. Hawaii
  9. Oregon
  10. Idaho


There is also a wide variation among states in primary doctor copays. West Virginia and Indiana don't have any copays. California, on the other hand, has the highest – $250.

Deductibles are what consumers must pay out of pocket before the health benefit kicks in. It can be as low as $1,300 in North Dakota or as much as $6,850 in South Carolina.

Where does your state rank? Check out the full study here.

The Affordable Care Act (ACA) is a national health insurance plan, but costs can vary significantly depending on where you live.Recently, GoBankingRate... extends sign-up deadline two days

Procrastinators have until just before midnight Thursday

Consumers selecting health care policies on government exchanges have a little more time to do so, in order to have coverage beginning January 1, 2016.

Normally, the deadline for arranging coverage is December 15. The Obama Administration said it is extending the deadline to 11:59 pm PT, Thursday December 17.

The administration said it is taking the action because of “unprecedented demand at and our Marketplace Call Center.”

“Hundreds of thousands have already selected plans over the last few days, and approximately 1 million of you have left contact information to hold your place in line,” said on its website. “We want to make sure all of you have access to affordable coverage. This additional 48 hours will give you a chance to come back and complete your enrollment for coverage starting January 1.”

The agency says consumers who provided contact information on the web or at the call center will receive an email or call when they can finish enrolling.

There will be another enrollment period in January, but coverage obtained then won't take effect until March. Under the Affordable Care Act, consumers who don't have health coverage will face a penalty at tax time.

Consumers selecting health care policies on government exchanges have a little more time to do so, in order to have coverage beginning January 1, 2016....

Should you have prescription drug coverage?

You should, if you think there's a chance you'll get cancer

Not everyone chooses to have health insurance coverage that pays some of the cost of prescription medication.

While health insurance policies sold in the Affordable Care Act (ACA) marketplace are required to have some drug coverage, it's still an option for those on Medicare.

Is it coverage you should have? A new study suggests the answer is yes, if you think you are at risk of getting cancer.

A study by the University of Colorado (CU) Cancer Center found the cost of even common cancer treatment drugs could be “catastrophic” for patients without some kind of coverage.

General coverage not enough

“I think what this research says is that general health insurance isn’t enough. You have to have prescription drug coverage,” said Cathy J. Bradley, the paper’s first author.

There have been two recent and important changes to cancer treatment: the development of new, targeted treatments for cancer, which tend to be very expensive and also tend to be taken orally and in patients’ homes, and the ACA, which has increased access to health insurance.

“Targeted cancer therapies tend to come in the form of pills taken at home. Many of these new therapies are expensive,” Bradley said. “This combination of more expensive medicines taken outside the hospital setting means less compliance. Or we see people choosing to alter their prescribed regimens by skipping doses. When you start to dial back from recommended doses, at some point the drug loses its effectiveness.”

Income breakdown

The Colorado study looked specifically at women treated for breast cancer. Women with household income below $40,000 were less than half as likely as women with annual household income greater than $70,000 to continue hormonal therapy.

Hormonal therapy for patients with estrogen, or progesterone-positive breast cancers can reduce the risk of cancer recurrence by as much as 50%.

Bradley says the rising costs of cancer care is a reason for insurers and healthcare consumers to rethink the definition of “catastrophic” illness. She concludes that women without prescription drug coverage, especially if they are from low-income households, may choose not to comply even with a relatively low-cost treatment regimen.

It's not just an extended stay in a hospital that can bankrupt you, Bradley says. So can relatively “low cost” cancer medications.

Not everyone chooses to have health insurance coverage that pays some of the cost of prescription medication.While health insurance policies sold in th...

Health insurance premiums rising twice as fast as inflation

Annual survey shows deductibles rising even faster

For any family or single person, paying for health benefits is a big expense. For those getting insurance coverage through work, the cost is sometimes obscured because it comes out of paychecks, along with taxes.

But the expense is there and rising, though not as fast as in the past. In the latest Kaiser Family Foundation/Health Research & Education Trust Employer Health Benefits Survey, auditors found single and family premiums for employer-sponsored health insurance rose an average of 4% this year, more than twice the rate of inflation.

Deductibles, meanwhile, have risen almost three times as fast as premiums and about seven times as fast as inflation. Here are the numbers:

The average annual premium for a single employee's coverage is $6,251, of which workers on average pay $1,071.

The average family premium is $17,545, with workers on average contributing $4,955.


But increasingly, insurance plans are there to cover the big things – a serious accident or a major illness. Routine medical care is often paid out of pocket since more employee-sponsored plans have deductibles – expenditures the policyholder is required to pay out pocket before the coverage kicks in.

The survey finds 81% of covered workers have plans with a general deductible they must meet each year, and the deductible is growing. This year the average deductible for a single covered person is $1,318. If the worker happens to work for a small firm, the deductible averages out to be $1,836.

In the last five years, both the share of workers with deductibles and the size of those deductibles have increased sharply, according to the survey. That makes for a 67% increase in deductibles since 2010, rising much faster than the increase in single premiums.

“With deductibles rising so much faster than premiums and wages, it’s no surprise that consumers have not felt the slowdown in health spending,” Foundation President and CEO Drew Altman said.

Not rising quite as fast

But at least the cost of coverage isn't rising as fast as it once did. Since 2005 premiums have increased an average of about 5% a year – or a total of 50%. Yes, that's a lot but premiums soared 11% per year from 1999 to 2005.

The survey also found that employees who enjoy attractive health benefits through work may need to prepare for an adjustment. A provision of the Affordable Care Act takes effect in 2018, putting an excise tax on expensive health care plans – sometimes called the “Cadillac tax.”

The survey found that most large employers have already performed an internal audit to determine if they are affected. Gary Claxton, the lead author of the study, predicts affected companies will respond by shifting more of the cost of these expensive plans to employees.

For any family or single person, paying for health benefits is a big expense. For those getting insurance coverage through work, the cost is sometimes obsc...

Katrina's legacy felt in insurance coverage

At one point, State Farm pulled out of Mississippi

The 10th anniversary of Hurricane Katrina is being observed in many ways, but for consumers the disaster's biggest impact has come in the area of insurance.

In the wake of the storm, it got very expensive, especially if you live near the water.

For policyholders along the Gulf Coast, it also got a lot harder to even find an insurance company to cover your property. In the immediate aftermath of the hurricane, Risk Management Solutions, an insurance industry analyst, placed a $100 billion price tag on the damage -- an estimate that turned out to be remarkably accurate.

The company said that what it calls the "2005 Great New Orleans Flood" has developed into the most damaging flood in U.S. history. It initially estimated that at least 150,000 properties had been flooded, surpassing the previous U.S. record from flooding and levee failures on the Lower Mississippi river in 1927, which inundated 137,000 properties.

Insurance hassles

Two weeks after Katrina hit, ConsumerAffairs was reporting many homeowners were encountering delays and denials. Typical homeowners policies don't cover flooding, so if a homeowner could not demonstrate the house was damaged by non-flooding aspects of the storm, insurance companies refused to pay.

It prompted Mississippi Attorney General Jim Hood to sue the insurance industry, seeking to declare void and unenforceable certain provisions contained in property casualty insurance policies issued to Mississippi Gulf Coast residents - excluding coverage from damage caused by Hurricane Katrina.

After State Farm lost a court battle in Mississippi over the disputed claims in early 2007, the insurance company declared it would no longer insure any homes in the state.

"It is no longer prudent for us to take on additional risk in a legal and business environment that is becoming more unpredictable," said Senior Vice President Bob Trippel, in a February 2007 statement.

Biggest lesson

The American Insurance Association(AIA) says the biggest lesson of Hurricane Katrina is the importance of preparedness. In other words, take steps beforehand to minimize the damage and losses from natural disasters.

“The devastation Hurricane Katrina caused emphatically underscored the need for greater resilience and catastrophe planning for consumers, insurers and governments alike,” said Leigh Ann Pusey, AIA’s president and CEO. “Since Katrina, insurers have continued to improve the claims experience for their customers, worked to improve predictive tools, and intensified their focus on risk engineering to better protect policyholders’ property exposures.”

Pusey says preparation should include preparing a disaster plan, safe-proofing a home or business, maintaining an up-to-date inventory of possessions, and having the right insurance coverage.

“Don’t wait until it’s too late,” she said.

AIA has published a four-step guide to protecting your property here.

Ten years later, Hurricane Katrina remains the costliest natural disaster in U.S. history. The storm claimed more than 1,800 lives and caused $100 billion in total economic damage, $41 billion in insured property damage, and $16 billion in flood insurance damage.

The 10th anniversary of Hurricane Katrina is being observed in many ways, but for consumers the disaster's biggest impact has come in the area of insurance...

With rising tuition costs, tuition insurance becoming more common

But like any insurance, costs are based on coverage

Whenever you spend large amounts of money on things, some risk of loss is involved. That's why you purchase home and auto insurance.

With the skyrocketing cost of college tuition, many parents are beginning to seek protection if their children have to withdraw from school for medical reasons. Thousands of dollars in tuition expense would otherwise be wasted. If the wasted tuition is part of a student loan, it's even worse – it's money you don't have but have to pay back.

That's why part of the college application process is now likely to include a pitch for tuition refund insurance. Sallie Mae, a provider of student loans, offers tuition refund insurance on its website through a third-party company, Next Generation Insurance Group.

“Tuition refund insurance helps you and your family protect your investment in education by covering up to 100% of tuition and fees lost due to a medical withdrawal or a withdrawal due to a mental health condition,” according to Sallie Mae.

No protection from flunking out

To be clear, tuition insurance does you no good if your student flunks out of school, or is dismissed for disciplinary reasons. It does protect against unexpected, involuntary termination of the semester because of death, illness – including mental condition – or injury.

According to Sallie Mae, most insurance policies provide refunds of tuition, academic fees, and some other educational expenses.

Allianz Global Assistance, a major provider of travel insurance, has also recently moved into the tuition insurance field.

“With the average annual cost of tuition and fees passing $42,000 for a private, four-year university, the cost of education can be an enormous financial burden for American families,” the company says on its website. “Most colleges will give only a small tuition refund or none at all, if a student withdraws after classes begin.”


Like any insurance policy, the more coverage you receive the more you pay for the policy. Allianz says its basic policy costs just $29.95 but reimbursement is limited to $2,500.

Allianz's Preferred policy, which it says is its most popular, pays up to $50,000 of eligible, non-refundable expenses. The cost is 1.35% of the covered expenses. If the tuition, fees and room and board totaled $42,000, the cost of the policy would be $567.

The Advantage policy, which provides more coverage, costs significantly more – 6% of the covered expense.

Some colleges and universities offer tuition insurance through third party companies. Whether you should purchase depends on your risk tolerance and what the institution's refund polices are like. If the college has a generous refund policy in case of an illness, then tuition insurance might be less useful.

Pre-existing conditions, a non-profit financial aid website, also points out that most tuition insurance policies exclude pre-existing conditions – at least for the first six months. That means if your child has a medical condition that might force her to withdraw from school before completing the term, the policy might not pay off.

The site's authors conclude that because most 17 to 21 year-olds are healthy, tuition insurance might not be a good investment, even though it does provide peace of mind.

Whenever you spend large amounts of money on things, some risk of loss is involved. That's why you purchase home and auto insurance.With the skyrocketi...

Geico to pay $6 million to California for "misleading, discriminatory" quotes

The state took issue with Geico's online premium quoting system

Geico has agreed to pay $6 million dollars and implement several changes to its business practices, as part of a settlement with the California Department of Insurance.
The settlement stems from a petition in which the Consumer Federation of California alleged that Geico's online premium quoting system was discriminatory and misleading to consumers.
Consumers rate GEICO
"Consumers are entitled to a fair estimate, that does not misrepresent material information, and discloses fully what they are getting for their money," said California Insurance Commissioner Dave Jones. "Insurers must adhere to the letter of law when developing quotes, whether in person or through an online system."
Based on information obtained through extensive testing of the Geico website, the Consumer Federation of California said the insurer misrepresented a $100,000/$300,000 limit quote as being a lowest-limits quote, when in fact, it was not. Consumer Federation of California alleged in their petition that these higher policy limits were only quoted to certain consumers, based on their education level, occupation, and gender.
Though insurers may also offer and sell policies with higher limits, California law requires insurers to offer a minimum limits policy of $15,000/$30,000. Geico's online premium quoting system was inaccurately describing quotes for higher limits as the lowest limits.
Insurance Commissioner Dave Jones issued an order approving the settlement agreement and requiring Geico to discontinue using consumers' education level or occupation to quote coverage limits, and to offer a quote for a $15,000/$30,000 policy to certain consumers for the next three years. The insurer has also agreed to submit to twice-yearly audits of its website for the next three years, to ensure it is complying with the law.
Geico has agreed to pay $6 million dollars and implement several changes to its business practices, as part of a settlement with the California Department ...

Anthem buying Cigna in $54 billion deal

Aetna and Humana announced a similar deal a few weeks ago

If you've been trying to decide between a health insurance policy from Anthem or Cigna, you can stop worrying about it. Anthem is buying Cigna for $54 billion.,

It's the latest in a wave of consolidations that are changing the face of the American healthcare industry. Just a few weeks ago, Aetna snapped up Humana for $37 billion.

If both deals go through, there will be only three major health insurers in the United States, which may be good for the companies but doesn't do much to spur competition. On the other hand, industry watchers say companies need to scale up to operate efficiently under Obamacare.

The combination of Anthem and Cigna would be bigger than a lot of countries, with 53 million customers and revenue of about $115 billion.

If both acquisitions survive scrutiny by regulators, Aetna/Humana will be the largest American health insurer, followed by Anthem/Cigna and UnitedHealthGroup.,

"We believe that this transaction will allow us to enhance our competitive position and be better positioned to apply the insights and access of a broad network and dedicated local presence to the health care challenges of the increasingly diverse markets, membership, and communities we serve," said Joseph Swedish, President and Chief Executive Officer of Anthem in a press release.,


If you've been trying to decide between a health insurance policy from Anthem or Cigna, you can stop worrying about it. Anthem is buying Cigna for $54 bill...

A helping hand for consumers shopping for health insurance coverage

Consumers’ access to important plan information is the goal

Consumers and employers will have an easier time comparing their options when shopping for and renewing health insurance coverage, according to the Departments of Health and Human Services (HHS), Labor, and the Treasury, which have just issued final regulations.

The rules also implement what officials call “streamlined processes to help health insurance issuers and group health plans provide consumers easy to understand information.”

“The Administration is committed to improving the information consumers receive when shopping for health care coverage so they can make informed choices for themselves and their families,” said Acting Centers for Medicare & Medicaid Services Administrator Andy Slavitt. “These clarifications will also make it easier for issuers and group health plans to provide the most accurate health coverage information to consumers.”

Impact of the rules

Health insurance issuers must provide online access to a copy of the individual coverage policy for each plan or group certificate of coverage. These documents must be made publicly available to all potential consumers prior to when a consumer applies, so they are clearly informed about what a plan will and will not offer. The final rules make few changes to the rules proposed in December 2014.

Health insurance issuers and group health plans must still provide a brief summary of benefits and coverage (SBC) that includes coverage examples and a uniform glossary to consumers. Revisions to the SBC, coverage examples, and uniform glossary are anticipated to be completed by next January after the departments utilize consumer testing and receive additional input from the public, including the National Association of Insurance Commissioners (NAIC).

The revisions will apply to SBCs for coverage beginning on or after January 1, 2017.  

Consumers and employers will have an easier time comparing their options when shopping for and renewing health insurance coverage, according to the Departm...

Most consumers are in the dark about health care costs

Research finds providers slowly moving toward fee transparency

Studies show that when consumers are presented with information about what health services cost, they tend to make better decisions. The hard part, however, is finding out what things cost.

New research by Public Agenda, a non-profit research organization, has found that 57% of consumers with health insurance and 51% of those lacking coverage are unaware of what their health care provider charges.

Without this information, the group says, consumers can't compare prices or look for less expensive providers when they are quoted a price they can't afford.

The study found that 56% of U.S. consumers have actively looked for prices before getting care, and 21% say they have compared prices across several providers. Of that group, nearly all say the price comparison influenced their decisions and ended up saving them money.

Consumers who compare prices charged by different providers tend to get more regular medical treatment. The study shows 42% of people who have compared prices before getting care receive regular medical treatment, compared with 33% of those who have not ever sought price information before getting care.

Make it easier to discuss prices

The authors say their findings suggest consumers want price information about their health care. They urge the industry to make it easier for providers, staff and insurance company personnel to discuss prices.

“The finding that many Americans are already trying to get price information from receptionists and hospital staff, insurance companies, doctors, hospital billing departments and nurses suggests a need to strengthen these professionals’ capacity to provide and discuss price information,” the authors write.

Consumers also need assistance in knowing where to look for price information. Part of the problem is health insurance. Some providers charge different rates, depending on whether the patient has a healthcare policy, and if so, what kind. However, a federal report recently found this does not happen as much as it once did.

Here's an example of a health care provider that posts its fee schedule, for both insured and uninsured patients.

More out-of-pocket costs

Since the Affordable Care Act (ACA) went into effect, health care consumers have been getting familiar with high deductible health insurance policies, according to the latest Survey of Consumer Finances (SCF).

A high deductible means the consumer pays the first $5000 or so of medical costs each year before certain aspects of the coverage kick in. It's designed to give consumers incentive to seek out lower health care prices.

But again, if consumers don't know what the care costs, and don't know where to look for the information, they aren't in a position to save money.

While ACA has made coverage more affordable, the high deductibles often mean many consumers can't afford to use their coverage.

“We assume that households pay premiums out of current income, but that they may need to use savings or other assets if they become seriously ill in order to meet the deductible or the out-of-pocket limit under their health insurance policies,” the SCF authors write. “We show that many households, in particular those with lower incomes or where someone lacks insurance, have low levels of resources that would make it difficult for them to meet health insurance cost sharing demands.”

All the more reason, it would seem, that health care consumers need an easy, transparent way to find out what things cost.

Studies show that when consumers are presented with information about what health services cost, they tend to make better decisions. The hard part, however...

Google wades into the car insurance market

Insurance agents may soon be as rare as travel agents

Quick, what's the most boring and confusing thing you can think of? If you said insurance, you're right on target. 

But, boring and confusing though it is, insurance is something everyone needs. Car insurance, in particular, is a requirement for anyone who wants to register a car in the U.S. And with monthly premiums amounting to $100 or more, you're talking about a lot of money. Billions of dollars, in round numbers.

So it was, perhaps, only a matter of time before Google waded into the insurance marketplace with a U.S. version of its Google Compare site, which has been operating in the UK for two years. It's starting with California, with more states to follow, we're told.

"When it comes to buying car insurance, 80% of drivers think they’d find a better policy if they could compare more than two providers. That’s why today we’re introducing Google Compare for car insurance in California, with more states to follow," said Jerry Dischler, Vice President of Product Management, Google AdWords, in a blog posting

It works about the way you'd expect -- your enter your name, driver's license number and a few other bits of data and Google displays the rates offered by its "partners," who pay a commission on any business Google brings their way.

The only problem with this, from the consumer's standpoint, is that Google does not yet have partnerships with every insurance company, which means there may be better rates lurking out there that Google doesn't bother to tell you about because it doesn't get a commission from those companies. Google does, however, have an arrangement with a site called CompareNow, which gives it access to some of the companies it would otherwise be missing.

So far, the only major companies signed up with Google are MetLife and Mercury. It's missing such titans as Allstate, Geico and State Farm.

Agents petrified

The insurance industry has been dreading Google's entry into the field but that's nothing compared to how independent agents feel about it. They're petrified. Those who aren't should be.

Agents, who make their living through commissions, have been the backbone of the insurance business. Like travel agents, their commission is covered by the companies they represent, so there's no visible cost to the consumer. And many agents -- travel and insurance alike -- perform valuable services by guiding consumers through the buying process, helping them make wise decisions (or at least that's how it's supposed to work).

We see, of course, how well travel agents survived after Google and others began offering ticket prices and selling tickets. Short answer: they didn't.

When you squeeze out the agents, you might assume that the cost to consumers would go down since the companies no longer have the pay a commission to the agents. That ignores, however, the commission they pay to the Googles of the world. 

While it's possible that Google might help consumers find a better policy for less money, it's also possible we'll never know if we really have the best policy for our needs, since there's more to insurance and most other things than just price.

Ah, but Google says it will have us covered on that score too. Soon it will be reviewing and rating insurance companies, not just selling their policies. 

Quick, what's the most boring and confusing thing you can think of? If you said insurance, you're right on target. ...

Scam alert: Delete those “Anthem” emails, and hang up on “Anthem” callers

Worried about the Anthem insurance hacking? These scammers hope to take advantage of that

Last week, when we reported how hackers had breached a database containing the records of 80 million current or former Anthem insurance customers, we also included a “pre-emptive scam warning” alerting you to the fake emails or text messages which scammers were certain to start sending out in Anthem's name.

Sure enough, the scam artists of the world immediate started producing so much Anthem-themed malware and phishing bait that the Better Business Bureau and Anthem itself have both posted warnings about it.

To clarify: Anthem has not emailed anybody about the hacking, and it hasn't called anybody either. Therefore, if you get any email supposedly from Anthem about the hacking, you should delete it at once. And if you get a phone call from someone purporting to be an Anthem representative wanting to discuss hacking-security matters with you, hang up. That wasn't a genuine Anthem representative reaching out to you; that was a scammer.

Anthem posted a scam alert on its “Investor relations” website:

“Individuals who may have been impacted by the cyber attack against Anthem, should be aware of scam email campaigns targeting current and former Anthem members. These scams, designed to capture personal information (known as “phishing”) are designed to appear as if they are from Anthem and the emails include a “click here” link for credit monitoring. These emails are NOT from Anthem.”

The scam alert went on to say that “Anthem is not calling members regarding the cyber attack and is not asking for credit card information or social security numbers over the phone.”

When Anthem starts contacting certain customers about the hacking, these communications will be done through the old-fashioned U.S. Postal Service – no electronic communication at all. Nor will Anthem ask thse customers for any personal information. Indeed, Anthem's online scam-email warning includes this bold-print statement:

Anthem will contact current and former members via mail delivered by the U.S. Postal Service about the cyber attack with specific information on how to enroll in credit monitoring. Affected members will receive free credit monitoring and ID protection services.

Last week, when we reported how hackers had breached a database containing the records of 80 million current or former Anthem insurance customers, we also ...

Managing risk through buyer protection plans

Consumers have more options in this area than they may think

You know that anytime you buy electronics or appliances at a big box retailer the sales person is sure to offer a service plan – sometimes referred to as an extended warranty.

Consumers might think they have two choices – take the store's plan or decline and have no coverage at all, assuming all the risk of loss. But actually, there's another option.

Stacy Vogler, U.S. Managing Director of Protect Your Bubble, a British-based insurance company, says consumers can easily purchase a protection plan months after they've completed the purchase.

Third option

“If consumers purchase a product, it might be new, or might be a year or 2 old, they decide they need protection for that and they can come directly to our website,” Vogler told ConsumerAffairs. “With a few bits of information about that product, they can get a protection plan for a low monthly rate.”

Protect Your Bubble is not your father's insurance company. It doesn't insure your car or your home. Instead, the company says it protects the important things in your daily life – things like your phone, TV, or washing machine. And they can usually do it for a lot less than the planes stores offer.

Huge markup

When you buy a retailer's service contract, a lot of what you are spending goes directly to the store's bottom line. Consumer's Checkbook estimates on average, the retailer pockets more than half of the selling price of these warranties as pure profit. They use the rest to pay third-party companies to back and administer these policies.

“We offer an alternative to those retail plans,” Vogler said. “Our plans are at a low monthly rate and the more devices you protect, the lower the rate.”

For example, insurance protection for an iPhone 6 through your cell phone carrier might cost $10 or more a month. At Protect Your Bubble it's $5.99.

The more things you protect, the cheaper the rate. For example, let's assume you add 2 laptops to your phone coverage. The monthly cost for the first laptop goes down to $4.99 and the cost for the second drops to $3.99 – for a monthly total of $14.97.

Vogler says consumers should research protection plans at the same time they research the product they are buying – before they go to the store.

“With a few extra steps and a little extra time online, they should also think about protection plans,” she said. “Do a little research there before they go to the store and make an informed decision.”

Other coverage

While Protect Your Bubble doesn't offer homeowners insurance, it does provide renter's insurance policies. It also provides an identity theft prevention service, alerting subscribers to any suspicious activities involving their banking and credit.

When consumers rent cars, they usually are given just 2 options – take the rental car company's loss waiver coverage or using their personal auto insurance to protect them from damage. Protect Your Bubble's rental car insurance is a third option – and a much cheaper one, saving up to 70% on the coverage the rental car company offers.

“Where our plans cost about $7 a day, the rental car companies charge about $35 a day,” Vogler said.

You pay nothing, of course, if you decide to use your personal auto insurance, but that option could prove costly in case of an accident or damage. If you have to make a claim on your personal car insurance for damage to a rental car, deductibles apply and you can expect your premium to go up in the future.

You know that anytime you buy electronics or appliances at a big box retailer the sales person is sure to offer a service plan – sometimes referred to as a...

More people are renting but many overlook insurance

Renters insurance can provide coverage for personal items damaged in disasters

The number of people renting homes instead of buying continues to rise, especially in high-cost urban areas. And it just so happens those are the same areas that are the most disaster-prone, according to the Insurance Information Institute, which says only 37% of renters have insurance on their belongings. 

The insurance group is quoting  a 2014 I.I.I. poll conducted by ORC International, which found that only 37% of renters have renters insurance, compared to 95% of homeowners who have a homeowners policy.

