Insurance News

If you’re a senior citizen and Medicare insurance subscriber, you probably know that open enrollment is nearly upon us. This year, Walmart has decided to enter the Medicare insurance arena.

During the annual enrollment period (AEP) beginning October 15 and running through December 7, Walmart’s new