“Renters insurance provides a very important financial safety net when there is a disaster,” points out Jeanne M. Salvatore, senior vice president and chief communications officer for the I.I.I. “And, renters insurance is relatively inexpensive — the average cost of a renter’s policy is only $187 per year, or less than four dollars per week.”

Homeownership has fallen for over the past decade, according to Pew Research. And, in major cities such as New York, Los Angeles, Chicago and Houston, renters outnumber homeowners, the U.S. Census Bureau reports. These cities are also at risk from natural disasters such as hurricanes, flooding, earthquakes and severe winter weather, as well as fire, theft and vandalism.

“Many renters are under the misperception that their landlord’s insurance policy will reimburse them if their personal property is damaged or destroyed, but that’s just not the case,” says Salvatore.

Types of coverage

The Insurance Institute provided this rundown of the types of policies available to renters:

Renters/Tenants Insurance
Renters insurance provides financial protection against damage to or loss of personal possessions due to hurricanes, fire, lightning, theft, explosion and other disasters listed in the policy. There is also coverage for water damage caused by burst pipes or a neighbor who forgets to shut off the water in the tub. Renters insurance does NOT cover flooding and earthquake, but separate policies can be purchased for these events.

Renters insurance also provides coverage for additional living expenses, in the event you are unable to live in your home due to a fire or other insured disaster. It also includes liability insurance if you, a family member (or even your pet) accidently injure someone and they sue you. 

Flood Insurance
Flood insurance is available from the National Flood Insurance Program (NFIP) and a few private insurance companies. It provides coverage for personal possessions on an actual cash value basis, generally up to about $100,000. More information is available at

Earthquake Coverage
Renters can purchase insurance for damage to their personal possessions due to earthquakes from private insurance companies or in California from the California Earthquake Authority. Coverage is available either in the form of an endorsement or as a separate policy. Earthquake insurance provides protection from the shaking and cracking that can destroy buildings and personal possessions.

Coverage for other kinds of damage that may result from earthquakes, such as fire and water damage due to burst gas and water pipes, is provided by a standard renters insurance policy.

Umbrella Liability
An umbrella liability policy can be a cost-effective option for increasing your level of liability protection. The policy kicks in when the limit on your renters insurance has been reached. It will also provide coverage for libel and slander.

Umbrella policies generally cost about $150 to $300 per year and will also provide additional liability protection if you own a car, boat and even a snowmobile.

Because the personal umbrella policy goes into effect after the underlying coverage is exhausted, most insurers will require specific underlying limits on your policies. For instance, you may be required to have $300,000 of liability insurance on your renters insurance policy and at least $250,000 on an auto insurance policy.

Floater for Expensive items
If you own expensive jewelry, collectibles, musical instruments or even high-end sports equipment, you may want to add a floater or endorsement to your renters policy. This would provide broader coverage for risks such as “mysterious disappearance.”

More information is available on the institute's website.

The number of people renting homes instead of buying continues to rise, especially in high-cost urban areas. And it just so happens those are the same area...

Louisiana sues State Farm

Suit charges the insurer uses unfair and fraudulent business practices

Louisiana Attorney General Buddy Caldwell is suing State Farm Insurance, alleging the nationwide insurer has engaged in a pattern of unfair and fraudulent business practices aimed at controlling the auto repair industry and forcing unsafe repairs on vehicles without the knowledge or consent of consumers.

“State Farm has created a culture of unsafe business practices in which consumer vehicle repairs are performed with cost-savings as the primary goal rather than safety and reliability,” Caldwell said.

The suit alleges State Farm violated Louisiana’s Unfair Trade Practices Act and Monopolies Law by using scare tactics to steer Louisiana consumers to State Farm’s preferred repair shops and forcing shops to perform vehicle repairs cheaply and quickly, rather than in accordance with consumer safety and vehicle manufacturer performance standards.

The lawsuit also charges that State Farm steers consumers to direct repair providers that have signed agreements with the insurance company. As part of the terms of the agreement, those repair shops must comply with the standards for repair laid out by State Farm.

The insurance company, not the repair shop, dictates how long the repair should take, what types of repairs are made and the quality of replacement parts. In many cases, the repairs are completed with sub-standard parts without the consent of the policy holder, the suit charges.

“In some cases, we’ve found that these parts are nothing more than used junk yard parts. In others, we’ve found them to be foreign knock-off parts of questionable quality,” said Caldwell. “Auto repair is not an industry where you can cut corners to save a little money,” he said. “It could be a matter of life and death.”

Consumers rate State Farm Auto Insurance
Caldwell says the suit aims to change the culture of unsafe business practices led by State Farm in the auto insurance and repair industry. State Farm currently holds the largest share of auto insurance policies in Louisiana. In 2012, State Farm wrote one third of all auto insurance policies in the state totaling over $1 billion in premiums.

“Each month Louisiana consumers give their hard earned money to State Farm under the assumption that the insurer will take care of them if an accident occurs. This simply isn’t happening. Quite frankly, State Farm has been there for State Farm, not the Louisiana consumer,” Caldwell stated.

Louisiana Attorney General Buddy Caldwell is suing State Farm Insurance, alleging the nationwide insurer has engaged in a pattern of unfair and fraudulent ...

Are you taking advantage of car insurance discounts?

Companies offer all kinds of discounts but you have to let them know you qualify

Among the costs of modern life that have risen sharply in recent years is auto insurance. A recent analysis shows its average cost is up 335% over five years. It goes without saying that anything you can do to lower your insurance cost, you should do. Still, many of us don't.

Doug Whiteman,'s insurance analyst, says the 10 largest U.S. auto insurance companies offer a wide range of discounts to customers who meet certain criteria and these companies add new discounts each year.

“Discounts are one of the ways insurers try to win business and separate themselves from the pack,” Whiteman told ConsumerAffairs. “And it seems they're coming up with new and more creative discounts all the time.”

Safety features help

For example, this year Whiteman found more insurers – State Farm, Geico, Farmers and USAA among them – offering discounts on cars that have daytime running lights. If your car has them, but you haven't told your insurance company, you most likely aren't getting the discount.

Anti-lock brakes also get you a discount with all of the big 10 except Progressive, Nationwide and American Family. In fact, the more safety features you car has, the more discounts you can get.

“With a lot of these safety features, the insurance companies believe they are making the vehicle safer and it's less likely you'll be in an accident,” Whiteman said.

An excuse to buy a new car?

Since safety features are more likely to be found standard on later model cars, rather than one 10 years old, you can probably get a lower rate just by driving a newer car.

“Five out of the 10 largest insurers have a newer vehicle discount,” Whiteman said. “What they mean by newer vehicle tends to vary. Typically we're talking 3 years old or less.”

Keeping your mileage low – meaning you do less driving and are less likely to be in an accident – can also get you a lower rate with all but Geico and Farmers. However, some insurers might require you to install a device that feeds data about your driving habits to the company.

“Consumers do have concerns about privacy and this might be one of the reasons this type of discount, or this type of telematics gadget hasn't swept the industry,” Whiteman said. “We found that the low mileage discount is offered by most of the insurance companies but it doesn't necessarily mean they all require you to have one of these onboard devices.”

Good grades

If you have a student driver in your household making all A's and B's, all 10 of the surveyed insurance companies will give you a discount. If all drivers take a defensive driving course, 8 of the 10 discount your rate.

All but American Family provide a discount for having an anti-theft device. And if you bundle your policies – insuring your vehicles and home with one carrier, all 10 reward you with a discount.

How much of a discount? It's hard to say. Different companies have different discounts. And since insurance regulations vary state-to-state, one company's discounts in California may differ for those offered in Louisiana.

In most instances Whiteman says discounts are around 3% to 5%. In some cases, however, he said he's found discounts of 30% or more.

Checking to see what discounts you qualify for and notifying your insurance company could be a profitable use of your time.

Among the costs of modern life that have risen sharply in recent years is auto insurance. A recent analysis shows its average cost is up 335% over five yea...

Consumer-driven health plans expected to grow

Proliferation of high-deductible policies may be a driver

The Affordable Care Act (ACA), also known as ObamaCare, brought many changes to the health care market last year. Even bigger changes may be ahead., not to be confused with the government health insurance site, is a private technology company that assists consumers in the health insurance marketplace. Itpredicts that the upcoming “open enrollment” period, when consumers can buy insurance in the ACA marketplace, will be even more active than the first one, which ended in March.

"We expect between 12-16 million people will purchase plans during the next Open Enrollment period which starts on November 15, 2014 and ends on February 15, 2015," said Jeff Smedsrud, CEO of "This surge in activity will demand that both private companies and federal and state marketplaces become more efficient in serving new buyers of ObamaCare."

The types of policies consumers purchase may also be changing. The lowest-priced coverage under ObamaCare typically carries a very high deductible, meaning the consumers must pay the first $5,000 or more of initial expenses before benefits kick in.

That often comes as a surprise to some consumers who assume that ACA policies cover all expenses. That may open the door for an expansion of what are known as consumer-directed health plans (CDHP).

15% growth

According to the American Association of Preferred Provider Organizations (AAPPO), CDHPs grew by 15% last year.

A CDHP allows a consumer to use a tax-deferred health savings account or health reimbursement account to pay for routine, inexpensive medical care. The inexpensive but high deductible comprehensive health insurance policy is there to cover major health expenses.

As health insurance premiums have skyrocketed, many businesses have moved to CDHPs, funding the health savings accounts but saving money by switching to high deductible health care policies.

These plans grew from 39 million in 2012 to 45 million in 2013, according to an AAPPO analysis of the Mercer National Survey of Employer Sponsored Health Plans.

"As major changes to the health system loomed last year, employers continued to look to consumer-directed health plans to offer the affordability, flexibility and stability to ensure their workforces get the care they need," said Karen Greenrose, AAPPO President and CEO.

Mixed reception

Historically CDHPs have been popular with some consumers but not so much with others. If you had health coverage with a little or no deductible, there wasn't much of an advantage. But those types of policies are either disappearing or getting a lot more expensive.

The AAPPO survey found that 23% of all employers offered CDHPs last year, a 1% gain from 2012. The larger the employer the more likely it was to offer a CDHP. Of companies employing 500 or more people, 39% offered CDHPs in 2013 – up from 36% the year before.

Thirty-five percent of all employers say they expect to offer CDHPs in 2016, with 64% of large employers expecting to offer them.

From a health policy standpoint, the growth of CDHPs can either be seen as a positive or negative. Those favoring these plans argue they will reduce the number of uninsured while encouraging consumers to shop carefully for routine health services.

Critics, on the other hand, say CDHPs mostly shift health care costs to employees. The also say these plans are favored by healthy consumers, since they have less need of services. Someone with a chronic illness, for example, might quickly exhaust the money in the health savings account.

The Affordable Care Act (ACA), also known as ObamaCare, brought many changes to the health care market last year. Even bigger changes may be ahead.Health...

Does your homeowners policy cover sinkholes?

Some states require it but many don't. Read your policy to be sure

Sometimes it's what you're not expecting that winds up causing the most damage. Take sinkholes, for example. We all know about tornadoes, hurricanes and fires but, really, who expects his house or car to fall into a sinkhole?

Sure, it's rare but it does happen. And it often brings with it an unpleasant surprise -- sinkhole damage may not be covered in your homeowners insurance.

There's only one sure way to find out, and that's to read your policy carefully. This is, of course, easier said than done since policies often appear to be written in the most obtuse language possible.

In Florida, the state with the dubious distinction of being the nation's sinkhole leader, the state requires insurers to cover  “catastrophic ground cover collapse,” but state regulators warn that not every catastrophic ground cover collapse is a sinkhole.

The logic may be a little hard to follow but, basically, if your home is damaged by a ground collapse but is not condemned as uninhabitable, the damage may not be covered by your policy. However, Florida requires all insurers to offer sinkhole coverage at an extra charge, so that may be worth looking into. 

Other states don't seem to have thought through the problem quite as extensively. In Baltimore, a street collapsed into a sinkhole yesterday, taking many cars with it. Several homes were evacuated and it's not yet known if they sustained severe damage.

As for the cars, city officials had little advice to offer and suggested the motorists contact their insurance companies.

Sinkholes occur worldwide but are most common in areas with a long history of erosion, or those with an abundance of caves and abandoned mines or tunnels. They also occur frequently in urban areas, where water mains and sewers may break and undermine the ground surface.

If your home falls into any of these categories, it may be wise to talk to your insurance agent and, if you're not satisfied with the answers, contact your state insurance commission for more answers. 

Sometimes it's what you're not expecting that winds up causing the most damage. Take sinkholes, for example. We all know about tornadoes, hurricanes and fi...

Homeowners get some relief from big flood insurance rate hikes

Premium increases capped at 18% for grandfathered properties

Homeowners in coastal and flood-prone areas are getting at least some relief from huge spikes in flood insurance costs, although many will still face premium increases of 18% per year.

President Obama earlier this month signed legislation that modifies the more horrifying provisions of a 2012 rewrite of the National Flood Insurance Program, which covers 5.5 million homeowners and is currently drowing in a $24 billion sea of red ink that threatens to lap even higher as future storms come roaring ashore.

“At a time when ordinary families are frustrated because government doesn’t seem to listen, I heard you loud and clear and thankfully both sides of the aisle came together to fix this problem so middle class families can afford flood insurance and stay in their homes, businesses can stay open, and property values won’t plummet," said Sen. Robert Menendez (D-N.J.), who co-sponsored the bill in the Senate. "This fight isn’t just about insurance-rate-tables and actuarial risk rates – it’s all about hardworking people.  People who played by the rules their whole lives." 

Shore it up

The 2012 rewrite was intended to shore up the program by making property owners pay insurance rates that would have driven many middle-class taxpayers from their homes.

Congress acted to modify the program after lawmakers from both parties were haranged for months by homeowners who said there was no way they could afford to pay increases of 100% or more. Critics say the relief measure simply will simply shift costs to taxpayers the next time a hurricane strikes.

"That's fine," said a property owner on New York's Long Island. "But if we're not going to insure taxpayers who live in flood plains, people that live in tornado or earthquake zones should be on their own too."

Most homeowners in flood-prone areas have no choice but to buy the federal flood program, since private insurers have largely abandoned coastal areas. Even simple homeowner's policies are barely affordable and, in some areas, can't be found at any price.

Grandfathered properties

Those who stand to benefit the most from the revision are those whose properties were originally built to code but subsequently were found to be at greater flood risk.

Such “grandfathered” homeowners currently benefit from below-market rates that are subsidized by other policyholders, and the new legislation preserves that status and caps premium increases at 18 percent a year. The 2012 overhaul required premiums to increase to actuarially sound rates over five years and required extensive remapping.

“Today, draconian flood insurance rate increases have been stopped, and we have returned affordability as a centerpiece of the National Flood Insurance Program,” Sen. Mary Landrieu, D-La., said in a statement.

In another provision intended to provide relief to middle-class voters, sellers of older homes -- those built before flood insurance risk maps were drafted -- will be able to pass their subsidized policies on to buyers of their homes. 

However, homeowners whose homes have flooded repeatedly and those whose second home is in a flood zone will still see premiums go up by 25% a year until they reach a point that's deemed consistent with the risk of flooding.

Homeowners in coastal and flood-prone areas are getting at least some relief from huge spikes in flood insurance costs, although many will still face premi...

Consumer group opposes delaying flood insurance rate hikes

Delaying rate hikes "asks America to stick its head in the mud," says Consumer Federation

Few government programs lose as much money as the National Flood Insurance Program, currently $24 billion in debt and likely to sink even further below the waterline as a new summer storm season approaches. 

The problem is pretty simple: subsidized flood insurance encourages people to live in flood-prone areas. Congress addressed the issue in 2012 with the Biggert-Waters Law that would begin raising premiums to more realistic levels this year.

But a measure passed by the Senate last month would delay implementation of the premium increases, ostensibly to give low- and middle-income homeowners more time to prepare for the sharply higher insurance rates.

The Consumer Federation of America thinks this is a bad idea, saying it would mislead homeowners about their vulnerability to flooding, undermine the flood program’s financial viability and increase costs to taxpayers.

Risking lives

“The Senate proposal for reforming flood insurance asks America to stick its head in the mud, rather than address the problem of a flood program that is encouraging people to live in high-risk flood plains, unnecessarily risking people’s lives and possessions,” said J. Robert Hunter, CFA’s Director of Insurance and former Administrator of the flood insurance program and Texas Insurance Commissioner. “You cannot lower prices by ignoring the real risk of flood; real reform requires transparency and honesty about the true cost of living in flood zones for homeowners, developers and taxpayers.

In a letter to Congress, CFA urges the House to reject the Senate bill and let the higher rates go into effect.

“It is much worse for consumers to be misled by inadequate rates from their own government than to have high rates that signal the real risk and informs the consumer to be careful,” CFA wrote in its letter to Congress. “Homeowners who buy new homes in areas that they think are safe from floods are harmed when old maps underestimate risk. ... These homebuyers and their families are at risk of being killed or injured if a storm hits, or of having their homes or treasured possessions destroyed. Paying a little more and being truly aware of the risk is a blessing, not a curse, for consumers.”

Few government programs lose as much money as the National Flood Insurance Program, currently $24 billion in debt and likely to sink even further below the...

How to choose the right healthcare plan

Plans with low out-of-pocket expense rarely the best choice

Now that the web site is working a lot better than it did on its disastrous roll-out, more uninsured consumers are beginning to sign up and choose healthcare plans on the marketplace.

But how do you decide which plan is best for you? There are a lot of things to consider, especially if you have a doctor you like. If you go with a cheaper HMO policy your doctor might not be part of that network.

In addition to making sure your relationship with your current healthcare provider continues without interruption, you will likely consider what the policy covers and what it costs. Even then, however, there are plenty of pitfalls.

Alarming results

Using simulated exchanges modeled on the design of the actual exchanges, researchers at Columbia Business School say their findings suggest that more than 80% of consumers may be unable to make a clear–eyed estimate of their needs and will unknowingly choose a higher-cost plan than they need. Researchers at Washington University School of Medicine in St. Louis reached a similar conclusion in November.

Essentially, consumers tend to choose a plan with low deductibles and co-pay and high monthly premiums, regardless of their healthcare needs.

"Consumers' failure to identify the most appropriate plan has considerable consequences on both their pocketbooks as well as the cost of the overall system," said Eric Johnson, co–author of the report and co–director of Columbia Business School's Center for Decision Sciences.

Two problems

The problem is twofold. First, consumers spend more on health coverage than they should. Second, Johnson says if consumers can't identify the most cost–efficient plan for their needs, the exchanges will fail to produce competitive pressures on healthcare providers and bring down costs across the board, which, after all, was one of the main reasons for relying upon choice and markets.

Because the federal government will subsidize many of these healthcare policies, American taxpayers could pay an additional $9 billion for consumers' mistakes in choosing more costly plans, according to the Columbia research.

What you should look for

If you are in the market for a new health benefits policy, what kinds of things should you look for? All the plans, regardless of their cost, are required to cover certain essential health services. The difference is how much of the cost you pay and what you pay for this coverage.

For example, some plans pay for more of the medical services you receive. As you might expect, it costs more each month for that kind of coverage. A plan that requires you to pay a bigger share of your healthcare costs will have a lower monthly premium.

Key question

So one question you need to answer before selecting a plan is how much healthcare do you expect to consume? If you have a chronic ailment that requires frequent trips to the doctor and expensive medication, a policy that covers more of those costs might be prudent.

But if you are in reasonably good health and maybe see a doctor once or twice a year, it almost always will pay to select a plan with a lower premium and higher out of pocket costs. Why would you pay an extra $1,000 a year in premiums in order to save $100 on a office visit?

Yet researchers have found that consumers, left to their own devices, seem to gravitate to more expensive policies because they want to avoid out-of-pocket expenses. The numbers simply don't add up.

Johnson and his colleagues identified several things that significantly helped consumers pick a more appropriate policy. These include:

  • Estimate First, Peruse the Plans Second: Estimating your medical services before choosing a plan increases your chances of choosing the best plan.
  • Educate: Tutorial links and pop-ups that explain basic terms like "deductibles" that might not be known to new buyers, increase your chances of choosing the best plan.
  • Implement smart tools: Adding a calculator to the process improves your chances of choosing the right plan and reduces the size of errors by over $216.
  • Implement other "smart defaults": Including a tool that defaults to the most cost-effective plan drastically improves a participant's chances at selecting the most cost-effective plan by 20%, they say. Together, calculators and defaults reduce the average mistake saving consumers and the government $453.
  • Limit the number of choices: Exchanges that limit their amount of choices in healthcare plans will help to avoid confusion among consumers  
Now that the web site is working a lot better than it did on its disastrous roll-out, more uninsured consumers are beginning to sign up and ...

Retailers fear Obamacare is hurting sales

But long-term, lower-income Americans should save money, economists say

It sometimes seems that the Affordable Care Act, unpopularly known as Obamacare, is being blamed for everything except the weather, and now large retailers say they're seeing signs it's hurting sales.

Walmart has been suffering anemic sales lately -- it just reported its third consecutive drop in comparable-store sales -- and says it's afraid the looming implementation of Obamacare could make things even worse. 

"For many of our customers, having to afford health care and insurance may be another line item in their personal budget that they may not have had to cover previously." Carol Schumacher, vice president of investor relations, told analysts on Thursday, the Wall Street Journal reported.

The idea behind Obamacare, of course, is to provide insurance coverage for families that currently have no coverage. But for lower-income consumers who are barely scraping by already, the addition of even a small monthly premium could cause them to cut back on other purchases, Walmart and other retailers fear.

Walmart's not alone. True Value hardware's CEO says Obamacare is "a massive concern." 

"Discretionary spending will certainly be impacted by the changes in the contribution Americans will have to make for health care," John Hartmann said Friday, the Journal reported.

Disaster or blip?

So is this a disaster in the making or just a blip?

Many economists vote for the blip. After all, Americans now spend 17.7% percent of GDP on health care, far more than any other developed country.

As Ezra Klein and Evan Soltas point out in the Washington Post's Wonkblog, if the U.S. could get health care spending down to 12%, there'd be an extra $893 or so billion floating around in the economy, money that could be spent on consumer goods, education, infrastructure and, presumably, the lottery.

Of course, the lottery is what uninsured Americans have now: by going without health insurance, they're basically gambling that they won't get sick. But as with most games of chance, the odds favor the house; after all, everyone gets sick eventually and without insurance, the options are to go to the emergency room and let everyone else pick up the tab, or take an even riskier gamble by going without medical care.

Who benefits?

A recent RAND Corporation study, meanwhile, may provide some comfort to the Walmarts of the world, if they're able to pause and look beyond same-store sales over the next quarter.

The study finds that people who are currently uninsured -- which would include many of the lower-income consumers who are Walmart customers -- will see the largest drop in health care spending when they become insured under Medicaid. 

"Among the groups we studied, a clear benefit of the Affordable Care Act is that it will reduce the risk of facing catastrophic medical costs,” said Christine Eibner, a study author and a senior economist at RAND, a nonprofit research organization. “Consumers with the lowest incomes will see the most-dramatic reductions of their risks.”

People who will be newly insured and do not qualify for government subsidies -- younger, healthier consumers with relatively well-paying jobs -- are those who are most likely to see increased total spending as they begin paying premiums for health coverage. 

Overall, the RAND study found that out-of-pocket medical expenses will decline for most consumers who become newly insured or change their source of health insurance under Obamacare.

In other words, costs may rise slightly for higher-income Americans and go down for lower-income individuals -- which seems to be what most fair-minded people would vote for. 

Leaving aside politics and economics for a minute, the primary goal of the Affordable Care Act is to deliver better health care at lower cost. This is a big order and one that's not likely to happen quickly or smoothly, as the frothy run-up to implementation shows.  

It sometimes seems that the Affordable Care Act, more popularly known as Obamacare, is being blamed for everything except the weather, and now large retail...

Uninsured face daunting challenge in selecting a health plan

Problems with the sign-up website may be the least of it

The problems with the government's roll-out of the Affordable Care Act have been well-documented. The Department of Health and Human Services' (HHS) national sign-up website,, has been a disaster. Some state sites have also had issues.

But technical issues aside, consumers – especially those who have never had health benefits – may face even bigger challenges in the new healthcare marketplace. A study by Washington University School of Medicine in St. Louis finds the whole process, even under the best of conditions, is not exactly a walk in the park.

“Selecting the best health insurance option can be confusing, even for people who have gone through the process for many years,” said Mary Politi, an assistant professor of surgery and the study’s lead author. “We need to do a better job communicating information about health insurance to help people make the choices that work best for them.”

Conducted before the roll-out

The study was conducted just before the Oct. 1 launch of and did not anticipate the problems that would occur with the website. However, it did identify difficulties that appear to be common among consumers lacking health coverage.

Most people who have never been insured, the researchers say, are going to be unfamiliar with the language of health benefits, such as “coinsurance” and “deductible,” that are necessary to compare and choose among available health plans.

Even individuals who have had previous experience with health insurance confused the meaning of similar terms, such as urgent care and emergency care or co-insurance and co-payment.

The conclusion that researchers have drawn from all of this is that uninsured consumers are going to be heavily dependent on navigators, individuals and groups hired under the new law to help guide consumers in their local communities through the process.

The researchers say navigators can simplify details, use visuals and provide context for unfamiliar terms to help people better understand their health insurance choices. How that plays out is yet to be seen.

Missed deadline

In northwest Ohio the Toledo Blade reports the Neighborhood Health Association and CareNet, two community groups receiving thousands of dollars in grant money from HHS to train health care navigators has yet to get started, missing a Nov. 1 deadline.

Republican opponents of the health care law have been quick to highlight problems with navigators, which supporters of the law contend is unfair and misleading. They suggest that states with GOP-controlled legislatures have thrown up bureaucratic obstacles for the community groups who are trying to get navigators on the job. Officials in those states say the extra regulators are needed to protect consumers and their personal information.

Success stories

Despite problems, some regions of the country report navigators are in place and signing people up. ACR Health, a community group in Syracuse, N.Y., reports problems are few and far between and it has a number of success stories to report.

Community organizations around the country are receiving $67 million under the ACA to train and deploy navigators who help consumers choose a health benefits package and get enrolled. The researchers say they may be able to help.

Based on their findings, they are testing ways to improve communication about health insurance and the newly created state and federal health insurance exchanges.

“This effort is especially important for individuals with limited health literacy and math skills, given the complex information required to understand plan differences,” Politi said.

The problems with the government's roll-out of the Affordable Care Act have been well-documented. The Department of Health and Human Services' (HHS) nation...

Questions and answers about Obamacare

New entitlement remains mired in political controversy

After a shaky rollout, uninsured Americans are attempting to sign up for health coverage under the Affordable Care Act, also known as Obamacare. As has been widely reported, the website consumers are directed to use has been unreliable and difficult to use.

Much of the criticism is directed toward Health and Human Services (HHS) Secretary Kathleen Sebelius, who has been invited to appear before Congressional committees this week to answer questions about the problems. On Fox News Sunday, Sen. Richard Durbin (D-IL) said Sebelius will testify.

It isn't just Republicans who have been critical of the rollout. Former White House Press Secretary Robert Gibbs has called it an embarrassment for the administration. House Democratic Leader Nancy Pelosi has called it “unacceptable.”

In addition to the problems associated with the website, a number of consumers – many in California – have complained of sharp hikes in their premiums. Others have been informed by their insurance providers that their particular policies will no longer be offered.

Partisan backdrop

All of this comes, of course, against the backdrop of bitter partisan disagreement about the new entitlement. In fact, repealing it was the condition set by House Republicans for funding the government, resulting in a 16-day government shutdown.

A bipartisan website – – is attempting to remove some of the partisan fervor surrounding Obamacare and address some frequently asked questions with honest answers. For example, will Obamacare raise health insurance premiums?

While there is anecdotal evidence that it will, says the question is debatable. The site quotes Douglas W. Elmendorf, Director of the Congressional Budget Office (CBO), in Mar. 30, 2011 testimony before the House Subcommittee on Health Committee on Energy and Commerce. Elmendorf projected some premiums might go up, due to the fact that plans would be required to provide more coverage than the current average policy.

“Premiums for employment-based coverage obtained through large employers will be slightly lower than they would otherwise be; premiums for employment-based coverage obtained through small employers may be slightly higher or slightly lower," Elmendorf said at the time.

Help with premiums

Will the government help people who can't afford to pay for health insurance? The answer is yes.

The Patient Protection and Affordable Care Act, Section 36B, "Refundable Credit for Coverage under a Qualified Health Plan," page 95, signed into law on Mar. 23, 2010, available at, states:

"(a) IN GENERAL.—In the case of an applicable taxpayer, there shall be allowed as a credit against the tax imposed by this subtitle for any taxable year an amount equal to the premium assistance credit amount of the taxpayer for the taxable year.”

Translated, that means if you buy on an exchange as an individual, you may qualify for a subsidy in the form of an advance tax credit if your household income is between 100 percent and 400 percent of the federal poverty level.

Out-of-pocket expenses

Does Obamacare put limits on out-of-pocket charges that insurance companies can collect. Again, the answer is yes, with a caveat.

The Obama Administration has instituted a one-year delay in one of the law's consumer protections – a clause that places limits on a patient's out-of-pocket expense in a calendar year. The limit is $6,350 for individuals and $12,700 for a family. However, that provision has been delayed for a year, taking effect in 2015.

Does the Affordable Care Act allow consumers to keep their current insurance? According to, this is debatable. The site quotes Paul Krugman, economics professor at Princeton, arguing for the affirmative.

“Those receiving good health benefits from employers would keep them," Krugman writes.

The emphasis here is on “good.” The law mandates fairly high levels of coverage. To save money, many healthy people currently purchase policies with limited coverage and high deductibles. These plans may be “grandfathered” in the beginning but opponents of the law predict those grandfathered plans will quickly be phased out.

Does Obamacare require dental coverage? Here, the answer is yes and no. The law does require policies covering children to provide dental coverage. However, policies covering adults are not required.

After a shaky rollout, uninsured Americans are attempting to sign up for health coverage under the Affordable Care Act, also known as Obamacare. As has bee...

Wolf Blitzer thinks Obamacare should be delayed a year

But states that set up their own exchanges report brisk business in sign-ups

CNN's Wolf Blitzer is the latest to suggest that Obamacare should be delayed for a year. Why? Well, Blitzer, not previously known as a healthcare policy analyst, says the website works so poorly it needs to be taken apart and rebuilt.

"They had three years to get this ready. If they weren’t fully ready, they should accept the advice Republicans are giving them, delay it for a year, get it ready and make sure it works,” Blitzer said in a recent broadcast that reported on problems with the site.

Blitzer's comments ignore the fact that is the default site for 36 states like Mississippi and Virginia that chose not to set up their own health insurance exchanges. 

The experience has been different in New York, California, Illinois and other megastates that put ideology aside and got to work early building exchanges that actually work.

California, the nation's most populous state, signed up 28,000 people in the first week its exchange was operating and New York has signed more than 40,000. 

“Looking back at this one week, the response has been nothing short of phenomenal,” Peter V. Lee, executive director of Covered California, said. “We anticipated we’d have very low enrollment in the first week.”

California expects to sign more than half a million people before the open enrollment periods ends March 31. New York expects to sign more than 1 million.

In Illinois, officials said served more than half a million page views on its first day of operations.

In Washington state, 9,452 people had been fully enrolled as of Tuesday. Another 10,000 people have completed applications for coverage from private health insurers through the exchange but have not yet paid for it.

"The number of applications we've received is a strong start to our six-month open enrollment period," said Richard Onizuka, CEO for the Washington Health Benefit Exchange

National data lacking

There's been a shortage of data on nationwide sign-ups, partly because the federal government's public affairs staffs are largely on furlough and not much new information is being released as a result.

In its first two days of operation, got 7 million visits, an HHS spokeswoman said a few days ago. That doesn't translate directly to sign-ups since most consumers visiting the site for the first time appeared to be gathering information about what types of coverage was available in their state.

Others were waiting by their computers as the sign-up sites went live.

"I've been waiting a year for this," said a 23-year-old actor in Los Angeles who asked that her name not be used. "I have been on my mom's policy but she is turning 65 and going on Medicare so I will be S-O-L if Wolf Blitzer gets his way."

The actor said that, besides the much higher cost of a traditional policy, she would not be able to get coverage because of a pre-existing medical condition.  

CNN's Wolf Blitzer is the latest to suggest that Obamacare should be delayed for a year. Why? Well, Blitzer, not previously known as a healthcare policy an...

Experts: Don't rush into purchasing a new health care plan

Choose the wrong plan and you'll pay hundreds more than you should

Now that the new health care exchange marketplaces are open for business under the Affordable Care Act, popularly known as Obamacare,  that doesn't mean you should rush online and buy a new policy.

For starters, there are the predictable glitches with the websites offering the plans. That makes it hard for many consumers to navigate the system. But there may be bigger issues at play.

Researchers at the Columbia Business School set up simulated exchanges, modeled on the design of the actual exchanges, to see how consumers would use them. The researchers said they were alarmed to discover that 80% of the consumers enlisted in the test were unable to figure out what they needed and ended up choosing a more expensive plan. 


"Consumers' failure to identify the most appropriate plan has considerable consequences on both their pocketbooks as well as the cost of the overall system," said Eric Johnson, a professor and co-author of the report. "If consumers can't identify the most cost-efficient plan for their needs, the exchanges will fail to produce competitive pressures on health care providers and bring down costs across the board, one of the main advantages of relying upon choice and markets."

Johnson is well-acquainted with the system being put into place by the new law. He spent the last year advising several state health exchange systems on their design and structure. He serves as a member of an advisory board run by Pacific Business Group on Health.

The Columbia experiment consisted of six experiments in which consumers were told to choose the most cost-effective policy when they logged onto websites that were near-duplicates of the ones being operated by the real exchanges.


Johnson calls the results “startling.” The average consumer stands to lose $611 simply by failing to choose the most cost-effective option. That's bad for the consumers, but also taxpayers. Since the U.S. government is subsidizing costs that exceed a certain percentage of the policyholder's salary, the taxpayer will absorb a portion of the cost of that over-payment.

Johnson is well aware of how opponents of the Affordable Care Act might pounce on this research to make a political point but insists it in no way makes an argument for or against the program. Rather, he says it simply underscores the complexity of creating the delivery systems for health care policies.

Take it slow

The take away from the research may be that choosing a plan should not be done quickly and probably should not be done without some assistance. The ACA provides for qualified groups and individuals to serve as “navigators” for each exchange, helping consumers and answering their questions. Talking with one of these navigators – or at the very least doing some research before making a selection – may help with making a good decision.

Johnson and his team have some additional advice:

  • Estimate your health care needs: How often do you go to the doctor? Once a year? Then why would you need a plan with no deductible and no co-pay? The monthly cost of such a plan would be a lot more than what you'd pay out of pocket for your annual visit.
  • Get educated: Take advantage of 'just-in-time' education: tutorial links and pop-ups that explain basic terms like "deductibles" that might not be known to new buyers, increase your chances of choosing the best plan.
  • Use available tools: Adding a calculator to the process improves your chances of choosing the right plan and reduces the size of errors by over $216, the researchers found.

What exchanges can do

Johnson says the exchanges can help consumers make better choices by tweaking the design of their sites and offering helpful tools.

"Designers of the exchanges should take heart and know that they can significantly improve consumer performance by implementing some easy, straightforward tools such as just-in-time education, smart defaults, and cost calculators," he said.

Consumers should also not rush into the marketplace because, chances are, they don't need to make a change from their present coverage. The marketplaces are mostly designed for people not currently covered by a health care policy – a number estimated at about 48 million.

Now that the new health care exchange marketplaces are open for business under the Affordable Care Act (ACA), that doesn't mean you should rush online and ...

Watch out for Obamacare scams

Con artists are out in force as new healthcare plans roll out across the country

Millions of Americans are starting to sign up for health insurance and financial assistance as the Affordable Care Act, commonly known as Obamacare, goes into effect today, creating a fertile field of scam artists and identity thieves.

In some cases, criminals will try to collect personal or financial information to steal your identity and your money. In other cases, unscrupulous sales people will try to sell “discount medical plans.” Those so-called discount plans may be insurance plans that really do not save you money, or they may not be legitimate health insurance plans at all, Illinois Attorney General Lisa Madigan warned.

What to do

  • Do not pay for help. The government will not charge for its services. You never have to pay to receive help. If you receive an offer to sign up on for insurance under Obamacare for a fee, you should hang up, delete or walk away. Do not give cash, your credit card or banking information to someone you do not know or did not contact.
  • Make sure any specialist you work with is certified. If you are working with a specialist made available by your state, make sure the specialist is certified. Most states are listing the names and contact information of their specialists on their state health exchange sites. You can find your state site through
  • Never open your door to a stranger, even if they claim to be a certified specialist.
  • Guard your personal information. Do not give out your Social Security number, bank account number, or other sensitive personal or financial information to someone who calls you, emails you or comes to your door. However, be aware that when you enroll for an insurance plan through the Health Insurance Marketplace, you will be asked to provide your Social Security number and payment information, among other personal information. Before you do this, make sure you are on the official website and if you sign up in person, ask the specialist who is helping you to look away while you enter this information online.
  • The state health exchanges do not offer Medicare. Medicare is not affected by the Affordable Care Act, and you cannot enroll in Medicare through the state exchanges. You should not share your Medicare number with anyone who contacts you uninvited. If you have Medicare questions, please call Medicare at 1-800-MEDICARE (1-800-877-9392).
  • Use the state exchanges for one-stop safe insurance shopping. Consumers who enroll for insurance through their state exchanges can be sure they are accessing approved insurance plans and at the same time determine, based on their income, whether they are eligible for Medicaid coverage under the newly expanded program, or for tax credits to help offset their premium payments.
HealthCare.govMillions of Americans are starting to sign up for health insurance and financial assistance as the Affordable Care Act, commonly known as...

What's the best health insurance plan?

Consumer Reports picks 114 out of the thousands of plans available

Finding the best health insurance plan become even more important today, as the Affordable Care Act takes effect, requiring everyone to sign up for a healthcare plan or pay a penalty.

Consumer Reports surveyed more than 1,000 private, Medicare Advantage and Medicaid plans and picked 114 as "Best Value" plans, choosing the ones that provide both high-quality care while avoiding unnecessary expense.

The full report is available in the November issue of Consumer Reports. The latest health plan rankings are available for free online at

The rankings data and the “Best Value” designation come from the National Committee for Quality Assurance (NCQA), a respected non-profit health care quality measurement group. 

The new Best Value designation for plans is based on how well a plan helps people with diabetes manage their condition. Consumer Reports focused on diabetes for several reasons. The disease has reached epidemic proportions, affecting some 26 million Americans. In addition, managing diabetes requires good, basic care for things like high blood pressure, cholesterol, and blood glucose levels—as well as coordination among providers. Plans that get diabetes care right are likely to do a lot of things well.

Finally, treating diabetes is expensive, especially if basic care is neglected, so plans that provide good diabetes care for less money should have more resources available to cover other conditions or to reduce premiums.

“Consumer Reports’ analysis found that expensive care doesn’t mean better care. Many people incorrectly assume that the more money that’s spent on health care, the better health care will be,” said John Santa, M.D., medical director of Consumer Reports Health. “But as these ratings show, the data found no connection between cost and quality.”


Though much attention is now being focused on the Affordable Care Act -- widely known as Obamacare -- at least 80 percent of Americans will notice almost no change because they already have insurance that meets the law’s requirements. This includes the 49 percent of Americans who get health insurance through their or someone else’s job, as well as people who get insurance through some type of government plan.

The centerpiece of the transformed health care system is an entirely new way of choosing and purchasing individual health insurance known generically as marketplaces.  They open for business today (October 1) in every state.

Megastates like California and New York have colorful, easy-to-navigate online exchanges but states that fought the plan tooth-and-nail or simply declined to participate have rudimentary sites put together by the feds. Taxpayers in Virginia, which fought the plan bitterly, are greeted with much plainer, harder-to-understand sites.

The report provides overall scores from 1 to 100 reflecting plans’ performance across many aspects of care. These include cancer screenings, immunizations and other preventative services, and treatments for chronic diseases such as heart disease, osteoporosis and mental illness. Customer satisfaction and results from NCQA accreditation surveys also contribute to the overall scores.

Consumer Reports has created a free online tool at to help consumers better understand how they may be affected by the Affordable Care Act.

Based on responses to a few questions, the tool provides a customized, printable report that identifies what an individual consumer should look for in the insurance marketplace. The tool does not require users to provide their name or other personally identifying information. 

Finding the best health insurance plan become even more important today, as the Affordable Care Act takes effect, requiring everyone to sign up for a h...

Will you qualify for a subsidy under Obamacare?

If so, your healthcare costs could go down in January

The Affordable Care Act tends to divide people along ideological lines, but come January it will also divide consumers along mostly economic lines.

Many people who purchase and pay for their own health insurance will get a subsidy from the government to help pay for it. Some won't. Those who get their insurance through their employers or labor union won't either, and in some cases may end up paying more.

Starting in October, consumers who purchase their own health insurance can start signing up for coverage through state health care insurance exchanges or, for those in states that refuse to set up an exchange, through a federal exchange.

Four levels of coverage

The exchanges will offer four levels of coverage, called Bronze, Silver, Gold and Platinum, with Bronze being the least expensive and Patinum the most expensive. These policies are more comprehensive than the high-deductible plans favored by many who pay for their own insurance. In many cases those who currently pay for their own policies are “grandfathered,” and will not have to switch to a more expensive Obamacare policy. However, it may pay them to switch.

Under the Affordable Care Act, consumers purchasing the more expensive and more comprehensive coverage through the exchanges will get a generous tax credit from the government to offset the cost. The net cost of the better Obamacare policy will likely be significantly less than they are now paying for less coverage.

The Kaiser Family Foundation (KFF), which has conducted an extensive analysis of the impending changes in health care, finds that eliminating premium surcharges based on health conditions and limiting premium variation due to age will tend to lower costs for older and sicker consumers while raising premiums for consumers who are younger and healthier.

How it works

It will all depend on your income. The law has limits on the percentage of your income that your health insurance can cost. KFF has broken it down. Here is how it might work for a 40-year-old individual making $30,000 a year (modified adjusted gross income):

  • Estimated benchmark premium for a 40-year old = $3,857 per year (which will vary from area to area)
  • Consumer is responsible for paying 8.37% of their income = $2,512, or $209 per month

The lower premium is derived by subtracting a $1,345 subsidy tax credit from the federal government.

The tax credit can be used in any plan offered in the health insurance marketplace, so the person would end up paying a lower premium for the lowest cost silver plan or a lower cost bronze plan, and more to enroll in a higher cost plan.

The lower your income, the higher your subsidy. The higher your income, however, the less your subsidy. And once your income rises to a certain level, you get no subsidy at all, but must pay the full cost yourself.

Nearly half to get subsidy

“About half -- 48% -- of people now buying their own insurance would be eligible for a tax credit that would offset their premium,” KFF said in its analysis. “This does not include over one million adults buying individual insurance today who will be eligible for Medicaid starting in 2014.”

Assuming all eligible current enrollees applied for a tax credit, KFF estimates the subsidy would reduce the premium for the second-lowest-cost silver plan by an average of 32% across all people now buying insurance in the individual market. If they were to opt for the most expensive plan, they would have to cover more of the cost out of pocket. Choosing a Bronze or Silver plan would lower premiums the most.

KFF has produced this calculator to help consumers estimate the amount of their subsidy, or whether they would qualify for a subsidy. Many will not. 

For example, a family of four earning $47,000 would receive no subsidy at all. According to KFF's calculate, the family's cost for health coverage would be $11,547 a year, or $962.25 a month.

Again, this would be for families purchasing their own health coverage. As long as an employer continued to provide health benefits, that coverage would continue.

The Affordable Care Act tends to divide people along ideological lines, but come January it will also divide consumers along mostly economic lines.Many p...

New York health insurance rates will plummet next year

Obamacare's marriage of regulation and competition appears to be getting results

"From Bergdorf's to Filene's" is how one official described the cost of health insurance in New York under Obamacare. New Yorkers, traditionally hard to shock, are still assimilating the news that the average individual health insurance premium will fall 50 percent next year when the Affordable Care Act takes effect.

"Health insurance has suddenly become affordable in New York,” said Elisabeth Benjamin, vice president for health initiatives with the Community Service Society of New York, according to The New York Times

Gov. Mario M. Cuomo broke the news, as he announced that state insurance regulators have approved rates for 2014 that are at least 50 percent lower on average than those currently available. 

“New York’s health benefits exchange will offer the type of real competition that helps drive down health insurance costs for consumers and businesses,” said Cuomo. “The opportunity to choose among affordable, quality health insurance options will mean improved health outcomes, stronger economic security, and better peace of mind for New York families.”

New Yorkers who now pay $1,000 a month or more for insurance will be able to find policies for as little as $308 per month. Federal subsidies for low-income people will drive their out-of-pocket cost down ever further.

“In setting these rates, we worked hard to do right by consumers and small businesses so they have access to affordable, quality health insurance," said Benjamin M. Lawsky, Superintendent of Financial Services. "Moreover, where New York previously had a dizzying array of thousands upon thousands of plans, small businesses will now be able to truly comparison shop for the best prices. New York will continue to move ahead rapidly so the exchange is up and running for 2014.”

Invisible hand or iron fist?

How can this be? Is it that fabled invisible hand of the marketplace? Or is the iron fist of the state?

Well, it's actually a little of each. It's competition, something that has been sadly lacking in health insurance recently, and it's being stimulated by the state health insurance exchanges established under Obamacare, as it's widely known.

The New York situation mirrors that in the biggest megastate of all -- California, which was quick to set up its health insurance exchanges. In the most competitive markets, like Los Angeles, a 25-year-old could pay as little as $190 per month for a basic plan, much less than had been expected.

Insurers have been rushing to get in on the action, not wanting to see Blue Cross Blue Shield and other big players wrap up the market. New York says it has approved 17 insurers to sell individual policies in the state, eight of them new to New York.

Small-business premiums will not fall as sharply as individual premiums but they are much lower to start with, insurance experts note.

Gov. Cuomo"From Bergdorf's to Filene's" is how one official described the cost of health insurance in New York under Obamacare. New Yorkers, traditiona...

After the storm, insurance can be hard to find

To manage risk, insurance companies often drop good customers

Insurance is a numbers game. When risk increases, as shown by  additional claims, companies manage their risk by writing fewer policies, or being more selective about properties they will insure.

When this happens, consumers often feel like they are being blindsided.

“After 27 years and no claims, State Farm is not renewing me,” Robert, of Great River, N.Y., wrote in a ConsumerAffairs post. “I live in New York and they say I am in a flood zone. I am over a mile from the water. Can they do that?”

At present they can, but Sen. Chuck Schumer (D-NY) thinks they shouldn't be able to. Schumer says that after last fall's Hurricane Sandy, insurance companies have been canceling policies in New York “in droves,” even for homes that weren't damaged in the storm. For example, Schumer notes that all 92 units in Long Island's Southold's Founders Village lost their insurance coverage in May.

Long Island homeowners take a hit

In particular, Schumer says homeowners on Long Island have been hit particularly hard. When they lose their insurance coverage, as many have, they are forced into extremely high-cost, low-coverage plans. He recently joined with the Long Island Housing Partnership to call attention to the issue.

According to Schumer, Long Islanders already have limited homeowners’ insurance options. Allstate, State Farm and Liberty Mutual issue most of the policies on Long Island but all three have been withdrawing from the Long Island market.

The situation isn't unique to New York. In the aftermath of 2005's Hurricane Katrina, State Farm withdrew from Mississippi, announcing it would no longer insure homes and businesses in the state. At the time, State Farm held about 30% of the policies in the state.

Since that time, it seems insurance companies have been even more active in managing their risk. Christine, of Cleveland, Ohio, says she had been an Allstate customer for 19 years without a claim when she suffered some roof damage in connection with Sandy.

Roof issues

“I asked my insurance agent to come check and see if I needed my roof replaced and if my insurance would cover the cost,” she writes. “When the agent came out and checked the roof, he said the insurance would only give $250 to fix the hole and a bucket of paint. Two weeks later, I received a non-renewal letter stating Allstate would not renew my homeowner insurance because my roof is dry-rotted and deteriorated and in need of repair.”

Greg, of Traveler's Rest, S.C., also reports losing his Allstate homeowners' policy over a roof damage issue.

“After seven years, I filed my first claim with Allstate,” he writes. “They sent an adjuster out who said, 'Oh, it's just some loose nails and such.' Three months later, I get a cancellation (non- renewal) notice due to the poor condition of my roof. So the adjuster says my roof is fine, and they cancel my policy due to a poor roof condition. This is a joke, right?”

Schumer has announced plans to step up pressure on insurance companies – primarily State Farm, Allstate and Liberty Mutual – to reverse their decisions to cancel homeowners’ policies. As leverage, he said he is asking the Federal Emergency Management Agency (FEMA) to penalize them by limiting or prohibiting their participation in the National Flood Insurance Program, which is operated by FEMA.

“It’s bad enough that homeowner insurance policies are limited on Long Island, but now – with precious little justification – policies are being dropped left and right, even for those who paid all their bill on time and had little-to-no storm damage” said Schumer. “Many of these homeowners were not even affected by Superstorm Sandy and now they’re being forced into extremely expensive plans. These insurance companies should not leave Long Island families and the federal government holding the bag and so today I am urging them to put a stop to these policy cancellations.”

When a homeowner loses their insurance coverage, they have to seek coverage in what is known as the “excess market.” According to Schumer, coverage in this market can be two to three times more expensive than a standard policy.

Insurance is a numbers game. When risk increases, in the form of additional claims, companies manage their risk by writing fewer policies, or being more se...

Blue Cross-Blue Shield takes the lead on Obamacare

Other insurers are hedging their bets but the Blues expect to be in nearly every state

We're just 100 or so days away from the Oct. 1 implementation of the state health insurance exchanges called for by Obamacare but some major insurers, not to mention Republican governors, are hanging back, refusing to have anything to do with the exchanges.

Not so Blue Cross-Blue Shield. They're expected to operate in nearly every state, while UnitedHealth Group and Aetna are proceeding more cautiously.

The idea behind the exchanges is to make it easier for consumers who don't have health insurance through their job to get a health plan that covers their basic health needs at an affordable price -- something that's nearly impossible for most Americans of modest or moderate means  these days.

Anyone who has ever stood in an emergency room while a family member was being treated and tried to remember if the insurance premium was up to date will know how important this is.

It's not just poor people who have trouble getting health insurance. Many self-employed and entrepreneurial types are in the same boat. With premiums for a family of four easily exceeding $1,200 per month in most states and a list of exclusions as long as a stretch limo, health insurance is a very expensive and frayed safety net.

Higher risk

The reason individual premiums are so high -- at least in theory -- is that individuals present a higher risk since the insurance company can't spread the risk over a larger group, as is the case when it writes a policy for Monsanto or General Motors. 

Of course, if everyone could buy insurance, that would create a larger group, no? This is, to over-simplify greatly, the general idea behind the health exchanges that are at the heart of Obamacare, more formally known as the Patient Protection and Affordable Care Act.

In California, which is way ahead of the rest of the states in implementing the exchanges, initial premiums have been lower than expected. They vary by location and plan but a 25-year-old in Los Angeles could pay as little as $190 per month for a bare-bones plan while a 40-year-old in San Francisco would pay up to $525 per month for moderate coverage.

In some parts of the state, there are as many as six companies offering plans while in others, there is only one so far.  

Out to lunch

Why governors in states like Texas and Virginia have decided to deny this coverage to their constitutents is something they'll have to explain. Of course, they're covered now and, in most cases, forever by health plans paid for by the taxpayers who can't afford insurance themselves, so perhaps that makes it OK.

Conservatives have objected to the so-called "mandate" -- the requirement that everyone must buy insurance or pay a penalty. By forcing everyone to either buy insurance of pay a fine, the government creates the enormous risk pool that is supposed to make the program attractive to insurers. Those who can't afford the full premium can qualify for a subsidy.

In states where the governors and legislators have been successful in blocking state-run exchanges, the feds will be in charge, which will provide something else for the local impresarios to complain about.

So why are the Blues going full-bore into the exchanges? Well, the simplest answer, as analysts quoted in various press reports explain it, is that they are already the largest insurer in most states, a position they want to protect.

If the Blues sat out the game, in other words, someone else would walk off with a big batch of their customers. So top Blues executives have decided the best strategy is to aggressively go after as much business as they can get, thus protecting their market share and -- not coincidentally -- creating a very large group across which to spread the risk they incur by taking on everyone who applies.

Enough talk

So, after years of political claptrap, Big Business is about to take over and the competition that the Republican governors claim they yearn for is about to commence.

While they may initially be on the sidelines, UnitedHealth, Aetna and others are not likely to stay there long if, as expected, they see Big Blue poaching their customers and portraying themselves as champions of the little guy.

You can expect the Blues to launch an aggressive advertising campaign that will in next to no time blow away the political fog that now surrounds the issue and provide the kind of consumer education that only Madison Avenue can.

Like it or not, Big Government has set up this system but it is now about to step out of the way and let the marketplace do its thing. Soon, as is already happening in California, there will be demands that the government get back into the game and regulate the insurance companies more harshly to ensure that premiums don't get out of line.

What to do

To find information about your state, go to the official Health and Human Services site --

Google and other search engines have not taken the trouble to identify the official government health exchange sites and will most likely direct you to advertisements or sites cleverly disguised to look like official sites. Nor do the commercial sites bother to offer a translation for "Obamacare." 

The search box in the upper right corner of will direct you to the insurance exchange site for your state, if there is one. You can also sign up for email updates.

We're just 100 days away from the Oct. 1 implementation of the state health insurance exchanges called for by Obamacare but some major insurers, not to men...

Shopping for life insurance

Make sure you understand what you are buying

It's not a subject we like to think about, but it's prudent to plan for your death. Usually, part of that plan will include a life insurance policy.

Life insurance is most important when a family is young. In previous generations a husband took out a policy to provide for his wife and children should something happen to him. Today, it's usually important for both husband and wife to be covered since the family may depend on both their incomes.

Buying life insurance is an important financial decision and shouldn't be taken lightly. Christine, of Old Lyme, Conn., realizes she needed to ask more questions when a Colonial Life and Accident agent signed her up at work.


“He told me this 'term' policy was what I needed,” Christine wrote in a ConsumerAffairs post. “Seven years later, when I was cut back on my hours and needed to re-think the deduction, I contacted the new agent and she told me that all the money I had contributed in this term policy would be gone! I could not change policy, I could not touch the money I contributed, and she was very sorry. Seems that the previous agent did not explain things to me, and I did not ask questions.”

Christine admits that she was naive when she signed up for the policy but her real problem is that she did not understand what she was buying. She purchased a “term” policy and not permanent insurance. Term insurance is in force only as long as you continue to make the payments. Once you stop the payments, the coverage ends. It's like renting your insurance.

The advantage to term life is that it costs much less than other types of policies. If you only want insurance coverage over the 25-year period that your children are being born and growing up, then a term policy may be just what you need. Once the last child graduates and gets a job, you let the policy lapse.

Christine apparently believed she was getting a policy that would eventually be paid up, or have a cash value that she could redeem should she cancel. These policies typically cost more and may or may not be a good use of your money.

Not always good investments

Whole life policies, for example, are more expensive because it is generally assumed they will be in effect longer than term policies and therefore, the odds the company may have to pay off are greater. Many financial advisers caution that non-term policies are generally not a good place to put your money. And because the products are so costly, a consumer typically under-insures, buying less coverage than they need.

A term policy, on the other hand, provides more coverage per dollar, allowing you to put the savings into more productive investments. The key, of course, is actually investing your savings. If you do, you should have a significant nest egg by the time you discontinue your term policy and can, in effect, self-insure.

Before considering the purchase of a life insurance product, learn the basics. Make sure you understand the difference between term insurance and permanent insurance.

When it comes time to purchase an insurance policy, make sure you buy the right kind for your needs. Once you understand the differences in policies it will be easier to avoid these mistakes.

How much?

How much insurance do you need? You need to answer this question before making a final decision. If you have a young family, both spouses need a policy that will provide enough money to help meet the family's needs for several years.

Buy insurance when you are young. Insurance is all about odds, with the company betting you won't die and you betting you will. The numbers suggest a 25-year old has a better chance of staying alive than a 45-year old. When you purchase life insurance when you are young and in good health, you'll get a better deal.

It's not a subject we like to think about, but it's prudent to plan for your death. Usually, part of that plan will include a life insurance policy.Life ...

Will the new healthcare law raise hospital use and costs?

One study says it didn't happen in a state that implemented its own version

It's been more than three years since the Patient Protection and Affordable Care Act, also known as Obamacare, was signed into law, and nearly a year since it was upheld by the Supreme Court and still the debate rages: “Will it increase costs or won't it?”

In 2006, Massachusetts reformed its healthcare system and, according to data presented at the American Heart Association's Quality of Care and Outcomes Research Scientific Sessions 2013, there was no substantial increase in hospital use or costs. The reforms increased the number of people insured by 300,000.

And, the findings were true even among safety-net hospitals, which often have an open-door policy to accept patients regardless of the ability to pay. These hospitals are most likely to care for people who need free services, use Medicaid or must pay their own hospital bills.

Little difference

"In light of the Affordable Healthcare Act, we wanted to validate concerns that insurance reform would lead to dramatic increases in healthcare use and costs," said Amresh D. Hanchate, Ph.D., the study's lead author, an economist at the V.A. Boston Healthcare System and assistant professor at Boston University School of Medicine. "We were surprised to find little impact on healthcare use. Changes we saw in Massachusetts are very similar to those we saw in New Jersey, New York and Pennsylvania — states without reform."

The study analyzed information on more than 2.6 million patients ages 18-64 discharged from 66 short-term acute care hospitals in Massachusetts in 2004-2010.

Prior to reform, in 2004-2006, the number of average quarterly admissions for each hospital was 1,502. After reform, in 2008 -2010, the average was 1,557 -- a 3.6% increase versus a 3.3% increase in the comparison states.

Further findings

The researchers also found:

  • The total days of inpatient care increased by 0.94% in Massachusetts, compared with 0.80% in the comparison states.
  • Hospital charges per quarter rose 1.1% more in Massachusetts than in the comparison states.
  • Hospital use increased among previously high uninsured groups; the number of hospitalizations increased by 2.8% among blacks and by 4.5% among Hispanics.
  • The results were similar to those of safety-net hospitals and Medicare patients.

"These results are more applicable for states similar to Massachusetts in terms of the current healthcare system and government policy," Hanchate said. "Because states vary a lot, it's hard to say how this would compare for the rest of the country."

Further study is needed to determine if the delivery of services changed, including whether inpatient services being moved to an outpatient setting, he said.

It's been more than three years since the Patient Protection and Affordable Care Act, also known as Obamacare, was signed into law, and still the debate ra...

State Farm wants to go for a ride with you

RightLane app gathers information on driving habits

State Farm is looking for 5,000 people to download and test its RightLane Android app, a smartphone app that the company is developing.

The first 5,000 volunteers will get a $50 gift card and State Farm promises that none of the information collected will influence your insurance premiums.

The testers need only to have an Android phone running version 4.0 or greater and Bluetooth factory installed in their car. The test period is 120 days and requires at least 500 miles of driving over 25 of those days.

State Farm says that for now, it's testing the feasibility of using smartphones to gather widespread data that can be used in its research.

Most insurance companies recruit volunteers to install plug-in devices in their cars, with possible rate discounts if the device shows them driving safely. State Farm is trying to see if an app can do the same thing without requiring a separate device.

Consumers who've posted reviews on Google Play seem pleased so far. 

"The app works perfectly now," said Tom Lendy, who said there had been some initial glitches that the app's developers worked through. "In fact I would say that it is pretty impressive, especially for being a Beta. It has a nice, simple to use interface. It is simple to understand as well."

"Love that Bluetooth was automatically configured/active... HATE that I could NEVER turn it off. Thanks for the money!" said Jaymes Williams. 

Interested? You can download the app from Google Play.

State Farm is looking for 5,000 people to download and test its RightLane Android app, a smartphone app that the company is testing.The first 5,000 vol...

VA promises to speed up veterans' claims processing

But after years of inaction, skeptics doubt much progress will be made

According to the Armed Forces Health Surveillance Center, one in eight troops coming back from Iraq and Afghanistan were referred to counseling for alcohol dependency. One in four had a substance abuse disorder.

But when it comes to receiving help for their addictions and other needs, many veterans are put on long waiting lists and aren't getting the quick help they need.

Yesterday, the Department of Veterans Affairs (VA) said it would finally try to clean up some of its claims backlog (story). 

Veterans who have been waiting one year or more for their benefits will have their cases expedited so they can receive things like compensation, educational reimbursement and help with alcohol or substance abuse, the VA said.

Paul Rieckhoff, CEO and Founder of Iraq and Afghanistan Veterans of America (IAVA), said officials on both sides of the political aisle have come together to solve this issue.

"The growing impatience over the VA disabilities backlog is one of the few genuine bipartisan issues in Washington today," he said. "IAVA thanks leaders in the Senate for their bipartisan efforts to help end the backlog and ensure that veterans get the care they need. Our veterans now need to hear from the President about how he plans to bring the number of veterans in the backlog to zero."

Letter to Obama

In a letter to President Obama, a number of senators specified just how bad the backlog is. They wrote:

"In the last four years, the number of claims pending for over a year has grown by over 2000% despite a 40% increase in the VA's budget.

As a reminder, during this same time period, Congress has given VA everything it has asked for in terms of more funding and more employees; however, this has not eliminated the backlog of claims. Solving this problem is critical for veterans of all generations.

We need direct and public involvement from you to establish a clear plan to end the backlog once and for all."

The promise to clean up some of the backlog is great news for people like Army veteran Paul Barron, who has been waiting a ridiculous amount of time to receive his benefits.

"I've been waiting three years for disability," he told a Connecticut news outlet. "I got Hepatitis C from the shots they give you in the Army."

Many times veterans pass away before every getting to see their benefits.

Dramatic increase

During President Obama's first term in office the number of surviving families waiting for burial benefits has dramatically increased.

Before Obama took office the number of people waiting for burial benefits was 23,000 and now it's swelled to 65,000. And the dollar amount that families are waiting for is somewhere between $600 and $2,000, reports show.

But veterans and their families finally receiving benefits isn't all about money, said Sheryl Ann Cornelius.

She is the widow of Jack Cornelius, who committed suicide in 2009 after  suffering from alcoholism, depression and post-traumatic stress. Sheryl was initially denied burial benefits after her husband killed himself and it took a whole year for the VA to reverse its decision.

In the amount of time that Sheryl had to wait for an appeal decision, she lost her home through foreclosure and accumulated even more debt as she tried to pay off a loan that she took out for the funeral.

But receiving money from the VA was only part of what Sheryl needed: "I needed the money," she said in an interview with The Daily Beast"But it was more important to me that the government admit that his death was caused by the war, that someone take responsibility for it."

More can be done

Although the VA is trying to clear out some of its backlog by making provisional decisions on its most outstanding claims, many believe a lot more can be done. Rep. Tom Graves (R-Ga.) said the VA should bring in outside companies to help with the backlog.

"It's also time to think outside the box when it comes to fixing the VA," he wrote in a recent op-ed piece. "In a digital age, they are under a crush of paper files -- literally. An inspector general report on the Winston-Salem VA office found that 37,000 claims folders were stacked on top of file cabinets."

"Why don't we ask tech giants like Apple, Microsoft, Google and Facebook to help?"

"Our veterans deserve the best system, and it makes sense to ask some of the most innovative companies of our time to either collaborate, or bid for a contract, to create a paperless claims system of ease and efficiency for veterans and the employees at the VA," Graves said.

According to the Armed Forces Health Surveillance Center, one in eight troops coming back from Iraq and Afghanistan were referred to counseling for alcohol...

Government simplifies Obamacare form

Steps up efforts for launch of the Affordable Care Act in October

The October 1 start of registration for the Affordable Care Act (ACA), also known as Obamacare, is closing in fast. Reacting to criticism from both Democrats and Republicans that Obama Administration planners are behind the curve, there are new efforts to explain how the law works and make signing up easier.

The latest step is a major overhaul of the forms consumers will use to shop for health benefits at a health exchange and receive a subsidy. The original form was 21 pages long and packed with insurance industry jargon. The new form, introduced by the Department of Health and Human Services (HSS), is only four pages long, not counting the page of instructions.

Information to provide

The form, to be used by a single person seeking a subsidy to help pay for benefits, requests:

  • Name, address, phone, email
  • Preferred language
  • Date of birth
  • Race/ethnic origin
  • Income
  • Health conditions
  • Employment/income
  • Current health coverage

You then mail a printed copy of the application to the health insurance marketplace and wait for a representative to contact you. If things go smoothly, that contact will come in a timely manner. But some are worried the system won't work that way.

Train wreck?

Sen. Max Baucus (D-Mont.), an architect of the ACA, worried aloud recently that implementation of the new health law “could be a train wreck.” Even President Obama, at a news conference, acknowledged it won't be easy.

“The challenge in setting up a market-based system, basically an online marketplace where you can go on and sign up and figure out what kind of insurance you can afford and figuring out how to get the subsidies, that's still a big complicated piece of business,” Obama said.

“And when you're doing it nationwide, relatively fast, and you've got half of Congress who is determined to try to block implementation and not adequately funding implementation, and then you've got a number of Republican governors who know that it's bad politics for them to try to implement this effectively, when you have that kind of situation, that makes it harder,” he said.

California prepares

In California, state officials have released a new guide that explains how ACA will change the insurance marketplace. The California Association of Health Plans (CAHP) says the biggest change will be in the individual market, where some small businesses and individuals purchase coverage.

The officials concede that, while residents will get more comprehensive benefits, many will pay more than they are paying now.

"The ACA will provide a host of benefits for Californians, from expanded coverage to federal subsidies," said Patrick Johnston, president and CEO of the CAHP. "However, premiums will still rise for some individuals. Lower out-of-pocket expenses, more comprehensive benefits and the elimination of annual and lifetime limits will ultimately help offset those increased premiums."

If you are receiving health benefits through your employer, these changes won't affect you. The individual market will work with people who currently have no insurance – and consumers who are currently paying for an individual policy – to find the best deal. In California, that's estimated to be less than six percent of the population.

The October 1 start of registration for the Affordable Care Act (ACA), also known as Obamacare, is closing in fast. Reacting to criticism from both Democra...

Exchanges: the new health insurance marketplace

Consumers can begin shopping for a new health plan in October

The Affordable Care Act (ACA), also known as ObamaCare, has been politically controversial from the start, dividing the parties, surviving a Supreme Court challenge, and serving as a major issue in the 2012 election.

But after all the fuss, it's still standing and later this year will begin to transform the way consumers obtain and pay for health insurance. The law goes into effect January 1, 2014.

For consumers who currently purchase their own health insurance, or who have no health benefits at all, it will bring about big changes. Currently, consumers must go to a variety of different insurance carriers to shop for and obtain a policy. The new law streamlines the process.

New marketplaces

Health insurance exchanges, or marketplaces, form the bedrock of ACA. Each state will have one or more exchanges that will offer these benefit packages. Individuals may use the exchange to find the policy that's right for them and small businesses can turn to an exchange to shop for a group plan.

The exchanges will offer a variety of certified health plans and provide information and educational services to help consumers understand their options. Under the law, states have the option to establish one or more state or regional exchanges, partner with the federal government to run the exchange, or to merge with other state exchanges.

Regardless of how they go about it, every state is required to have a health insurance exchange for its residents by January 2014. Some states, like Virginia, have refused to set up their own, so their citizens will be covered by an exchange set up by the federal government.

Sign up in October

The health insurance exchanges will open for business October 1, at which time consumers under age 65 may select a health plan. Those 65 and older will continue to be covered by Medicare.

The exchanges will only offer benefit packages that are “certified.” In other words, they must cover certain things. If you currently have an individual policy with a very high deductible and minimal coverage, it is possible that you will be required to replace it.

California is among a handful of states that moved quickly to establish a health insurance exchange. Its exchange, known as Covered California, received federal approval in January.

“This is another significant step in California's long but determined march toward better health at an affordable price," Covered California’s Board Chair Diana Dooley said at the time.

Since then Covered California has been working with interested private health care plans to offer certified health benefit products online for individuals and small businesses. Starting October 1, consumers can begin using the exchange's website to shop for a plan.

Variety of plans

Insurance plans will vary — from generous to modest — but each plan must include basic, comprehensive medical coverage and prescription drug benefits. As with an online travel site, where you can compare airline fares and hotel rates, you’ll be able to compare the plans’ costs and benefits head-to-head online.

These certified health benefit plans are not cheap, which brings us to paying for these benefits. What you, as a consumer, pays will depend largely on your income.

Families below a certain income level will continue to receive Medicaid coverage. Most middle-class families who purchase individual policies will receive a federal subsidy to offset the cost.

Calculating your cost

How much? There are a number of online calculators that help you find out. The Henry J. Kaiser Family Foundation has created this calculator to help you determine your cost. 

Here's an example using the calculator. Let's assume a family of four, in a “medium” cost area of the country, is covered by an individual health insurance plan because the 45-year old principal policy holder is self-employed. According to the calculator, the unsubsidized cost of the average policy would be $14,245, or $1,187 a month.

But under ACA, the family would only have to pay a maximum of 9.5% of their income in premiums. The government would provide a subsidy of $7,120, meaning the premium would be $7,125, or less than $600 a month.

The subsidy will be provided through a tax credit. Ordinarily, consumers would have to wait until they file their federal returns before they receive the benefit. However, under ACA the tax credit available through the health exchange will be available immediately, to offset the cost of the monthly premium.

What to do

Starting October 1, go to your state's online health exchange and begin shopping for a plan. You can find it by using a search engine, entering the name of your state and the words “health insurance exchange.”

If you are currently covered by an employer-issued group plan, Medicare or Medicaid, you do not need to take any action.

The Affordable Care Act (ACA), also known as ObamaCare, has been politically controversial from the start, dividing the parties, surviving a Supreme Court ...

Do you need renter's insurance?

While a growing number of landlords demand it, most renters are uninsured

With mortgages harder to get, more consumers are renting their homes these days, with rents rising sharply across the U.S.

While homeowners who have mortgages are required to have a homeowner's insurance policy, not all landlords require renter's insurance. In fact, a recent survey by found only 34% of renters carried insurance policies.

Many renters may think the property owner's insurance covers them. It doesn't. In case of loss or damage, the landlord's policy just covers the building and their own liability from lawsuits. It doesn't cover the renter's belongings.

With more people now renting, all the major insurance companies offer renter's insurance policies. Whether you take out one depends on your risk tolerance because these policies are not very expensive. According to the National Association of Insurance Commissioners, the typical cost is $185 per year.

Surprisingly affordable

"Renter's insurance is a lot more affordable than most people think," said Laura Adams, senior insurance analyst, "Most renters don't realize that their landlord's insurance usually only covers the structure and not the renter's belongings. And even in a safe area, renters can fall victim to theft, fire, water damage or another calamity. Fifteen dollars a month is a small price to pay in order to protect your possessions and liability in a lawsuit."

Like any kind of insurance policy, your cost will depend on what you buy. There are different levels of coverage and you can select the deductible you're comfortable with. The lower the deductible – the amount you have to pay before coverage kicks in – the higher your premium.

What should rental insurance cover? According to insurance experts at the University at Buffalo, a renter's policy should cover personal property against theft, fire and wind damage. It should also cover:

  • Personal liability for accidents of others on your premises
  • Damage to property of others in your care
  • Living expenses if you're forced to vacate the premises during disasters or repairs.

“Acts of God” excluded

Renter’s insurance usually will not cover you for "acts of God", such as floods and natural disasters.

To get a policy, ask friends or fellow tenants for a referral. If you have auto insurance, you may be able to get a discount by going through the same company.

Just like other types of insurance, renter's insurance coverage isn't always a sure thing. Companies are selective about who they insure.

Consumers rate Allstate Homeowners Insurance
Kathleen, of Mooresville, N.C., filed a claim with Allstate in 2010 when her home suffered ice damage during a snowstorm. When she sold her house and rented a apartment, she again turned to Allstate for rental insurance and was quoted $79 a year.

“I'm sure you can imagine my surprise when they called back to tell me I was denied because I filed a claim over two years ago,” she wrote in a ConsumerAffairs post. “Okay, so I filled a claim for a service that I've paid for, for many years, and now I'm being denied because I actually used that service? Will someone please tell me the logic here?”

Kathleen was in a real jam because her apartment building is one that requires tenants to take out an insurance policy.

Even if you are not required by your landlord to take out a renter's insurance policy, it could still be the prudent thing to do. You might not believe your possessions are valuable, but once you start adding up their replacement value, their loss could hit you harder than you think.

With mortgages harder to get, more consumers are renting their homes these days, with rents rising sharply across the U.S.While homeowners who have mortg...

Insurers hit safer drivers with higher premiums, study finds

Rating factors give more weight to education and occupation than driving record

A survey by the Consumer Federation of America (CFA) reaches the surprising conclusion that major insurance companies frequently charge higher premiums to safe drivers than to those who recently caused an accident.

In two-thirds of the 60 cases studied, large auto insurers quoted higher premiums to safe drivers than to those responsible for an accident. And in more than three-fifths of the cases with these higher premiums, the premium quoted the safe driver exceeded the premium quoted the unsafe driver by at least 25 percent.

These higher prices for “good drivers” mainly reflect insurer use of rating factors such as education and occupation that, in a 2012 nationwide survey, over two-thirds of Americans said were unfair.

“State insurance regulators should require auto insurers to explain why they believe factors such as education and income are better predictors of losses than are at-fault accidents,” said J. Robert Hunter, CFA’s Director of Insurance and former Texas Insurance Commissioner.

“Policymakers should ask why auto insurers are permitted to discriminate on the basis of non-driving-related factors such as occupation or education,” he added.

Discriminatory practices

“Unfortunately, the discriminatory practices of auto insurers mainly harm low- and moderate-income drivers,” noted Stephen Brobeck, CFA’s Executive Director. “This damage can be considerable since all states but one require drivers to carry auto insurance, and most Americans need a car to pursue work opportunities,” he added.

CFA priced policies in twelve cities using the websites of the five largest auto insurers – State Farm, Allstate, GEICO, Farmers and
Progressive – who together have over half the private auto insurance market.

It compared premiums quoted to two 30-year old women who each had driven for 10 years, lived on the same street in the same middle-income zip code, and sought minimum liability coverage required by that state.

But these two women differed in several important respects: One was a single receptionist with a high school education who rents, has been without insurance coverage for 45 days, and has never had an accident or moving violation. The other woman was a married executive with a Masters degree who owns a home, has had continuous insurance coverage, and has had an at-fault accident with $800 of damage within the past three years.

There were significant differences among the five major insurers. On the one hand, in every case Farmers, GEICO, and Progressive quoted the safe driver a higher premium than the driver causing an accident. (In several cases, companies refused a quote to the good driver but gave one to the accident-causer.)

On the other hand, in all twelve cities State Farm charged the good driver less. Moreover, in all twelve cities, the rates quoted by State Farm were
either the lowest (6 cities) or the second lowest (6 cities).

“With nearly one-quarter of the private passenger auto insurance business, State Farm dominates the market. If they can be a successful company without using highly discriminatory factors, other large companies should be able to do so as well,” Hunter said.

The full report is available on CFA's website.

A survey by the Consumer Federation of America (CFA) reaches the surprising conclusion that major insurance companies frequently charge higher premiums to ...

Are shareholders bad for consumers?

Nationwide Insurance takes a slight anti-Wall Street stance with its advertising

Car insurance companies are pretty much alike, right? What sets them apart is their marketing.

One might have an Australian lizard as a pitchman, another may have a woman named Flo, but they're all selling a product you are required to purchase and the rates, if based on the same kind of data, are probably going to be in the same ballpark.

So it has been interesting to watch as Nationwide Insurance has launched a new ad campaign that delivers the message, "We put members first, because we don't have shareholders."

And there you have it -- in an industry where consumers increasingly feel like companies are looking for ways not to pay their claims, Nationwide is attempting to set itself apart. It doesn't have to please Wall Street, the company says, just you.

It's mutual

Consumers rate Nationwide Insurance - Auto

Nationwide is making a virtue of its corporate structure. It is what is called a "mutual" insurance company, meaning it is owned by its policyholders. It's similar to a credit union, which is owned by its members, not stockholders.

Does this make a difference when it comes to consumers? Theoretically, it should. A company owned by shareholders, particularly if its shares are traded on Wall Street, is under pressure every quarter to increase its profits so its share price will rise, or at least stay more or less even.

How does an insurance company increase its profits? Like any company it tries to increase the number of customers every month. Since it's probably not going to cut executive salaries, it tries to cut its expenses, and for an insurance company, that means paying fewer claims or becoming more selective about the drivers it insures, in hopes of reducing future claims.

"After 40 years of having State Farm Insurance, they informed us that we are longer able to renew our automatic renewal policy," Alice, of Kissimmee, Fla., wrote in a ConsumerAffairs post. "They told us years ago that they can never cancel our policy for any reason whatsoever. However, if they decide they don't want you any more, they simply change the rules."

State Farm, of course, is also a mutual company.

A difference?

But just how different is Nationwide, and does being a mutual insurance company make a difference? A consumer from Bowling Green, Ky., doesn't think so.

Consumers rate Liberty Mutual - Auto

"I called to get a quote," the poster wrote. "One car accident on your record in the past five years and they will not accept you! Even when I am able to have car insurance through Nationwide, you won't be getting my name under your expensive policy!"

And Nationwide is far from being the only U.S. mutual car insurer. As its name implies, Liberty Mutual is also a mutual company. It, too, draws its fair share of consumer complaints.

"My wife was rear-ended three months ago," Jon, of Delray Beach, Fla., wrote at ConsumerAffairs. "Liberty Mutual has been very slow and unresponsive. We sent them a registered/return receipt detailed claim package requesting diminished value over a month ago and haven't even had the courtesy of a response!"

A state court in West Virginia recently took action against Liberty Mutual when the state's attorney general charged the company was forcing body shops to use "junk" parts to make covered repairs, a violating of the state's consumer laws. In that case, being an insurance company without shareholders didn't seem to be much help to consumers.


But are there any advantages to doing business with a company that doesn't have to please shareholders? While the complaints about mutual insurance companies are not all that different from those about stockholder-owned companies, there might be some advantages.

Consumers rate State Farm Auto Insurance

Nationwide's current ad campaign is primarily about its "vanishing deductible" program. For every year of safe driving (claim-free), $100 comes off the policyholder's deductible. In some cases, mutual insurance companies return excess premiums to policyholders at the end of the year, or make downward adjustments to future premiums.

In the case of credit unions, it seems clear that consumers fare better than they do as customers of a large, corporate bank. While credit unions, like banks, have to make enough to pay for operations, they usually have fewer and lower fees.

In 2011, a grass-roots consumer movement led millions of large bank customers to transfer their accounts to credit unions and small community banks. The underlying message seemed to be that consumers would fare better by avoiding dealings with large, publicly-traded entities that had to please shareholders.

You also see that in the theme of the "buy local" movement. Consumers are urged to spend their money where it will support independent businesses that are part of their community.

Nationwide Insurance, though far from being a local, independent business, appears to be hopping on that anti-Wall Street bandwagon as well.

Car insurance companies are pretty much alike, right? What sets them apart is their marketing.One might have an Australian lizard as a pitchman, another...

Insurance spending: how to get a handle on it

Most people saw their outlays for insurance rise or hold steady last year

It's said that only death and taxes are inevitable. You might want to add insurance to that short list, especially since the new healthcare law will require all of us to be covered

Are you paying more for insurance, less or about the same? According to Bankrate's Financial Security Index, more than a third of consumers in the U.S. saw their overall insurance spending increase last year -- mostly due to rising premiums. In its survey, Bankrate asked people about their household insurance budgets. Relatively few spent less on insurance, suggesting – according to experts -- consumers may be missing out on insurance savings.

The survey says...

The survey results show that 37 percent spent more overall for all kinds of insurance, including homeowners, renters, auto, life and health coverage, while 52 percent spent about the same; just seven percent saw their insurance bill decrease.

Of those whose overall insurance tab rose, 62 percent attributed the increase to a rise in premium costs. Other reasons included: the addition of coverage for a new home, vehicle, boat or RV (12 percent); changes in coverage due to family circumstances, such as marriage or addition to the family (nine percent); and a decision by the consumer to boost coverage on an existing policy (four percent).

Why you may be paying more

Michael Barry, spokesman for the Insurance Information Institute, an industry trade group, says an unusual streak of natural disasters in 2011 almost certainly contributed to a rise in homeowners insurance rates for many during 2012.

"We had Hurricane Irene, the Joplin tornado that was the single biggest insurance event in Missouri history, and widespread winter storms, tornadoes and flooding in interior states like Minnesota," he notes. "While homeowners rates don't move significantly in just one year, when you look at how some of the costliest natural disasters in U.S. history have all occurred in the last decade, this is not a surprise."

Consumer Federation of America's director of insurance J. Robert Hunter has a different prime suspect for the cost increase.

"It's probably health insurance," he says. "That's one that people recognize because a lot of times it comes through their employer, so they have an opportunity to look at various options and think about that policy a little more."

In Hunter's view, the percentage of survey respondents who actually faced higher insurance bills last year was probably higher than the survey shows.

"I'd guess more than half probably had premium increases and just don't realize it," he says. "Consumers are buying insurance in six-month pieces instead of annually, and insurance companies have taken advantage of that. Instead of raising rates 10 percent every two years, they raise them 2.5 percent every six months, and people don't notice that."

Some consumers aren't so sure why they're paying more. Pam of Anderson, SC, says she purchased a term life insurance policy for her husband approximately four years ago after he retired. "New York Life through AARP was happy to draft my checking account for the monthly premiums", she writes in a ConsumerAffairs post. "This month the premium increased with no notification from New York Life - AAPR. When I called to question the increase, NYL would not talk with me because the policy is on my husband. I only wanted to know why the premium increased, no other information. They draft from my account, therefore, I feel I have the right to ask why the draft amount increased!"

Ken of Pasadena, TX, has an auto insurance policy with Allstate. "I just received my premium statement," he writes in a ConsumerAffairs post. "Last year it went up 5%. This is to be expected, all prices increase in this economy. This year, my premiums went up 20%! I have been calling my agent and he is unable to find a cause for this jump. There was no warning this was about to happen, there is no explanation of why. This is unprofessional. I will be moving my account to another insurance carrier."

Inertia could cost you

Hunter says insurance companies know we dislike shopping for insurance, don't understand our policies, and so are prone to park ourselves with one carrier.

"There's a huge inertia in insurance," he says. "People are afraid if they move from a company after 20 years and then have an accident, the company might cancel them, so they pay the occasional $50 (increase) and stay put."

Now that insurers have the technology to identify those inert clients through online buying and other behaviors, chances are if you appear willing to spend a little more, you probably will, Hunter says.

Reining in costs

"Shopping is the key," says Hunter. "When I was insurance commissioner in Texas, we got 25 regular people to bring in their auto policies and 25 their home insurance policies, gave them our buyers guide and a telephone. In one hour, the average person saved $125 per car and $85 on home insurance. We called it the $100 hour."

Barry, of the Insurance Information Institute, offers these tips to save on insurance without unduly sacrificing on coverage:

  • Increase your homeowners deductible. "A lot of people can achieve double-digit percentage decreases in their homeowners insurance premiums by going from a $500 to a $1,000 deductible, if you're in the position to pay the first $1,000 out of pocket," he says.
  • Adjust your auto policy options. To trim your auto insurance bill, ditch collision coverage rather than comprehensive, especially if you drive an older vehicle. "Collision should be the first to go because it's the most expensive," Barry says. "I would recommend keeping the comprehensive coverage because it covers so many events such as a tree falling on a car or the car being flooded."
  • Bump up your auto deductibles. As with your homeowners, it may make sense to increase your auto insurance deductibles, depending on how much risk you're willing to assume. "That will almost certainly result in premium savings," Barry says.
  • Bundle home and auto policies. Most insurers offer a discount to customers who purchase more than one type of policy with them.
  • Consider a new term life insurance policy. Premiums for term life policies have dropped significantly in recent years. If you currently own a waning term policy, you may be able to purchase the same or better coverage for less by shopping around.
It's said that only death and taxes are inevitable. You might want to add insurance to that short list, especially since the new healthcare law will requ...

Auto accidents often lead to unpleasant encounters with insurance companies

After an accident it might be wise to go to the hospital and call a lawyer

Being in an auto accident is a traumatic event. Even if no one is seriously hurt there can be lasting repercussions, especially if you encounter resistance during the insurance claims process. And that appears to be happening a lot, industrywide.

Diana, of Fresh Meadows, N.Y., reports being in an accident on November 29.

"I was making a left turn in the proper turning lane when a minivan struck me on the right hand side attempting to make a left turn from a middle lane," Diane wrote in a recent ConsumerAffairs post. "Laws of driving, we know this is not allowed!"

Geico insured them both

Consumers rate GEICO

To make matters worse Diana said the driver of the other car left the scene, but not before she got the make of the car and the license number. She phoned the police and initiated an accident report. She said she also called her insurance company, Geico, providing pictures of her car at the scene. Police quickly tracked down the other driver and Diana assumed all was well. But, she said, the other driver was also insured by Geico.

"Geico inspected the other party's car and found that he had past damage to his minivan but there was no concrete evidence that he had hit my car and now is denying the accident ever happened," Diana writes. "Now he is saying he never touched my car. I have the paint on my car still to prove it and pictures. Geico wants to dismiss this case."

Takeisha, of Ft. Lauderdale, Fla., writes that she was also involved in an accident. Though she says she was not at fault the company insuring the other driver initially refused to pay. She said she was forced to cover the repairs out-of-pocket until she was finally reimbursed. But it turned out she wasn't finished paying.

Escalating premiums

Consumers rate Allstate Auto Insurance

"I had zero fault for the accident yet my insurance premium at Allstateis now more than 200 percent more than it was before the accident," Takeisha wrote. "I have a good driving record. I am over 40 yet my premium is like that of a teen driver. I have paid for insurance and never used it . Why am I being penalized for something beyond my control?"

J.B., of Richmond, Va., reports a two-year wrangle with Progressive after a serious accident injured both him and his children.

"Progressive attempted to allow the statute of limitations to run out, thereby having no obligation to pay me a dime," J.B. wrote. "I had to file a Warrant in Debt to wrangle a settlement from them, which did produce a low ball offer, and they would not offer more."


Consumers rate Progressive Insurance

J.B. said he went to court to get a higher settlement and said the court granted it, but that the company has yet to pay. His advice to those who get in an accident:

"Get a lawyer, day one," J.B. wrote. "That is the way the lawyers have written the statutes, ensuring their own business."

Lawyers at Lane & Lane, in Chicago, would probably agree with that advice. In the firm's blog, attorneys also recommend that you go to the emergency room, even if you don't feel hurt.

Getting immediate medical attention creates a paper trail you will need should things go sour with the insurance company, as an increasing number of consumers have found.

Being in an auto accident is a traumatic event. Even if no one is seriously hurt there can be lasting repercussions, especially if you encounter resistance...

Insurance Companies Waive Hurricane Deductibles in PA

Governor praises 'proactive' response

Residents of Pennsylvania who suffered damage in Hurricane Sandy have gotten some good news. Insurance companies will not enforce hurricane deductibles that normally bear on homeowners' policies.

"Insurance deductibles could have added significant costs to Pennsylvanians already struggling to clean up and rebuild after Hurricane Sandy," said Pennsylvania Gov. Tom Corbett. "Insurance companies have deployed catastrophe teams to Pennsylvania and they have been advised that hurricane deductibles should not be applied to any homeowner's insurance claims."

This is a departure from the norm. Most homeowners' policies carry special "hurricane," "tropical storm" or "named storm" deductibles based on a percentage of a property's insured value. These deductibles typically range from one percent of a home's insured value to five percent.

Proactive response

"We are very pleased with the initial, proactive response we're seeing from insurance companies and their commitment to helping Pennsylvanians recover," Pennsylvania Insurance Commissioner Michael Consedine said. "Insurance companies are experts in managing risk and responding to disaster. We will actively monitor the insurance industry to ensure they are fulfilling their commitments to their policyholders."

That doesn't mean there won't be any out-of-pocket costs. Homeowners, by and large, will still be responsible for paying their standard homeowner deductibles for wind and storm-related claims. They won't be hit with higher hurricane costs.

Regardless of whether you live in Pennsylvania or another northeast state that was in Sandy's path, if you have property damage from the storm you should contact your insurance company as soon as possible.

Here are some additional tips to help when filing a claim:

  • Before calling your insurance company, try to locate your policy number and other relevant information. Your company representative will prepare a "Notice of Loss" form and an adjuster will be assigned to assist you. Ask for a timeline on when your agent can help you.
  • Take photographs/video before clean-up or repairs. If you have already taken your damaged items out of the house, take pictures of the debris. After you've documented the damage, make the repairs necessary to prevent further damage, but do not make any permanent repairs until an adjuster or company representative is able to inspect the damage and your carrier approves the repairs.
  • Save all receipts. Keep a diary of all discussions with your agent or carrier. Cooperate fully with the insurance company. Ask what documents, forms and data you will need to file the claim.
Resident of Pennsylvania who suffered damage in Hurricane Sandy have gotten some good news. Insurance companies will not enforce hurricane deductibles that...

Consumers Are Generally Satisfied with Their Auto Insurance Claims Settlements

J.D. Power says satisfaction is up even though consumers are paying more

We often hear how unhappy some people are with the settlements they received from their auto insurers.

Take Gloria of Acworth, GA, who is insured by Allstate. “After over 30 years with no insurance claims, I had one minor accident backing out of my driveway,” she says in a ConsumerAffairs post. “Allstate paid $1105 for the repair of my neighbor's vehicle and jacked my premiums $353 every 6 months for the next 3 years. My premium is going up $2118 because they paid an $1105 claim.”

Or John of Congers, NY, regarding his experience with AAA: “Car broke down in Englewood Cliffs and was towed to White Plains. Front bumper was torn from car during the tow. AAA first accused me of doing the damage myself,” he wrote in a ConsumerAffairs post, “then lied and said car was inspected by me and tow truck driver which it was not. Car was towed to an AAA garage, who found the damage and quoted a repair. Then AAA asked me to settle for $150 for a $900 repair job.”

Despite these and other complaints, the J.D. Power and Associates 2012 U.S. Auto Claims Satisfaction Study found that claimant satisfaction with their auto claims experience has increased from last year, driven primarily by an improvement in their perceptions of the fairness of settlement terms.

The study measures claimant satisfaction with the claims experience for auto physical damage loss. Depending on the complexity of the claim, a claimant may experience some or all of the following factors measured in the study: first notice of loss; service interaction; appraisal; repair process; rental experience; and settlement.

Auto-Owners Insurance on top

For a fifth consecutive year, Auto-Owners Insurance ranks highest in overall satisfaction with a score of 887 (on a 1,000-point scale). Following Auto-Owners Insurance are Amica Mutual and Erie Insurance in a tie (876) and Automobile Club of Southern California (AAA) and COUNTRY in a tie (874).

Overall claimant satisfaction has increased significantly to 852 index points -- a 6-point improvement from 2011. Satisfaction has increased in five of the six factors year over year, with settlement, the most important factor contributing to overall satisfaction, increasing by nine points to 846.

Settlement satisfaction has increased by 16 points among claimants with a total loss. The average total loss settlement has increased by nearly $690, compared with 2011, driven by increasing used-vehicle values throughout much of 2012.

"As used vehicle sale prices increase, the value of the loss settlement also increases," said Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates. "According to our Power Information Network, a database of vehicle sales transactions, used-vehicle sales prices peaked in May and June of this year, averaging nearly $18,500, compared with approximately $17,700 in January of this year."

Rising costs

Satisfaction with settlement has improved overall despite claimants spending more of their own money. The average out-of-pocket costs incurred have increased by $26 from 2011, to $403. Out-of-pocket costs include claimants' deductible and any additional expenses incurred, such as rental car or repair costs. Settlement satisfaction relies heavily on claimants' perceptions of the fairness of the settlement. In the 2012 study, this is an indication that insurers are managing claimants' expectations more effectively, as satisfaction has increased despite the increase in costs incurred by claimants.

"Providing exceptional customer service is an important element in driving the perception of being treated fairly," said Bowler "Claimants' perception of fairness is more than just the amount of the settlement, especially for repairable vehicles, where claimants are more focused on their vehicle being returned in its pre-accident condition. Focusing on keeping claimants updated and quickly communicating what will be covered in the claim also have a major impact on their perceptions of how fairly they are treated."

Big improvement

One area in which insurers improve the most this year is increasingly offering more options to keep claimants informed of the progress of their claim, with 64 percent of claimants indicating having been offered options, compared with 61 percent in 2011.

Failing to explain and update claimants adequately may lead to their questioning the settlement offer and potentially increasing the rate of negotiations, which negatively impact overall satisfaction.

The 2012 U.S. Auto Claims Satisfaction Study is based on responses from more than 12,508 auto insurance customers who settled a claim within the past 6 months. The study excludes claimants whose vehicle only incurred glass/windshield damage or was stolen, or who only filed roadside assistance claims. Survey data were collected between November 2011 and September 2012.

We often hear how unhappy some people are with the settlements they received from their auto insurers. Take Gloria of Acworth, GA, who is insured by Alls...

Insurance Company Fined for Dropping Good Drivers

Massachusetts law says drivers with clean records can't be dropped

Auto insurance companies are all about risk management. If you are considered too much of a risk, then you might be at risk of being dropped as a customer.

It happened to Hose, of Fort Mill, of Ft. Mill, SC, who says State Farm dropped him after nine years when he had two claims in two years. He doesn't understand why.

“Why pay for, and have the law mandate insurance if you're dropped when you use the coverage you pay for,” Hose asked in a ConsumerAffairs post. “It's the biggest legal scam going. Then, once they've dropped you, they can code you which makes your next policy cost higher.”

Sometimes consumers find they are not renewed, even though they have made no claims. Insurance companies sometimes do that if there has been an increase in claims in a particular zip code, for example. The company tries to manage its risk by insuring fewer people.

But companies that do that in Massachusetts can run afoul of the law. Massachusetts has a state law called the “clean-in-three” rule. If you haven't had an accident or traffic violation in three years, your insurance company can't drop you.

Two-year investigation

In 2010 Massachusetts Attorney General Martha Coakley's office began investigating Metropolitan Property and Casualty Insurance Company’s (Met P&C) termination of more than 2,600 Massachusetts automobile insurance policies and found some of them violated the law since the policyholders had clean driving records. As a result, the insurance company is required to pay close to $345,000 in restitution to consumers and $50,000 to the Commonwealth.

Under the terms of the settlement with the state, Met P&C will pay 56 consumers a total of $35,000 after their policies were allegedly terminated in violation of state law, and were unfairly assigned to the state’s more expensive residual market -- the Massachusetts Automobile Insurance Plan (MAIP). The company will also pay an approximate total of $310,000 to 2,583 policyholders who were wrongfully non-renewed but found alternative insurance in the voluntary market.

Along with an additional $50,000 in payments to the state, Met P&C has agreed that it will abide by Massachusetts' “clean-in-three” law in the future.

  Auto insurance companies are all about risk management. If you are considered too much of a risk, then you might be at risk of being droppe...

Dog Bite Claims Push Up Home Insurance Premiums

Medical bills and jury awards up 53 percent in eight years

There is no doubt dog is man's best friend, but she can be expensive. There's food, flea and tick medicine and periodic visits to the vet, which can be as expensive as some trips to the doctor.

Then there's your insurance premiums, one of the hidden costs of living with a dog. The Hanover Insurance Group says dog bite claims are on the rise and accounted for more than one-third of all homeowners insurance liability claim dollars in 2011.

If you have a dog living in your household, your insurance company may increase your premium to reflect that. The Insurance Information Institute reports the cost of dog bite claims -- reflected in both medical costs and jury awards -- rose 53.4 percent from 2003 to 2011.

Some breeds aren't covered

While dog bites are covered under most homeowner liability policies, some policies exclude certain breeds. Before adopting, rescuing or buying a dog, The Hanover recommends checking with your insurance agent to see if the breed you are planning to add to your household can be covered.

Some dog owners have taken the precaution of purchasing an umbrella policy to add additional liability coverage. These policies kick in when a liability claim exceeds the normal homeowners policy coverage. Mark Desrochers, president of The Hanover's personal lines business, says a one million dollar umbrella policy can cost between $100 and $300 per year.


If you don't have a dog but are planning on getting one, the Insurance Information Institute offers these tips for reducing the risk of dog bites:

  • Consult with a professional (e.g., veterinarian, animal behaviorist or responsible breeder) to learn about suitable breeds of dogs for your household and neighborhood
  • Spend time with a dog before buying or adopting it. Use caution when bringing a dog into a home with an infant or toddler. A dog with a history of aggression is inappropriate in a household with children
  • Be sensitive to cues that a child is fearful of or apprehensive about a dog. If a child is or seems fearful or apprehensive, delay acquiring a dog. Never leave infants or young children alone with any dog
  • Have your dog spayed or neutered. Studies show that dogs are three times more likely to bite if they are not neutered
  • Socialize your dog so it knows how to act with other people and animals
  • Teach children to refrain from disturbing a dog that is eating or sleeping
  • Play non-aggressive games with your dog, such as "go fetch." Playing aggressive games like "tug-of-war" can encourage inappropriate behavior
  • Avoid exposing your dog to new situations in which you are unsure of its response
  • Never approach a strange dog and always avoid eye contact with a dog that appears threatening
  • Immediately seek professional advice from veterinarians, animal behaviorists, or responsible breeders if your dog develops aggressive or undesirable behaviors

Of course, most dogs are friendly and loving creatures and the insurance industry acknowledges that. Still, they're paid to look at the risks and in recent years, the risks have been rising. The numbers don't lie.

  There is no doubt dog is man's best friend, but she can be expensive. There's food, flea and tick medicine and periodic visits to the vet, ...

Many Consumers Confused About Insurance Policies

The danger is learning about policy limits at the worst possible time

Insurance is one of those things you pay for every month but hope you never use. But when you are in an auto accident or your home is damaged, adequate coverage for your loses and liabilities is indispensable.

However, many consumers purchase insurance policies without fully understanding what they cover. They learn about the limitations in their policy at the worst possible time.

"I pay for free towing for a few different reasons, being I am a single female living in the southeast Houston area," Charity, of Pasadena, TX, wrote in a ConsumerAffairs post. "Now, when I think of free towing, I am under the impression that if for any reason, I should have to have my vehicle towed, it will be taken care of by State Farm because I pay for it with my policy. Wrong! I had to have my car towed due to a blown head gasket and manifold intake gasket."

More costly surprises

And there can be other more serious and costly surprises if you aren't clear what your policy covers and what it doesn't. Nieves, of Worthington, Ohio, got a nasty surprise when his basement flooded.

"I'm not an agent and didn't know until the crisis that I had to have an additional water back-up plan, which my agent finally told me it would have only cost me $35 a year," Nieves wrote. "His staff has offered me all kinds of marketing with regards to my car and knew I had a finished basement and never told me I needed sewage, water back-up etc. I thought this was included. I am not the agent here or his staff."

But ultimately, consumers like Nieves have to take the responsibility to educate themselves about insurance. True, a good agent will ask lots of questions and make suggestions but consumers should take the initiative.

Consumers often in the dark

But many times they don't. A recent survey by MetLife found that 30 percent of homeowners believe their insurance coverage is based on the current market value of their home. Actually, the available coverage limit for homeowners insurance is based on the cost to rebuild the home, a mistake that could lead to confusion for homeowners trying to evaluate whether they have the right amount of insurance.

An additional 46 percent don’t know how much coverage they have for their homes’ contents, such as furniture and clothing. Additionally, many aren’t aware of coverage overlaps that may exist, which could result in opportunities to save money.

When it comes to auto insurance, consumers need to know exactly what coverages the policy contains. If a car is being financed, make sure that the payoff in the event of a total loss will be adequate to pay the amount owed. This is a major consideration for leased vehicles as well.

But don't over-insure

Part of getting educated about insurance policies means not paying for coverages you don't need. In some cases, opting for a higher deductible will mean you will pay more out of pocket in the case of an accident, but will result in lower monthly payments.

Insurance, after all, is shared risk. If you expect the insurance company to take on all the risk, you will pay a higher premium each month. But if you are willing to shoulder some of the risk -- raising the deductible for a claim to $1000, for example -- it lowers your monthly costs.

Just be sure the critical needs in both a homeowners and auto policy are covered and you know their limitations.

Insurance is one of those things you pay for every month but hope you never use. But when you are in an auto accident or your home is damaged, adequate cov...

Five Ways To Save Money On Homeowners Insurance

Taking the right steps can reduce the monthly cost of owning a home

Most people pay for their homeowners insurance from an escrow fund managed by their mortgage servicer. It's part of their monthly house payment and they probably don't think much about it.

But they should. Insurance costs will vary significantly, depending on where you live, what kind of policy you have and how much your home is worth. Here are some ways insurance industry experts suggest keeping your rates as low as possible:

1. Shop around

It may seem obvious that getting more than one insurance quote would be helpful in getting the best price, but a surprising number of homeowners don't bother. They go with a particular agent or company without doing any price comparison.

Actually, shopping isn't all that hard. According to the Insurance Information Institute, states often make information available on typical rates charged by major insurers and many states provide the frequency of consumer complaints by company. When comparing prices, however, make sure you're comparing policies that provide the same coverage.

2. Increase your deductible

Insurance is something to cover you in the unlikely event you suffer major damage to your home. But some homeowners want a policy that covers them 100 percent, so that they have no out of pocket expense for any kind of damage.

That's very expensive insurance. By raising your deductible as much as you can and paying for minor repairs out of pocket, you'll save hundreds of dollars each year, more than enough to handle the minor repairs. If your home suffers a disaster, yes you will pay more out of pocket but the odds are your home isn't going to suffer a disaster. By assuming some of the risk, you save money.

3. Insure it for the right amount

How much would it cost to rebuild your house if it burned to the ground? Knowing that number is critical to not over- or under-insuring your home. In this market many new homeowners bought distressed properties for much less than what it cost to build an identical house. They should consider the replacement cost, not the purchase cost. By the same token, remember that part of the cost of your home is the land, which doesn't need to be insured.

4. Bundle

If you have done all of the above, you will still want to get the best rate possible from your insurer. While a lot of factors go into setting rates for insurance, most companies will provide some kind of discount if you insure your automobiles as well as your home with them. Some discounts can be as much as 15 percent. Just be sure that the combined price is lower than if you bought different coverages from different companies.

5. Protect your credit score

Insurance companies are increasingly using credit information to price homeowners insurance policies. To protect your credit standing, pay your bills on time, don't take more credit than you need and keep your credit balances as low as possible. Check your credit record on a regular basis and have any errors corrected promptly so that your record remains accurate.  

Most people pay for their homeowners insurance from an escrow fund managed by their mortgage servicer. It's part of their monthly house payment and they pr...

Most Expensive States For Car Insurance? Not What You'd Expect

Michigan, Louisiana, Kentucky have the highest rates

You might think the highest car insurance rates would be in the big crowded states -- the ones with lots of traffic, lots of accidents, lots of car thieves and so forth.

But you'd be wrong, for the most part. 

A new study finds that Michigan residents face the steepest car insurance cost burden in the nation, followed by Louisiana, Kentucky, West Virginia and Mississippi.

The study, conducted by, a Bankrate company, found that the typical Michigan household pays a whopping eight percent of its annual income for car insurance. divided the median cost for car insurance by the median household income in each state (plus the District of Columbia) to come up with its list of the most and least expensive states.

The least expensive state is Massachusetts, where the typical household pays 1.43 percent of its annual income for car insurance. North Carolina, Hawaii, Alaska and Oregon round out the five most affordable states.

Click here for a comprehensive breakdown of the car insurance costs in all 50 states, plus the District of Columbia:

“The laws in each state vary widely,” explained John Egan of “For example, part of the reason why Michigan is so expensive is that it’s the only state that guarantees unlimited personal injury protection.

"While you’re probably not going to move to a new state just because of car insurance costs, the most important thing to remember is that – regardless of where you live – you can get a better deal than the Average Joe by shopping around,” Egan said.

To determine median car insurance rates, used a proprietary system developed by Quadrant Information Services, Inc. that tracks the rates of car insurers in each state. Median car insurance rates were based on actual customer profiles of online car insurance shoppers that can include multiple drivers, multiple vehicles and other variables.

The car insurance data was collected in June 2012. The income data came from the 2010 Census.

You might think the highest car insurance rates would be in the big crowded states -- the ones with lots of traffic, lots of accidents, lots of car thieves...

Should You Have Renters Insurance?

If you have a lot to lose, it can be a prudent purchase

If you own a home with a mortgage, the lender requires you to have a homeowners insurance policy. While some landlords require tenants to take out renters insurance, most don't.

Should you have renters insurance? It depends. In some cases it could provide protection and peace of mind at a fairly reasonable cost. The average renters insurance policy cost only $184 per year in 2009, ccording to the National Association of Insurance Commissioners.

But according to the Insurance Information Institute(III) only 31 percent of renters buy renters insurance, according to an survey conducted in May, 2012.

Assess your needs

For those considering renters insurance, a good place to start is a needs assessment, comparing that to what a policy actually covers.

"Renters insurance provides financial protection against the loss or destruction of your possessions when you rent a house or apartment," said Jeanne M. Salvatore, III's senior vice president for Public Affairs. "While your landlord may be sympathetic if you experience a burglary or a fire, your possessions are not covered by your landlord's insurance.”

Under most renters insurance policies your belongings are covered against losses from fire or smoke, lightning, vandalism, theft, explosion, windstorm and water damage, not including floods. But if your upstairs neighbor's bathtub overflows, ruining items in your apartment, you're covered.

Another argument for renters insurance is its liability coverage. Just as a homeowners policy protects the homeowner from damages when someone is injured, renters insurance covers your responsibility to other people injured at your home or elsewhere by you, a family member or your pet and pays legal defense costs if you are taken to court.

Additional living expenses

Most policies cover your additional living expenses (ALE) if you are unable to live in your home because of a fire or other covered peril. ALE pays for hotel bills, temporary rentals, restaurant meals and other expenses you incur while your home is being repaired or rebuilt. However, not all coverage is the same and there are limits.

Probably the biggest consideration in deciding on renters insurance is risk. What do you have to lose?

For example, if you're a college student with limited possessions, protecting those possessions may be less critical than if you are a professional with nice furniture, a big screen TV and an extensive wardrobe.

If you have expensive jewelry, furs, sports or musical equipment, or collectibles, the need for insurance is obviously greater. But keep in mind you may have to add what's called a “floater” to your policy to cover these items.

Most standard renters policies offer only a limited dollar amount for items of extra value. A floater is a separate policy that provides additional insurance for your valuables and even covers them if they are accidentally lost.

If you own a home with a mortgage, the lender requires you to have a homeowners insurance policy. While some landlords require tenants to take out renters ...

Report: Insurers Can Manipulate Computer Systems to Broadly Underpay Injury Claims

Court documents shed light on insurers' huge but questionable savings

Large insurance companies routinely "lowball" personal injury claims to squeeze consumers and generate large profits, according to a report released  by the Consumer Federation of America (CFA).

CFA said that computerized claims’ systems used by most of the nation’s largest insurance companies can be easily adjusted to make broad-scale “lowball” claims’ payments to injured consumers that are less than what they should receive under their insurance policies. The primary author of the report is an expert on insurance claims’ practices and was a longtime insurance executive.

“This report is a wake-up call for consumers and regulators who are not aware of the many ways that computer claims’ software  can be manipulated to produce unjustifiably low injury payments to consumers and tens of millions of dollars in illegitimate ‘savings’ for insurers,” said Mark Romano, CFA’s Claims Project Director.  Romano was the “subject matter expert” on the Colossus injury claims’ evaluation system at Allstate and Encompass insurance companies for almost ten years. Colossus, which is the dominant claims’ system in the marketplace, is sold by Computer Sciences Corporation (CSC).

“When CSC and its competitors talk publicly about computer-based claims’ systems, they stress that the programs allow insurers to more consistently evaluate bodily injury claims,” said Romano.  “Consistency is a legitimate goal, but these companies tell a different story behind closed doors.   Software marketing representatives acknowledge that the real reason insurance companies are willing to invest millions in these systems is that they can dial down claims’ payments to thousands of consumers at a time, regardless of whether these payouts are fair.”

Tuned for profit

The report details the history of the use of Colossus and similar software products by insurance companies.  It provides considerable information about how these programs are set up, “tuned” to reach particular claims’ payment monetary goals and adjusted over time. 

The report also identifies specific techniques that insurers can use to directly and indirectly produce “lowball” claims:

  • Directly reduce payments by a predetermined amount across-the-board, without determining whether this will lead to unjustifiably low payments for individual claims.
  • Selectively remove higher-cost claims from data used to determine the acceptable range of payments for particular injuries.  This has the effect of lowering payments for all claims of this type.
  • Require insurance adjusters without medical training or credentials to second-guess medical professionals by altering injury determinations, thus dictating lower payments for certain injuries.
  • Encourage adjusters to downplay or even ignore the likelihood that injured consumers will need future medical treatment or will be permanently impaired, thus lowering payouts.
  • Encourage adjusters to determine that drivers are partly at-fault for the auto accident that injured them, even when they may not be.

“Many of the concerns about Colossus and similar programs have focused on the potential for insurers to manipulate these systems directly in order to reduce claims’ payouts,” said Romano.  “But insurers can also use many techniques to unjustifiably lower payments in a more subtle manner, by putting biased or incomplete information into the system.”

The report includes excerpts from recently released court records in a major class action lawsuit, Hensley v. Computer Sciences Corporation, that reveal disturbing information about how Colossus and similar products are marketed to and used by insurance companies.

“These documents show that most of the nation’s top insurers used the Colossus system in ways that put millions of American consumers at risk of not getting the claims payments that they paid for with their premiums,” said J. Robert Hunter, CFA’s Director of Insurance and former Federal Insurance Administrator and Texas Insurance Commissioner.  “The documents also reveal, unfortunately, that top executives at these companies violated their obligation to deliver fair claims’ payments to their own policyholders on a huge scale, in order to increase profits.”

ormer Industry Executive Details Claims’ Tactics That Shortchange ConsumersNewly Released Court Documents Reveal Huge and Questionable Insurer Clai...

Feds Urged To Probe 'Forced-Placed Insurance' By Mortgage Companies

Mortgage lenders increasingly purchase expensive insurance policies for homeowners

If you have a home mortgage, you are required to carry homeowners insurance. In nearly every case, the premiums are paid from an escrow account by the mortgage servicer.

Increasingly, homeowners like Tamara, of Houston, Tex., have complained that the mortgage company unilaterally insures the property and charges the homeowner. In Tamara's case, she said her premiums had always been paid out of escrow.

“One year we received a notice that Bank of America was attaching their own insurance because ours had been cancelled the year before,” Tamara wrote in a ConsumerAffairs post. “We never received any notice of this from our carrier or the bank until they attached their own insurance. They claimed they paid our home insurance from escrow, the money was definitely gone, but the carrier said they never received it.”

Calling on feds to investigate

The National Consumer Law Center is calling on the Consumer Financial Protection Bureau to investigate what it calls “forced-placed insurance” (FPI), calling it a growing problem for both borrowers and investors.

FPI, also known as lender-placed insurance, is insurance placed on the borrower’s home when the borrower fails to maintain their own insurance policy or provide evidence of insurance as required by the loan agreement.

FPI is a group credit insurance policy sold to the lender or loan servicer and names the lender or loan servicer as the insured. The lender or servicer pays the premium for the insurance when the coverage is placed and then bills the borrower for the FPI premium.

Profitable tactic

The National Consumer Law Center says the practice is increasing because it is lucrative for the lenders.

“FPI is much more expensive than regular, voluntary homeowners insurance—up to ten times more expensive,” the consumer group said in a report. “Because the additional cost of FPI is normally added to a homeowner’s mortgage payments, the high cost of this type of insurance can drive a borrower into default or prevent a borrower who is already in arrears from catching-up on missed payments. The difference in cost, however, is unjustified.”

The group notes that the recent mortgage abuse settlement federal and state governments reached with five major lenders specifically called for reducing instances of FPI. It says Fannie Mae has also revised its servicing guidelines in an attempt to address the problem.

If you have a home mortgage, you are required to also carry homeowners insurance. In nearly every case, the premiums are paid from an escrow account by the...

Staying Healthy Costs More, So Does Dying

Two reports suggest you're paying more either way

Whether you're living or dying, it's costing you more. A report from consulting and actuarial firm Milliman, Inc., shows health care costs for families are up nearly seven percent in one year.

At the same time, Nursing Economic$, a medical journal, examines the escalating expenses incurred in the process of dying in a special May/June 2012 issue.

Healthcare costs -- mostly insurance premiums paid through employer-sponsored programs -- rose for the typical family to an average of $20,728 this year, according to Milliman. While the 6.9 percent increase over 2011 is the lowest rate of increase in the ten years of this study, the $1,335 increase surpasses last year's record of $1,319.

Illustrates the challenge

"The average rate of increase this year dips below seven percent for the first time since we began analyzing these costs, but the total dollar increase is still the highest we have seen," said Lorraine Mayne, principal and consulting actuary with the Salt Lake City office of Milliman. "This helps illustrate the challenge of controlling healthcare costs. When the total cost is already so high, even a slower rate of growth has a serious impact on family budgets."

Families may be surprised to learn their health care costs have reached $20,000 since most only pay part of it. Their employers pick up the rest.

The study notes the future of healthcare remains uncertain, as the constitutionality of the Affordable Care Act is being decided by the U.S. Supreme Court. However, the report notes that, to date, the Act has had only a limited effect on healthcare costs for families covered by an employer-sponsored PPO plan. Longer term, the implications may be more pronounced, researchers say, and will depend on a number of changing and interrelated factors.

"We face a number of different potential scenarios depending on the future of reform," said Chris Girod, principal and consulting actuary with the San Diego office of Milliman. "We have tried to map out what those different scenarios may mean for consumers, employers, care providers, and the government."

High cost of dying

The special issue Nursing Economic$ examines the skyrocketing costs, the discomfort people experience in talking about death, and the emotional strain of end-of-life care. Six research reports are also presented. The authors outline alternatives to the care individuals usually receive at the end of life.

For example, in an article entitled "How Can We Afford To Die," the authors maintain that the U.S. cannot sustain society’s proportional cost commitment to end-of-life care as the baby-boomer generation ages.

"These crises beg the question: How does the United States deal with the substantial costs incurred in the last 6 months of life?" the authors ask.

The issues will get a thorough airing at the 5th Nursing Economic$ Summit, "June 6, 2012, in Washington, DC.

"Now is the time to bury past demons and discussions surrounding 'death panels' and replace them with conversations on progressive approaches to expanding hospice and palliative care, and the use of advanced directives, like living wills, in the United States," said Donna Nickitas, Nursing Economic$ editor.

Whether you're living or dying, it's costing you more. A report from consulting and actuarial firm Milliman, Inc., shows health care costs for families are...

April a Costly Month For U.S. Insurance Companies

Survey puts losses from tornadoes at $1 billion

April was a month of wild, destructive weather in the U.S., especially in the Midwestern states.

During the month's most notable outbreak, multiple central states sustained widespread tornado, hail and wind damage. At least 94 tornado touchdowns were recorded during a 72-hour stretch.

In Kansas, an EF-3 tornado just outside the city of Wichita affected at least 777 homes and 165 businesses. Additional tornado damage occurred in southwest Iowa and northwest Oklahoma, killing at least six people. The economic toll was also staggering.

A report by Impact Forecasting shows the series of severe weather events across central and southern sections of the United States caused upwards of $1 billion in insured losses. Economic losses were even higher.

Consumers feel it

This is relevant to consumers because major losses by insurance companies are usually passed on, in the form of higher premiums or cancelled policies. Even consumers living outside the recent area of destructive impact can feel the impact.

"Without notice, Allstate increased our home owners insurance 24 percent due to 'weather related claims,'" Ray, of Amherst, N.Y., wrote in a ConsumerAffairs post. "There has been no significant weather event in this area since the ice storm of 2007. Adding to the anger is that our insurance rep failed to inform us of the increase while visiting beforehand to review our policy and was non-responsive when asked for some notice from Allstate justifying the increase."

Tina, from Tennessee, says she filed two weather-related claims with State Farm, one in 2008 and one last year.

"We received a letter from them stating that as of May, we would no longer have homeowners with them - they were canceling our insurance because of the two claims," Tina writes. "Really? They are weather-related! Wind and hail! Not neglected home!"

A claim is a claim

But in a numbers-oriented industry like insurance, a claim is a claim. Last month Texas opened an investigation into State Farm's cancellation of 11,000 homeowner policies.

The Impact Forecasting report says a severe weather outbreak in Texas, which comprised at least 21 tornadoes and widespread hail, damaged more than 1,100 homes alone in the greater Dallas-Fort Worth metro region. Various insurers received at least 105,000 claims with payouts in excess of $650 million.

"While not as substantial as the historic 2011 season to this point in terms of overall losses, the 2012 severe weather season has certainly caused significant damage across portions of central and southern sections of the United States," said Steve Jakubowski, President of Impact Forecasting.

While weather damage so far this year has been severe, it may just be beginning. Tornado frequency data dating to 1991 indicates that May is typically the most active tornado month of the year in the U.S., which Jakubowski says is a warning to all consumers to remain aware of potential storm threats.

April was a month of wild, destructive weather in the U.S., especially in the Midwestern states.During the month's most notable outbreak, multiple centra...

Texas Tangles With State Farm Over Policy Cancellations

Company sues attorney general over investigation

Texas Attorney General Greg Abbott and State Farm, the state's largest home insurer, are locking horns.

It all started when State Farm notified the Texas Department of Insurance that it was dropping some 11,000 Texas policyholders, specifically those living in the Gulf Coast counties of Orange, Jefferson, Chambers, Brazoria and Galveston.

On April 16 the Attorney General’s Office sent civil investigative demands – a type of civil subpoena – to State Farm Lloyds of Texas seeking information about the company’s decision not to renew more than 11,000 Gulf Coast policies. Late last week, State Farm filed a lawsuit against the Attorney General’s Office in an effort to block the investigation.

No documents

Consumers rate State Farm

To date, Abbott says State Farm Lloyds has not produced a single document in response to the subpoenas issued by the Attorney General’s Office.

“The largest issuer of homeowners insurance in Texas has filed a lawsuit in an attempt to prevent the Attorney General’s Office from investigating its non-renewal of thousands of residential property insurance policies along the Gulf Coast,” Abbott said. “Given the number of Texans that are affected, we want to ensure that State Farm complies with the law. If State Farm has not done anything wrong, it’s certainly curious that they would go to court just to avoid the State’s subpoenas.”

State Farm, which insures about one and a quarter million Texas homeowners, cancelled the policies effective May 1. Its suit against Abbott's office this week complains that the subpoena is too broad and amounts to "a fishing expedition."

Abbott says his office opened the investigation last month to determine if State Farm engaged in deceptive practices when it notified Texas policyholders of the cancellations.

Texas Attorney General Greg Abbott and State Farm, the state's largest home insurer, are locking horns.It all started when State Farm notified the Texas ...

Survey: Big Jump In Consumers Switching Car Insurers

Consumers switch even though savings are declining

Fewer consumers are shopping for auto insurance, but of those who do, 43 percent switched from one insurance company to another in the last 12 months, according to J.D. Power and Associates.

It's the largest number of consumers ditching one company for another since the survey began in 2008.

"Although fewer consumers are shopping for insurance, more current customers who do are willing to make a switch based on competitive quotes," said Jeremy Bowler, senior director of the global insurance practice at J.D. Power and Associates.

Bowler also notes that more consumers are switching insurance companies, even though savings achieved through switching had declined. Bowler says consumers saved on average $412 per year by switching in 2010 but only $359 in the last 12 months.

Money isn't everything

Sometimes, there are other reasons besides saving money for switching insurance companies. In a ConsumerAffairs post, Moranda, from Louisiana, says she's dropping Progressive.

“Disrespectful, inconsiderate, unprofessional, and hard to get in touch with,” she wrote.

Charity, of Pasadena, Tex., says she's dropping State Farm over a dispute about towing reimbursement, which she said was covered in her policy.

“I called State Farm and they sent a tow truck, and told me they would reimburse me,” Charity wrote in a ConsumerAffairs post. Inconvenient, but whatever. I called my agent to find out the proper protocol to get reimbursed for the wrecker. I was told they would only pay for up to $80 on towing.”

Targeting the competition

Bowler also notes that insurance companies have increased advertising spending in an effort to attract customers from the competition.

The study finds that 52 percent of auto insurance shoppers start their shopping process online, and 73 percent visit at least one insurer's Web site at some point during their shopping experience. More significantly, 32 percent of customers solely obtained quotes online, and today 34 percent of all recent shoppers state they would most prefer to purchase their new policy online.

The study, now in its sixth year, examines consumer shopping and purchasing behaviors and overall satisfaction among buyers who recently purchased insurance across three factors (in order of importance): distribution channel; policy offerings; and price.

Another recent J.D. Power survey found that overall consumer satisfaction with their insurance company declined sharply in the last three quarters.

Fewer consumers are shopping for auto insurance, but of those who do, 43 percent switched from one insurance company to another in the last 12 months, acco...

Seniors Often Confused About Life Insurance Policies

"Guaranteed coverage" doesn't always mean what they think it does

When people reach a certain age, they begin to ponder the end of life and what they will pass on to their children. If they don't have many assets, they look to life insurance as a quick way to build an estate, or at least cover their funeral expenses.

But for people 70 and over, getting reasonably priced life insurance isn't always as simple as the TV commercials make it seem. Paul, of Yorktown, Ind., found that out when he learned the premiums on the life insurance policy he had been paying on for years were about to rise dramatically.

"I took what remaining cash value I had and as a AARP member applied to New York Life," Paul wrote in a ConsumerAffairs post. "I was honest and supplied my medical information with the application."

Paul says he has Type II diabetes which is controlled with medication but is otherwise an active, healthy 72-year-old. He was angry when New York Life turned him down for coverage.

Coverage might not start right away

Alta, of Manassas, Va., says her parents signed up for AARP's New York Life policy, which had a two-year waiting period.

"My mother passed away five days before a two-year waiting period for her life insurance policy," Alta writes. "She and my dad took out a small policy each of $5000 to cover their funeral. They were told they were getting the guaranteed life that AARP and NY Life advertise in the mail, email and on TV. What NY Life gave them was a group life and because my mom signed the paper, they now will not pay her life insurance -- leaving my dad to pay the funeral cost that he cannot afford."

Currently, AARP offers four different life insurance products for seniors and they are very different. The lowest level, for example, is limited to a $50,000 death benefit but will be cancelled when the policyholder turns 80, or perhaps even sooner. It starts with low premiums that rise as the policyholder gets older.

Lifetime coverage, or maybe not

The two higher levels offer protection that can last a lifetime, in some cases. The benefit is limited to $50,000 in one case but only $15,000 in the other. The latter is the only policy that does not base acceptance on existing health issues.

All four of the products have no requirement for a physical exam, which is featured prominently in marketing materials. It might lead some seniors believe that life insurance at an advanced age is easy to get and affordable. It rarely is ... for obvious reasons.

Life insurance companies always play the odds. They are betting that you will live long enough to pay them enough to more than offset what benefits they have to pay out. If you don't look like a good bet, they will either pass or price the product they sell to you accordingly.

Many consumers who have reviewed the AARP policies advise others to read all the policy material carefully and talk to a trusted financial adviser before making a decision.

When people reach a certain age, they begin to ponder the end of life and what they will pass on to their children. If they don't have many assets, they lo...

Liberty Mutual Charged With Ordering Used Parts For Car Repairs

West Virginia sues, seeks restitution

When you're in an accident, the insurance company has a lot of leeway in the repair process, even approving the body shop doing the repair work. But in West Virginia, insurance companies must meet one hard and fast rule – they aren't allowed to mandate used or refurbished parts for the repair.

West Virginia Attorney General Darrell McGraw has sued Liberty Mutual Insurance Company and a West Virginia repair shop - Greg Chandler’s Frame & Body, LLC - for repairing vehicles with junkyard parts in violation of state law.

The suit lists what it says were repeated violations of the West Virginia Consumer Credit and Protection Act by Liberty Mutual and Greg’s Body Shop. McGraw’s office alleges that Liberty Mutual required body shops to repair vehicles with reconditioned, re-manufactured, and used parts in violation of West Virginia law. In addition, he said Liberty Mutual failed to provide the proper notices and written statements to consumers.

In West Virginia, it is unlawful for an insurance company to require the use of salvaged, used, or reconditioned OEM crash parts when negotiating repairs of motor vehicles within three years of manufacture, without acquiring the motor vehicle owner’s consent.

Complaints about junkyard parts

The attorney general began investigating Liberty Mutual and Greg’s Body Shop after receiving evidence that new vehicles were being repaired with junkyard parts. The investigation by McGraw’s Consumer Protection Division confirmed that Liberty Mutual employed a policy that violated state law.

McGraw’s lawsuit asks the court to enjoin the defendants from engaging in this unlawful activity in the future, seeks restitution for consumers whose cars were illegally repaired with junkyard crash parts, and asks for civil penalties.

“My office will always work to insure that West Virginians receive safe, high quality, competent, and lawful repairs to their vehicles,” McGraw said. “Implementing policies that thwart state law in an effort to increase profits is unacceptable.”

Consumers who think they have been a victim of this policy should contact Attorney General Darrell McGraw’s consumer protection hotline at 1-800-368-8808.

For consumers in states other than West Virginia, it might be prudent to call your state insurance commissioner's office when your car is being repaired by an insurance company. Ask what the law states about the use of used, or after-market parts and make sure the insurance company is complying with the law.

West Virginia accuses Liberty Mutual of repairing cars with junkyard parts...

What's On Your Mind? State Farm, Dish Network, TurboTax, PlanetRX

Our daily look at consumer reviews

Last spring's outbreak of tornadoes caused widespread destruction over a wide area of the south Midwest. Now, some people whose homes were damaged by tornadoes think they are being victimized again by their insurance companies.

“My home was hit with a tornado in April,” Tamara, of Granite City, Ill., told “I am still making repairs to the property. I am beginning to submit receipts. I am being told that I have already been overpaid on my claim! Seriously? I submitted copies of bids for the damage to my kitchen that they are now saying they will not pay for. And, I get a letter that my policy will NOT be renewed in November. I have had State Farm for my homeowners for 30 years and also various autos.”

Tamara believes her policy calls for restoring her home to pre-tornado condition. Obviously, her insurance company has another view. That's why it's important for homeowners to review their policies from time to time to make sure they have the coverage they think they do.


There are hazards, as well as convenience, when you allow a company to automatically debit your bank account. Mistakes can happen.

Dish Network took a $91 payment twice for my service on the same day; now they tell me it will take 10-12 days for them to reimburse me,” said Denise, of Rancho Cordovo, Calif. “In this day of technology, this in unacceptable. It took only one day for them to make their mistake. No one is able to tell you why it takes them so long to reimburse even though it is showing on their system as a mistake.”

The simple answer is that businesses go through internal red tape any time they make a refund, even for a payment taken by mistake. Also, they don't mind holding onto your money as long as possible, That's one reason why it's much better to use your bank's online bill payment system to pay your bills and not allow businesses access to your bank account.


Troy, of Dallas, Tex., wonders why Turbo Tax's online tax filing system is taking a few months off.

“I submitted an extension for my 2010 1040 return in April, got approved and wasted time and procrastinated and left life get in the way of me filing before the October 17 deadline,” Troy told Now that being said, I find it extremely disconcerting that the entire website, with the exception of the ability to download a PDF copy of prior year returns, is now unavailable until mid-December! I can understand shutting down E-FILE services, but no access whatsoever to the software for those of us that forgot about our returns?”

It appears to be true. There is a message on the website that reads “Turbo Tax online for tax year 2010 is no longer available.” Another message reads “in December 2011, come back and sign in to a new, more powerful Turbo Tax Online for your 2011 taxes.

Missing drugs seems to be having a problem filling orders in a timely manner. At that's the report from some consumers we've heard from lately.

“I am in the same boat as are many many others,” said William, of Rochester Hills, Mich. “I submitted an order and on the same day they drew the money from my credit card account. It's almost been a month now and I have contacted them over and over to no avail.”

Another consumer said he cancelled his order after being told the medication was back ordered, but never received a refund.

Here is what's on consumer's minds today: State Farm, Dish Network, TurboTax, PlanetRX, Oops, Seasonal, Missing drugs and automatic billing....

Health Insurance Now Costs More Than a Ford Fiesta

Higher costs for both employer and employee

We all know that health care costs are going up, but consumers who receive benefits through their employers might not realize how much.

The employee's portion of the cost is deducted from her paycheck, and might not be that noticeable on a regular basis. The employee may be oblivious to the employer's portion, but rest assured the employer is aware and considers it part of the employee's compensation package.

The Kaiser Family Foundation and the Health Research & Educational Trust (HRET) track the costs of employer-sponsored health plans and now put the average annual cost of family coverage at more than $15,000, the equivalent of a new Ford Fiesta. Employer-sponsored insurance covers about 150 million people in the U.S.

Key findings

The key findings from the 2011 survey, conducted from January through May 2011, include increases in the average single and family premiums, as well higher enrollment in high deductible health plans with savings options (HDHP/SOs).

The 2011 survey includes new questions on the percentage of firms with grandfathered health plans, changes in benefits for preventive care, enrollment of adult children due to the new health reform law, and the use of stop-loss coverage by firms with self-funded plans.

The average annual premiums for employer-sponsored health insurance in 2011 are $5,429 for single coverage and $15,073 for family coverage. Compared to 2010, premiums for single coverage are 8 percent higher and premiums for family coverage are nine percent higher. That nine percent rate compares to a three percent increase in 2010.

Up 113 percent since 2001

According to Kaiser, average premiums for family coverage have increased 113 percent since 2001. Betty, of Marina, Calif., has found her Aetna policy is rapidly going up in price.

“I received a notice a few months ago that my son's insurance premium was being increased $25,” Betty told “The increase started July 2011. I just received a letter on August. 20, 2011 that his insurance premium is being increased again $27, beginning in November 2011.”

With health policies continuing to rise, it becomes a problem for consumers, like Betty, who haven't had a raise in a while.

“Our wages have not increased for at least the last 3 years,” Betty said. “We are barely able to pinch pennies now.”

We all know that health care costs are going up, but consumers who receive benefits through their employers might not realize how much.The employee's por...

What's On Your Mind? The Hartford, Cuisinart, Samsung, Facebook

Our daily look at consumer reviews

Remember Hurricane Irene? The storm that roared up the East Coast at the end of August may seem like a distant memory for some. But it's still very real if your life hasn't returned to normal. Tammy, of Clinton, Md., says falling trees damaged her home and three vehicles, while knocking down power lines. She says her insurance company, The Hartford, has been less than helpful.

“The adjuster did not inspect the property until September 7,” Tammy told  “My son and I were unable to remain in the home as there was no power and Pepco would not reconnect the lines until electrical work was complete.  Hartford stated I would have to pay for the tree-cutting and removal, the electrician, contractor, the loss-of-use expenses and and submit for reimbursement.  The total cost thus far is almost $8,000 and I have yet to receive one penny from Hartford after submitting receipts and paid invoices as instructed.

"My funds are down to $32 and I can no longer afford the hotel we were staying in.”

Tammy should call the office of Maryland's Insurance Administration to find out if this kind of delay is normal. Doesn't sound like it should be, even after a natural disaster.

Too Hot

For months, some U.S. consumers have reported problems with the Cuisinart coffeemakers. Here's a similar report from north of the border.

“My Cuisinart coffee maker is about one year old,” said Shelley, of Coldstream, British Columbia. “I was in my home office when I could hear a crackling sound coming from the kitchen. My coffee maker was smoking and the coffee in the pot, about a cup, was actually boiling! I could smell a terrible burning plastic smell. I unplugged the unit and smoke continued to come from the element and the back of the unit. I thought I was going to have to throw it outside! Thank goodness I was home.”

If you have one of these coffeemakers, it might be wise to unplug it when it's not in use.

Coming around

Owners of flat screen TVs are well aware of capacitor plague, when these small electronic components fail, rendering the expensive TVs useless.

“On Sept 18 my 46 inch Samsung TV started clicking when I tried to turn it on,”John, of Grand Junction, Conn., told “I got online and found that Samsung had bad capacitors in the TV`s that were made in 2008. I called them and was told they were no longer repairing the TVs free. The next day I brought it into a repair shop and had three bad capacitors replaced at a cost of $89.45. On Sept 22 I received a call from Samsung and was told they would make the repair. I told the lady that I just paid to get it repaired. She said for that reason she couldn't reimburse me.”

John said he doesn't understand why Samsung won't reimburse him if they were willing to pay for the repair. Most certainly, there is probably a company policy that explains it. What we find most interesting is that Samsung is willing to pay for out-of-warranty repairs to TVs with bad capacitors. Samsung owners should remember this if, and when, their TVs fail.

'Not a spammer'

Candace, of Anaheim, Calif., is angry that Facebook has flagged her as a spammer. It happens, she says, when she sends friend requests that receive no response.

“I was logged out one day, and forced to log in again to an insulting prompt, which informed me that I must be a spammer, and such, I could not request friends or send messages for 7sevendays,” Candace said. “Then I was forced to agree not to send friend requests or messages to people I don't know - something I was NOT doing!”

Candice also expressed frustration that there is no way to contact someone as Facebook. She isn't the first person to express that frustration.

Here is what's on consumer's minds today: The Hartford, Cuisinart, Samsung, Facebook, Too Hot, Coming around and 'Not a spammer'....

Hurricane Damage? Good Luck Getting Fair Claims Payments

CFA warns homeowners will have to "dig deeper into their pockets"

The Consumer Federation of America (CFA) is warning homeowners they may not find it easy to get their insurance companies to pay up for damage caused by Hurricane Irene.

Hurricane Irene could result in up to several hundred thousand claims for wind damage by homeowners but fewer than 100,000 federal flood insurance claims, CFA estimates.

Hurricane Katrina resulted in 1,200,000 wind claims and over 500,000 flood insurance claims. Payments for wind damage from Hurricane Irene will likely exceed $5 billion, while flood claims will not exceed $2 billion, in part because so few people purchase flood insurance in the area hit by Irene, compared to the region struck by Katrina.

In other words, Hurricane Irene is likely to result in wind insurance
losses of about one-sixth of those caused by Hurricane Katrina in 2005, but under 10 percent of the flood claims of Katrina.

"Families will have to dig deeper into their pockets because insurers have been steadily increasing hurricane wind coverage deductibles and imposing other policy limitations," said J. Robert Hunter, Director of Insurance for CFA and former Federal Insurance Administrator and Texas Insurance Commissioner. “This liability shift to consumers may take some by surprise, since disclosures are often buried in renewal paperwork that consumers may not understand or even read,” he said.

“Because so many consumers experienced claims problems in the wake of Hurricane Katrina, we urge homeowners dealing with losses caused by Hurricane Irene to be vigilant with their insurance companies to ensure that that they receive a full and fair settlement,” Hunter said. 

As consumers prepare to contact their insurance companies in the wake of the storm, the Consumer Federation of America offered the following tips.

1.) Report your claim as promptly as possible as insurance companies generally handle them first come, first served.

2.) Once your claim is reported, be sure to get your claim number and write it down. Insurance company claims departments can locate your file easiest by your claim number. 

3.) When the insurance company sends out an adjuster to survey your damage, ask if he/she is an employee of the insurance company or an independent adjuster (I.A.) hired by them. If an independent adjuster, try to secure the name of the actual company adjuster that the I.A. is sending your information to or are they authorized to make claim decisions and payments on behalf of your insurance company.

Keep good records

When you file a claim, you should immediately start a notebook documenting contacts with your insurance company. List the date, time and a brief description of the exchange. If you need to
complain later, this information will be vital.

If an adjuster says he or she will come and does not, write it down. If an adjuster is rude, write it down.

Get out your inventory of possessions or try, at once, to list your possessions. Take pictures of your possessions before the storm and keep them in a safe place. If you later realize you have no pictures when you file a claim, don't forget that your family likely has pictures of rooms in your house (for example, from Christmas or other celebrations) that can be helpful in recreating a list of your belongings.

Obtain a repair estimate from a trusted local contractor to use as a guide in talking with the adjuster. Keep receipts from emergency repairs and any costs you incur in temporary housing. This
may be reimbursable under the "Additional Living Expense" portion of your homeowners' policy.

You may be entitled to money up-front for living expenses, such as hotel costs, if your home becomes uninhabitable. Insurers are usually very good about these initial payments, while the media is focused on the hurricane aftermath. Most claims problems, if they arise, come later, when bigger payments are sought.

Deciding whether to file a claim

You have paid your premium and are entitled to coverage. If you have a legitimate claim, do not hesitate to file it. Insurers treated many people poorly who filed claims for damages caused by Hurricane Katrina.

For example, after Hurricane Katrina, insurers pulled back from offering coverage along the coasts, dumping people into higher-priced, state-run insurance pools. They also cut coverage and raised rates substantially. However, this should not deter you from seeking fair compensation for losses caused by Hurricane Irene.

Indeed, insurers should face greater scrutiny by regulators because of the serious claims problems that occurred after Hurricane Katrina. CFA is calling on state regulators not only to closely monitor insurers to prevent claims abuses but to stop insurers from moving unjustifiably after claims are paid to increase rates and cut back on the coverage they offer.

There is no reason, actuarially, for insurers to raise rates or cut back coverage due to Hurricane Irene, which is a storm well within the projections of insurers’ current rate schedules. Insurers have already raised prices and cut back coverage along the East Coast of
America and no further price or coverage action is called for.

Consumers must also act to protect themselves. To do this, consumers must stand together and agree not to buy auto insurance and other coverage from any insurance company that refuses to
renew policies with consumers who make claims related to Hurricane Irene.

Consumers stood together after Hurricane Andrew, persuading Florida to pass a moratorium on the non-renewal of policies and to look carefully at rate increase applications. Consumers should fight any attempt to use hurricane claims as an excuse not to renew homeowners' policies and should complain to state regulators to assure that insurers do not take such actions.

Claim disputes

If the claim is denied or you feel the offer is too low, demand that the company identify the language in your homeowners' policy that served as the basis for denying your claim or offering so 
little. This approach has a number of benefits:

• The company may be right and you may not know it. Once they pinpoint the appropriate language in the policy, you should be able to make this determination. For example, you may have $400 in damage, but the company could well point out that you have agreed to a
$500 deductible.

• The company may have slipped new limitations into the policy and not adequately informed you. If you feel that you have been misled in this regard, it might be a good idea to consult an attorney. The introduction of percentage deductibles (up to 10 percent of the value of a home) will greatly shift the cost of Hurricane Irene from insurance companies to insurance consumers, as compared to earlier storms. The practice of shifting the cost of previously insured events back to consumers is acceptable, as long as consumers are clearly given the option to select the level of coverage they want with fully informed consent. 

• Another restriction new to many policies is a limit on replacement cost payments, which might come into play in the event that a home is totally destroyed. A typical cap is 20 percent above the face value of the policy. If costs surge because of the spike in demand in
materials or labor from a major storm like Hurricane Irene (or if the state does not monitor price gouging sufficiently) this limit might apply. For example, if a home would cost $200,000 to replace and that amount was the limit on the policy, the insurance company
would pay no more than 20 percent more, or $240,000. If the surge in construction costs due to extreme demand caused the price of replacing the home to jump to $300,000, the homeowner would be short $60,000.

• Once the insurance company tells you the reasons for its action, it cannot produce new reasons for denying payment or making a low offer at a later time. You have locked them in—a major advantage for the consumer.

• If you review the policy and find that, under a reasonable reading, you think you are entitled to the full amount of your claim as you read the language they relied upon, you will likely win if you go to court. Courts consistently rule that if an insurance policy is ambiguous, the
reasonable expectation of the insured party will prevail since the consumer played no part in writing the language of the insurance policy,

How to complain

If you feel that the offer is too low or the claim denial is wrong, the best process for getting your complaint resolved is as follows:

• Complain to more senior staff in the insurance company. Use the records you have kept since the claim process began. The more serious the insurance company sees that you are in documenting how you were treated, the more likely they will make a more reasonable offer.

• Complain to your state insurance department. All states will at least seek a response to your complaint from your company. A few states may actually intervene on your behalf with the insurance company in clear cases of bad claims handling. It is important to dispassionately
present your side of the story, using the notes you have been taking.

• See a lawyer. Now the notes you took are vital. In addition to an award covering your claim, if your treatment was particularly bad, the courts in many states will allow additional compensation when the insurance company acted in “bad faith.” Since insurance companies
take your money in exchange for their promise to make you whole when disaster strikes, they must act in utmost good faith in performing that obligation.

What isn't covered

Homeowners' policies do not cover flood, earthquake, tree removal (except when the tree damages the house) or food spoilage from power failures. Some insurers use an “anti-concurrent causation” clause in their policies that, insurers allege, removes coverage for wind damage if a flood happens at about the same time. CFA believes that these clauses are ambiguous, so if an insurer uses such a clause to deny your claim, read the provision carefully to see if you think it is
ambiguous and, if so, see an attorney right away.

What about flood claims?

The federal government underwrites flood insurance coverage, although insurance companies often service claims. Follow the same procedures as above, except direct complaints to the Federal Emergency Management Agency (FEMA), the government agency responsible for running the federal flood insurance program (1-800-427-4219, TDD# 1-800-427-5593).

The FEMA flood insurance program tips on handling claims are available online.  

Since the National Flood Insurance Program (NFIP) is paid for by taxpayers, and often the same insurance company will handle the claim for both the wind and the flood damage, it is very
important that consumers verify that insurers do not attribute an unjustifiably large portion of the losses they experience to flood damage.

Consumers must be the first line of defense against
insurers shifting costs for wind losses to the NFIP. If you see such potential abuse by insurers, contact your U.S. Representative and Senators so that they can make sure that taxpayers are

"Not all insurance companies handle claims badly, so go into the claims process with an open mind," said Hunter. "Be vigilant though, or you run the real risk of being shortchanged," he concluded.

The Consumer Federation of America (CFA) is warning homeowners they may not find it easy to get their insurance companies to pay up for damage caused by Hu...

Study: Small Firms Over-Paying For Health Insurance

Lack of information leads to lack of competition, researchers say

If you work for a small business and have health insurance through your company, chances are both you and your employers are overpaying for health coverage.

That's the conclusions of a researchers James Rebitzer of Boston University School of Management, and Mark Votruba and Randall Cebul, both at Case Western Reserve University’s Weatherhead School of Management, and Lowell Taylor of Carnegie Mellon University.

In a paper published in American Economic Review, they highlight the difficulties small employers have in searching for health insurance. Those difficulties, they contend, increase average health insurance premiums paid by small businesses by 29 percent. Naturally, where employees pay a portion of their health benefits, their premiums are also higher.

High plan turnover

When the four researchers began taking insurance markets’ vital signs a few years ago, one fact particularly captured their attention: small employer groups changed plans very frequently. This turnover was something of a puzzle.

“If markets are competitive, plans of similar value should be offered at similar prices,” said Votruba. “It’s costly to switch plans, so if employers are switching plans all the time, it suggests that something is impeding competition.”

The problem, they concluded, stemmed from an inability to easily comparison shop the different plans, a phenomenon economists refer to as “search frictions.”

Search frictions arise whenever consumers are unable to easily compare all the options available to them in the marketplace. This, Votruba, Cebul, Rebitzer and Taylor argue, is exactly the case for purchasers of individual and small group health plans.

Confusing options

"Consumers have hundreds, sometimes thousands, of different options, and each plan has its own unique set of benefit details,” Votruba said. “In this complex environment, it’s hard for consumers to find the plan that offers them the best value. What our paper shows is that this 'shopping problem' has important implications for how market competition plays out. If consumers have a hard time evaluating value, competition becomes less about value, and more about marketing."

Part of the problem stems from the fact there are very few sources of objective information and analysis of various health plans. Most experts who can provide this information are usually trying to sell their own plan.

No need for competition

How this works against consumers, the researchers say, is that all the companies selling health insurance can be less competitive and charge higher rates. Instead of competition forcing all insurers to offer similar plans at a similar low price, frictions enable many insurers to profitably pursue high margin/low volume strategies.

The net effect is that consumers end up paying more for their health insurance – 29 percent more on average in the small group market – and insurers spend more on marketing.

Because it's hard to find objective information about plans, employers are never quite sure they are getting the best deal. That can lead to frequent changes, as businesses drop one plan and go with another.

"High turnover rates undermine the quality of health plans by reducing insurers’ incentive to finance care that makes their policyholders healthier in the future," Cebul said. "Why spend money on wellness or disease management programs – programs which yield a return on investment only after several years – for a policyholder who probably isn’t going to stick around long?"

Researchers conclude small businesses overpay for health insurance by 29 percent...

What's On Your Mind? US Fidelis, Consumer Credit Group

Our daily look at consumer reviews

Judith, of Kissimmee, Fla., is one of thousands of consumers who purchased an extended auto warranty from US Fidelis, which has declared bankruptcy and has ceased operations. It has left Judith, and others like her, high and dry.

“I purchased an extended warranty with US Fidelis and now that company has been shut down by the Attorney General in Missouri,” Judith told “I paid over $2400.00 and the last payment was made a couple of months ago. The lady took my payment over the phone even though I just found out they have been shut down and the two owners have been indicted. What can I do? I lost my job and struggled to get these payments made which I paid off and now I have no warranty. How can I get my money back?”

A year ago, Missouri Attorney General Chris Koster asked the federal bankruptcy court to order the appointment of an independent trustee over the US Fidelis bankruptcy proceedings, with the goal of protecting assets for the company’s customers.

Koster also urged the need for a top-to-bottom, scrupulous financial examination of the company, citing concerns regarding explicit business practices intended to defraud consumers. At the time, Koster made clear that the filing of the US Fidelis bankruptcy does not end the state’s interest in protecting policyholders of the company. Judith should contact Koster's office to learn the status of those efforts.

Illegal pitch

Beware of companies that call you on the phone and promise they can lower the interest on your credit cards. In nearly every case, it's an empty promise.

“I was told they could lower my interest rates on all my cards to as low as 1.24 – 6.9 percent fixed rate for the life of the cards,” said Lucy of Weirsdale, Fla. “They couldn't guarantee an exact percentage but it would fall in that range.”

Lucy said the telemarketer told her a new law that had just passed that allowed companies like Consumer Credit Group to help Americans get out of debt faster. She was also told it was a one-time deal and they would go to the next consumer if she didn't take the deal the same day.

That, of course, is untrue. There is no such law and the pressure tactic of saying she had to act immediately should have told her it was not on the up and up, but she said she was caught off guard and agreed to pay an advance fee of $795.

“Boy do I feel like a big dummy,” Lucy said. “I'm a single mother struggling to make ends meet but am veru proud of paying all my creditors on a timely manner, and then to get taken for a ride like this.”

While the “law” Lucy said the telemarketer mentioned does not exist, there is a law that bans telemarketers from collecting an advance fee to help consumers with credit and debt problems before actually providing the service. Lucy might have a chance of getting her money back if she complains to Florida Attorney General Pam Bondi's office.

Not covered

Computer problems are aggravating, especially if you think they are covered by a warranty and they aren't.

About two weeks ago, when shutting down my computer, it said there were updates to install. It took forever for them to install and when I turned it on in the morning, it stayed on the blue Microsoft page” Cleo, of Clearlake, Calif., told “Since under warranty I took it to the Best Buy in Sacramento, where they said the system needed to be restored. “I said to go ahead and restore it as it was still under warranty. When I went to pick it up I was told there was a $200 charge. I asked why, since it was still under warranty? He said that only is for hard drives etc. “I was not informed of a charge or told the warranty does not cover restoring.”

Cleo may be annoyed, but it is really up to the consumer to know what the warranty does, and does not cover. A manufacturers warranty typically covers parts and labor. It would have been nice, however, if Best Buy had informed Cleo ahead of time what the charge would be for restoring her system.

Here is what's on consumer's minds today: US Fidelis, Consumer Credit Group, Illegal pitch, Not covered and Best Buy....

Physicians Dropping More Privately Insured Patients

Doctors increasingly turning down private health insurance plans

Thanks to the new health care law passed last year, millions of people now without health insurance will be required to get it. But some health researchers say that doesn't necessarily mean more people will get better health care.

Since 2005, U.S. doctors have been accepting fewer and fewer patients with health insurance, according to the research team, which reports its findings in the June 27th issue of Archives of Internal Medicine.

As a result, says Dr. Tara Bishop, assistant professor of public health at Weill Cornell Medical College, and lead author of the study, insured patients could face new obstacles to receiving the medical attention they need, and overall access to health care could actually contract.

Bishop, who is also a practicing physician at New York-Presbyterian Hospital/Weill Cornell Medical Center, and her fellow investigators looked at survey data from a national survey run by the CDC's National Center for Health Statistics and found an overall decline in physician acceptance of several types of insurance.

First, they noted a modest drop in acceptance of Medicare patients, from 95.5 percent in 2005 to 92.9 percent in 2008. Doctors also turned more and more Medicaid patients away over the four-year period -- a phenomenon the authors attribute to Medicaid's historically low reimbursement rates.

Privately-insured patients fall from favor

But the most surprising decline of all was seen in doctors' acceptance of new patients with private insurance.

"Given the medical profession's widely reported dissatisfaction with Medicare, we expected to find hard evidence that Medicare patients were being turned away," Bishop said. "Instead, we saw only a modest decline in doctors' acceptance of patients on Medicare. The survey data showed a more significant decline in their acceptance of patients with private insurance."

Physician acceptance of patients with traditional fee-for-service private insurance declined from 93.3 percent in 2005 to 87.8 percent in 2008.

What's behind the change?

This change could be traceable to two major factors, she explains: inadequate reimbursement levels that have not kept pace with medical practice expenditures; and the tangle of administrative issues that go hand in hand with private health insurance.

"At a moment when the country is poised to achieve near-universal coverage, patients' access to care could be a casualty of the collision between the medical profession and the insurance industry," said Bishop.

The researchers say they hope their study will alert policymakers to potential problems in health care access, exacerbated by current shortages in primary care, an aging population, the growing prevalence of serious chronic diseases, and the imminent expansion of health insurance coverage as mandated under health care reform.

"Consumers and health advocacy groups, too, should be aware of these early warning signs so that they can work to ensure access to quality medical care," Bishop said.

Researchers say U.S. doctors appear reluctant to accept new patients with private insurance...

Consumers Cautioned About Credit Insurance

Maryland Attorney General calls it 'overpriced'

When consumers borrow money for almost any purpose, they are often offered the option of purchasing credit insurance.

That's a policy that insured repayment of the loan, even if the borrower dies, becomes disabled, or loses their income. Maryland Attorney General Douglas Gansler says it's notorious for being one of the most overpriced insurance products and consumers should go into any purchase with their eyes wide open.

“Consumers need to know what they are buying and how much it will cost before they commit to paying for credit insurance,” Gansler said. “Before you sign any contract, understand all the terms and costs.”

Rarely required

Gansler said credit insurance may be sold under the pretense of being mandatory, but rarely is. In Maryland, for example, lenders cannot require the purchase of most types of credit insurance. Lenders can require credit property insurance on loans secured by a piece of property, or a destructible possession, but a consumer is allowed to choose the insurance company.

There are three types of credit insurance:

  1. Credit Life Insurance, which pays off an outstanding loan if a consumer dies;
  2. Credit Disability Insurance, which makes payments on a loan if a consumer is disabled; and
  3. Credit Involuntary Unemployment Benefit Insurance, which makes payments on a loan if a consumer is involuntarily unemployed.

Credit insurance really only benefits the lender. While it protects the consumer from default, any benefit is paid directly to the lender.

Consider the alternatives

If consumers wish to purchase insurance, they should consider a few alternatives, Gansler says, including checking to see if their current homeowners or life insurance policy provides adequate coverage.

As with other forms of insurance, it is important for the consumer to check the policy closely before agreeing to its terms. Some good questions to ask include the length of any waiting period, limitations, cancellation terms, coverage length, financing and comparability to other similar policies.

Mortgage insurance is a type of credit insurance that is often required on some home loans, to protect the lender in the case of default. Mortgage insurance is usually required on loans where the consumer is borrowing more than 80 percent of the purchase price.

Maryland's Attorney General has cautioned consumers about credit insurance, calling it notoriously overpriced...

What's On Your Mind? Nationwide, Payday Loan Scam, Vonage

Our daily look at consumer reviews

So, your insurance company canceled your policy? You're not alone. Even a former insurance agent says his policy was pulled. Michael, of Spanish Fork, Utah says he was once an agent with Nationwide Insurance and has just learned the company canceled his policy. And he's not happy with the way it was handled.

“This happened more that seven months ago without any notification,” Michael told “Normally if a policy is non-renewed the agent would call and inform the client so that other insurance could be put into place in a timely manner. Not only did I not receive any calls regarding the termination but did not receive any termination notice from the company despite their claims that they sent one to me.”

Michael says he is still at a loss as to why he was canceled. He says he's had the same policy in effect for the last four years. We have received other reports of canceled policies, especially in the wake of weather disasters.

Dangerous scam

Over the last week has seen an increase in reports from consumers reporting contact by the scammer who claims to represent Fast Cash USA. The the sound of it, it's the same operation, they just keep changing the name of the payday lender they supposedly represent.

“I received a phone call from a financial Fraud Claims stating they were calling on behalf of USA Fast Cash,” said Kim, of Newport News, Va. “He stated that they were taking charges out against due to a payday loan I took out, canceled and they could not get back.”

Kim didn't recognize this for the scam that it is, but fortunately she didn't fall for it either. The name, who threatened to have her arrested, demand that she fax a copy of her drivers license and financial information. She refused, but is worried.

What she should be worried about is this character has her personal information. Where he got it is the million dollar question. The fact that most of the targets of this scam did, at one time, apply for a payday loan might be an indicator that the information was stolen from, or sold by, a payday loan company. This seems ripe for a Federal Trade Commission investigation.

If you get one of these calls, hang up immediately. Then, contact all three credit reporting agencies and place a fraud alert on your account.

Not my plan

Jane, of New York, feels like she has been a victim of bait and switch at the hands of Vonage.

“I signed up with Vonage for a $17.99 for 500 minutes of VoIP service,” Jane told “They have informed me that they are now charging me $19.99 for more minutes, which is not what I want. They are refusing to offer me the initial baited offer but have now switched me to higher rate.”

Communications companies routinely have wording in their terms of service that say they are allowed to substitute your plan with another, if they discontinue the plan you are on. It does seem unfair, especially since they require you to commit to a two-year contract.

Here is what's on consumer's minds today: Nationwide, Payday Loan Scam, Vonage, Dangerous scam and Not my plan....

What's On Your Mind? John Hancock, FedEx, Mortgages

Our daily look at consumer reviews

Long-term care insurance is expensive. It's expensive for the policyholder who has to make monthly payments. It's also expensive for the insurance company when it has to pay off.

Robin, of Gilroy, Calif., says her mother purchased a comprehensive individual long term Care insurance policy in 2002. She paid her premiums in full on time annually. But after her mother suffered a massive stroke last summer, Robin said she has had trouble getting John Hancock to pay for the 24-hour care her mother requires.

“The first check we received was issued February 16, 2011 in the amount of 2520.00,” Robin told “I have made numerous phone calls with wait times in the range of 45 minutes. I have left over 15 voice mails. I have sent several emails to management who responds that some one will call me. That has still not happened. I have re-submit billing. I made up my own excel spreadsheet to send and help explain why they owe us much more money. I have sent the spreadsheet and re-submitted billing twice. They have not responded once. No calls, no correspondence. Nothing.”

As of this date Robin estimates the insurance company owes $22,860.00 and wants to know what she should do.

Because she has not gotten satisfaction from John Hancock, or an explanation for non-payment, Robin should probably have an attorney fluent in insurance matters review her policy. If she has misunderstood the terms of the policy, it can be explained to her. If she is correct in her estimate of what is owed, an attorney can advise a proper course of action.

Calendar issues

Daisy, of New York, N.Y., thinks Federal Express is having trouble keeping up with the days of the week.

“Our office is located in midtown Manhattan. We have been using Fedex sending packages for years,” Daisy told “But, lately, Fedex keep billing me $15 Saturday Pickup, but packages were pickup on Friday.”

From January 21 to April 8, Daisy says FedEx wrongly billed 16 packages.

“I had to dispute this $15 every time I received invoice,” she said. “Even though I got my $15 back it still bothers me that I have to do it again and again, every week.”

It sounds like Daisy has a standing pick-up order with FedEx for Friday. Somehow, perhaps, that got entered into FedEx computers as a standing Saturday pickup. Maybe if she canceled her standing order, then re-established it, they would get it right.

Count your blessings

Ruth, of Starke, Fla., hopes to buy a home and needs a mortgage. She said she found on online lender called that advertised loans even if you have bad credit and can't verify your income. Ordinarily, that's when alarm bells should start to go off.

“Close your own loan denied my application because they said I didn't have credit history that's not the case,” Ruth said.

Ruth is miffed that she was denied credit, but honestly, she may have dodged a bullet. It's likely Ruth, who says her credit scores are in the mid 600 range, would do better by going to a community bank in her area. She could also join a credit union and perhaps get a loan there.

We've seen this movie before.

The case of the Hollywood Video late fees might make a good mystery movie. We continue to get complaints from former members of the now-defunct movie rental chain.

“Like so many others, I too received a letter from National Credit Solutions saying I owed $103.50 for one late movie over a year and a half ago,” Kathy, of Ankeny, Iowa, said. “Our local Hollywood Video had long since been closed. I called NCS confused what the charge could be for and spoke with an extremely rude representative who in the end hung up on me. She did however offer to close my case for a reduced payment of $40.00. I refused to pay for anything since I knew of nothing I ever owed to Hollywood Video, I never once received a bill or phone call from them.”

Kathy said she resolved the issue by writing a letter to NCS requesting any and all information that pertained to the amount owed including all charges, payments and write-offs to her account. She's heard nothing from them since.

We find it interesting that nearly every consumer who reports this experience seems to owe an amount more than $100, and that the NCS rep always seems very willing to bargain the amount down to something less.

Here is what's on consumer's minds today: John Hancock, FedEx, Mortgages, Calendar issues and We've seen this movie before....

No Escape From Medicare, Judge Rules

Retirees would have to give up Social Security and repay benefits to opt out of Medicare

Much of the opposition to “Obamacare” has centered around its supposedly unprecedented requirement that everyone must have a health insurance policy in place. But as a group of retired federal employees will tell you, this is hardly the only federal health program that lacks an opt-out provision. (Consumer complaints about Social Security).

A federal judge has ruled that retirees cannot opt out of Medicare Part A, the part that covers hospital stays, unless they are willing to forfeit their Social Security checks and repay all of the benefits they have already received.

Though sounding sympathetic, Judge Rosemary M. Collyer of the U.S. District Court for the District of Columbia declared her hands were tied.

“Medicare costs are skyrocketing and may bankrupt us all; nonetheless, participation in Medicare Part A (for hospital insurance) is statutorily mandated for retirees who are 65 years old or older and are receiving Social Security Retirement (so-called ‘old age’) benefits. Whether Congress intended this result in 1965 or whether it is good fiscal and public policy in 2011 cannot gainsay the language of the statute and the regulations,” Judge Collyer wrote.

The plaintiffs – Brian Hall, John Kraus, and Richard Armey – are retired federal employees who had previously been enrolled in the Federal Employees Health Benefit (FEHB) program and wanted to “disenroll” from Medicare without surrendering their Social Security benefits.

Too bad, said Judge Collyer, noting that the Supreme Court had previously recognized the “mandatory institutional health benefits (such as coverage for hospital expenses) provided by Part A.” in a 1986 decision.

“The parties use a lot of ink disputing whether Plaintiffs’ desire to avoid Medicare Part A is sensible. This is not an issue the Court needs to address,” she wrote. This dispute constitutes a case or controversy without regard to why Plaintiffs prefer other insurance coverage. ”

Under the law and Social Security regulations, the only way for an individual to avoid being “entitled” to Medicare Part A is to either not register for Social Security or submit a written request withdrawing from Social Security and returning all benefits previously paid, Judge Collyer held.

In conclusion, said the judge, “Plaintiffs are trapped in a government program intended for their benefit. They disagree and wish to escape. The Court can find no loophole or requirement that the [Health and Human Services] Secretary provide such a pathway.”

It could not be immediately determined whether the Richard Armey who was one of the three plaintiffs is “the” Richard Armey, the Texas Republican who served in Congress from 1985 to 2003 and was the House Majority Leader from 1995 to 2003.

No Escape From Medicare, Judge Rules. Retirees would have to give up Social Security and repay benefits to opt out of Medicare....

Reinsurance Broker Guy Carpenter Agrees to $4.25 Million Antitrust Settlement

Company conspired to inflate insurance costs nationwide, Connecticut charged

Connecticut Attorney General George Jepsen today announced a $4.25 million settlement with one of the world’s largest reinsurance brokers, Guy Carpenter & Company, LLC, and Excess Reinsurance Company, ending a landmark antitrust case that began in October 2007.

The settlement resolves claims that Guy Carpenter orchestrated a series of conspiracies in the reinsurance industry that illegally inflated insurance and reinsurance costs nationwide.

Under terms of the agreement, Guy Carpenter and Excess Reinsurance deny all liability, but will pay the state $4.25 million to settle the lawsuit. In addition, Guy Carpenter will undertake significant nationwide business reforms, including enhanced disclosure and a formalized system for obtaining competitive quotes to ensure its clients receive the best rates and terms for insurance.

“Like the lawsuit, this settlement is ground-breaking in that it requires Guy Carpenter and a number of reinsurers to change the way they conduct business – not just in Connecticut, but on a nationwide basis,” Jepsen said. “As a result of the business reforms that Guy Carpenter has agreed to, the market for reinsurance will be more transparent, more competitive and, ultimately, may lead to lower prices for insurance.”

The litigation against the two companies was the first of its kind brought by an antitrust enforcement agency – state or federal—in the reinsurance industry, and previously resulted in a $1.3 million settlement with The Hartford Financial Services Group in October 2009. Terms of the latest settlement remain in effect for five years.

Reinsurance is purchased by insurance companies to cover exposure to claims on the policies they write. Because the cost of reinsurance is typically passed on to consumers, anti-competitive practices by reinsurers drive up prices to individuals and businesses purchasing the coverage.

Anti-competitive practices can also hurt other reinsurance companies seeking to compete for the business in an open market.

Jepsen commended Guy Carpenter and Excess Reinsurance for agreeing to the settlement. “Guy Carpenter has chosen to make significant changes to the way it does business. These changes will not only benefit its clients, but the reinsurance industry in general,” Jepsen said.

The state sued Guy Carpenter in 2007 for allegedly orchestrating a series of conspiracies with dozens of reinsurers, including Excess Re in which Guy Carpenter was a part owner, which illegally inflated costs for insurance companies and consumers nationwide over several decades.

According to the allegations in the complaint, Guy Carpenter created select groups of reinsurers, which it called “facilities,” and funneled lucrative reinsurance business to those co-conspirators for undisclosed commissions and other benefits. The reinsurers in the groups agreed not to compete against the prices or terms set by Guy Carpenter for the business. The practice essentially created a closed market that Guy Carpenter said was “insulated from competition” or any market forces. The state’s investigation showed the practice pushed up costs 10 to 40 percent in some cases.

The complaint alleged that the facilities were used to provide reinsurance to Guy Carpenter’s smallest clients, those who were relying on the broker’s expertise to obtain the best coverage at the lowest prices. Guy Carpenter never disclosed its relationship with the other companies in the

facilities or that it was often setting the price and terms for reinsurance contracts.

Reinsurance Broker Guy Carpenter Agrees to $4.25 Million Antitrust Settlement. Company conspired to inflate insurance costs nationwide....

More Massachusetts Motorcycle Riders Get Insurance Refunds

Total of 12 insurance companies didn't adjust premiums for declining value of bikes

The State of Massachusetts has reached settlements with five more auto insurance companies over allegations that they overcharged tens of thousands of Massachusetts residents for motorcycle insurance.

As a result, riders will get $12.1 million back from their insurance providers. State Attorney General Martha Coakley launched the investigation alleging that Arbella Mutual Insurance Company, Hanover Insurance Group, OneBeacon Insurance (aka Massachusetts Homeland), National Grange Mutual (NGM), and Norfolk & Dedham Group (N&D) used inflated and un-depreciated motorcycle values to calculate premiums for Massachusetts motorcycle riders, resulting in more than $12 million in overcharges.

Coakley reached similar settlements with seven other insurance companies earlier this year. In total, the 12 insurance companies that have settled with the Attorney General's Office are paying back more than $33.8 million to Massachusetts residents and over $1.5 million to the state. 

One consumer started it all

"We began our industry-wide investigation into motorcycle insurance based on a single consumer complaint.  To date, that investigation has forced 12 insurance companies to return more than $33 million to Massachusetts motorcycle owners," Coakley said. "As this investigation demonstrates, and as the insurance companies in this state know, when consumers bring complaints to our office, we listen and we take action."

The settlements stem from allegations that these insurance companies were illegally using inflated motorcycle values to calculate premiums and failing to depreciate motorcycle values as policies renewed.  

For example, the couple from Lynnfield that filed a complaint with Coakley owned a 1999 Harley Davidson Road King Classic.  In each year between 2003 and 2008, the investigation showed that Safety Insurance Company had charged the couple premiums as if their 1999 Road King Classic were worth $20,000.    However, by 2008, the couple's motorcycle was nine-years-old and worth less than $12,000. 

As a result, Safety overcharged the couple by more than $1,500.  As a result of this industry-wide investigation, the Attorney General's Office has identified over 100,000 policies that are eligible for refunds under the settlements reached to date.  Average refunds under the settlements are around $320.  

A complaint from a single Massachusetts motorcycle owner has resulted in $33 million in refunds from 12 insurance companies....

After Injury, Uninsured More Likely to Die

Researchers say they are surprised by results of study

June 14, 2010
In a typical hospital emergency room, patients are treated for a variety of trauma, with some surviving and some dying.

A new study suggests having health insurance increases the odds a trauma patient will remain among the living.

The University of Buffalo study analyzed 193,804 patients from 649 facilities who suffered gunshot wounds or auto accident injuries. Patients covered by any of the insurance plans studied -- Medicaid, Medicare, private and managed care organizations such as HMOs -- had better mortality rates for all injuries than persons without insurance, the analysis showed.

Dietrich Jehle, MD, UB professor of emergency medicine and first author on the study, says these findings suggest the causes of this difference are many and probably are not based just on quality of care.

"Generally we don't know a trauma patient's insurance status when we treat them initially in the emergency department, which makes us ask if there are differences in these populations other than the delivery of care," Jehle said. "This finding was a little surprising."

Both race and insurance status are independent predictors of mortality rates for trauma outcomes, the researchers found, and of the two, insurance status, specifically lack of coverage, is the most significant.

"This is not unexpected, since uninsured adult patients in general have a 25 percent greater morality rate than insured adults for all medical conditions," he said.

Several possible factors

Lack of insurance could influence mortality in a number of ways, said Jehle. With no way to pay for care, people may delay getting treatment. Those without insurance frequently are from ethnic groups who face language or literacy problems, and may be afraid to go to a hospital.

Other factors could include differences in risk-taking behaviors. Studies have shown a relationship between not wearing seat belts and lack of health insurance, and that the uninsured are likely to drive older, less safe vehicles.

In addition, says Jehle, people without insurance have poorer health status in general, which would lessen their ability to survive a traumatic injury, and they often are treated differently.

"Research shows that, for other than trauma injuries, the uninsured may actually receive less aggressive treatment and fewer diagnostic procedures," he said. He adds that universal health coverage could change these statistics.

"For instance, there would be no need for patients to delay treatment with universal health coverage, and such coverage could improve the overall health status of injury victims and increase their survival rates," he said.

The study data were extracted from the National Trauma Data Bank for 2001-05. The researchers concentrated on patients between the ages of 18 and 30 to eliminate those more likely to have chronic health conditions, leaving 191,666 patients in the analysis with complete data, including 150,332 blunt trauma patients and 41,334 penetrating trauma patients.

After Injury, Uninsured More Likely to Die...

Survey Suggests Many Drivers Are Clueless

New York drivers worst in insurance company survey

By Mark Huffman

May 28, 2010

One reason the highway is an increasingly dangerous place is because too many drivers don't know what they are doing, an insurance company study suggests.

GMAC Insurance conducted an online survey, posing 20 questions taken from state driving license exams. The results showed many respondents might have flunked if it had been a real test.

For example 85 percent of respondents did not know how to react to a traffic signal where the light was yellow. Others showed confusion on other questions or admitted to unsafe habits like texting while driving.

If the test results were averaged out nationally, the study suggests nearly 20 percent of licensed drivers -- some 38 million motorists -- "may be unfit for roads" and wouldn't pass a state-issued written exam if taken today, the study said. The average test score fell from 76.6 percent in 2009, and 78.1 percent in 2008.

"It's discouraging to see that overall average test scores are lower than last year," said Wade Bontrager, senior vice president, GMAC Insurance. "American drivers need to make safety a top priority and be aware of the rules of the road at all times. The National Drivers Test allows everyone to brush up on their driving knowledge with a brief refresher course."

Score breakdown

Where are the nation's worst drivers? Motorists from New York had the worst record on the survey, followed by drivers in New Jersey, Washington, California and Rhode Island.

Drivers in Kansas did the best, followed by Oregon, South Dakota, Minnesota and Iowa. In general, drivers in the Midwest seemed to be the most informed about the rules of the road while drivers in the Northeast fared worst.

Men over age 45 tended to score the highest, the survey shows, while men overall outscored women, who admitted to engaging in more distracting behavior while behind the wheel.

Lack of attention

Additional questions from the survey reveal drivers conduct a variety of distracting behaviors behind the wheel; approximately one in four participants admitted to driving while talking on a cell phone, eating and adjusting the radio or selecting songs on an iPod. However, only five percent reported they text while driving.

Overall, a significantly higher percentage of females than males reported engaging in the following distracting situations: conversation with passengers, selecting songs on an iPod or CD/adjusting the radio, talking on a cell phone, eating, applying make-up and reading.

One reason the highway is an increasingly dangerous place is because too many drivers don't know what they are doing, an insurance company study suggests....

MetLife Uses Software to Deny or Limit Claims, Suit Says

Conduct is called at odds with terms of policy

A recently-filed class action accuses MetLife of using a software program to improperly deny insurance claims. The complaint charges that MetLife uses computer 'fee-review' software -- known as 'Decision Point' -- to improperly limit and exclude from coverage part of Plaintiff's and the Class's reasonable medical expenses incurred after a covered occurrence.

The suit says that MetLife uses Decision Point to justify its denial of claims without first deciding whether those claims are reasonable. Indeed, according to the complaint, Decision Point software is not designed to determine whether a charge is 'reasonable' or 'unreasonable,' though MetLife uses it for this very purpose.

Rather, the software is simply intended to determine what percentage of the customer's costs are covered by comparing those costs with a set benchmark figure.

According to the complaint, [i]nsurers such as Met select a particular 'percentile' payment benchmark and any amount of the charge that exceeds that payment benchmark is capped and excluded from coverage. Further, Decision Point software does not (and cannot) analyze in any way whether a submitted charge incurred by its insured is higher [or] lower than the usual and customary charge for the medical services rendered.

The suit contends that MetLife's use of Decision Point to deny claims constitutes a breach of contract, since the company does not determine, as the policy requires it to do, whether any submitted medical payments claim is reasonable. Moreover, Met's Policy does not define 'reasonable' expenses, or for that matter, what constitutes 'unreasonable' expenses. For every medical payment benefit reduced with [Decision Point], Met simply reduces the benefits based upon predetermined and undisclosed limitations of its own selection.

The lead plaintiff in the suit is Back Doctors LTD, a medical office in Swansea, Illinois, led by Dr. Kathleen Roche. According to the suit, Roche treated patients who were injured in covered occurrences, and charged usual and customary fees for her service. When she submitted the claims to MetLife, however, the insurer excluded part of her charges based on an undisclosed fee review algorithm.

Additionally, the suit claims that MetLife is unable to vouch for the accuracy of the Decision Point software, which is licensed by Ingenix, a third party corporation owned by managed health care conglomerate United Healthcare Corporation.

According to the complaint, MetLife is unable to substantiate the accuracy or propriety of its fee review determination or verify the components of the algorithm used to purportedly make 'reasonable' or 'unreasonable' determinations, and has never inquired whether fee review based coverage limitation and Policy exclusion determinations are consistent with Policy requirements and definitions.

The suit contends that MetLife saved untold dollars on claims that it should have paid under the express terms of the policy. In addition to the breach of contract claim, the suit charges MetLife with violation of the Illinois Consumer Fraud Act.

MetLife Uses Software to Deny or Limit Claims, Suit Says...

Senate Debates 'Loophole' In Health Care Law

Door left open for big rate increases before law takes effect

By Mark Huffman

April 21, 2010
In the rush to pass health care legislation this year, Congress created at least one provision that even the law's backers say needs to be changed.

Sen. Dianne Feinstein (D-CA) has authored a bill that she says would close an "enormous loophole" in the new federal law. As written, she says the law would allow health insurance providers to rapidly raise rates on health benefit policies that Americans will soon be required to buy.

The Feinstein bill calls for the National Association of Insurance Commissioners ("NAIC") to write key definitions of what constitutes an "unreasonable" rate increase and to assess the value of current state regulations. Amendments are needed to assert that HHS has the sole authority to determine the definitions that will make or break the law. The bill must also assure that direct federal regulation is used only as a fallback when states fail to develop adequate regulation and review of health insurance rates.

However, Consumer Watchdog, a California-based consumer group, says the health care law "fix" doesn't go far enough. In fact, the group says the bill as written the bill would give too much power to the insurance industry over defining "unreasonable" rates that could be blocked.

"Senator Feinstein should be commended for proposing legislation to close a gaping loophole in the federal health reform law," said Jerry Flanagan of Consumer Watchdog." As written, nothing in the health reform law prevents insurers from dramatically increasing rates in advance of the law's requirement that Americans must buy insurance policies or face tax fines."

History repeating itself?

Consumers, in fact, witnessed a similar occurrence last year when Congress passed credit card reforms in May, but didn't implement the new law until this past February. Credit Card companies spent the intervening seven months raising rates and implementing other soon-to-be prohibited activities.

Consumer Watchdog sees problems by designating NAIC as the official referee when it comes to insurance rates.

"NAIC is a private organization that is not subject to the transparency and public participation rules of a government body, is funded in large part by the insurance industry, and NAIC members enjoy a 'revolving door' of job opportunities in the industry thanks to the organization's close ties to insurance companies," Flanagan said. "The insurance industry's dominance of the NAIC will allow it to game the regulatory system through complicit regulators and undefined standards that industry actuaries are expert in manipulating."

Senate Health, Education, Labor, and Pensions (HELP) Committee Chair Tom Harkin (D-IA) called the lack of state "prior approval" of rate increases a "gaping hole" in health care reform. Under a "prior approval" system, insurance companies must receive approval from state regulators for rate increases before they go into effect.

Consumer Watchdog says the Feinstein Bill would establish a federal rate authority to review rates and take corrective action, including blocking rates or requiring rebates, only in states that do not have the authority or capability of doing so on their own. A better approach, it says, would be frontline state regulation of health insurance rate increases with strong federal fallback if states fail to act just as envisioned by the legislation.

Senate Debates 'Loophole' In Health Care Law...

Consumer Watchdog Files Anthem Class Action

Says insurer's rate hikes violate California law

A consumer advocate group has filed suit against Anthem Blue Cross, claiming that the insurer's recent California rate hikes illegally blocked coverage to scores of policyholders.

Consumer Watchdog, a Santa Monica-based nonprofit, filed the class action in Ventura County Superior Court on Monday. The complaint says that Anthem, California's largest for-profit health insurer, used enormous rate hikes to force patients into lower benefit and higher deductible health coverage in violation of state law.

Lead plaintiffs Mary Feller and Randy Freed both received letters from Anthem telling them that their policies were no longer being offered to new customers and that, as a result, their premiums would significantly increase. As a consolation, Anthem assured them that they could switch to any Anthem Blue Cross individual health plan with no underwriting required.

Unfortunately, all of the alternative plans available to Feller and Freed had some combination of higher premiums, higher deductibles, and/or inferior coverage compared to their canceled plans.

Rate hikes led to death spiral

The suit alleges that Anthem's actions -- closing certain health plans to new customers without providing comparable coverage to existing members -- illegally trap those existing customers in their too-expensive policies and lead to the dreaded insurance death spiral.

That term refers to the phenomenon whereby rates go up, forcing consumers out of their current plans, which leads to a smaller pool of customers and, predictably, another rate hike. A 1993 California law prohibits insurance companies from putting customers in this situation.

Still, Jerry Flanagan, a health advocate with Consumer Watchdog, says that the practice is all too common.

It's a very profitable practice, and what we know is the insurance industry is very focused on short-term returns, Flanagan said.

Double-digit rate increases

The Fellers saw their rates jump 39%, pushing their annual premium from around $14,000 to nearly $20,000. Their 26-year-old daughter, a breast cancer survivor, also saw a 38% spike in her coverage costs.

Blue Cross has a gun to our heads, Feller said. We could either stay with our old coverage or switch to a new policy with much lower benefits. What Blue Cross did not tell us was that staying with our better policy would mean a 39 percent rate increase.

Feller's family is paying almost $25,000 a year in premiums, more than the mortgage on their home in high-end Marin County, California.

I think for the first time, we're really scared that we're going to be without health insurance, Feller said.

Ironically, Anthem's announcement last month that it would be raising premiums to as high as 39% is credited with reigniting the push for health care reform. President Obama counted himself very disturbed by the announcement, and Kathleen Sebelius, the Secretary of Health and Human Services, demanded a detailed justification for the hike. California Insurance Commissioner Steve Poizner is also investigating.

A consumer advocate group has filed suit against Anthem Blue Cross, claiming that the insurer's recent California rate hikes illegally blocked coverage to ...

California Targets Medical Discount Plans

State officials seek new licensing regulations

For the self-employed and the unemployed, finding good, affordable health insurance can be a challenging task. Consumers who mistake a medical discount service for a health insurance policy can wind up losing money and still having no insurance.

In California, state regulators have begun cracking down on discount health and dental plans that consumers say they are led to believe are insurance plans. The marketers of these medical discount plans, meanwhile, insist there is nothing misleading in their pitch.

California is not the first state to take on medical discount plans. In Massachusetts last September, Attorney General Martha Coakley filed proposed new consumer protection regulations designed to protect residents of the Bay State from unscrupulous marketing of plans that claim to offer discounts on medical products or services.

The problem w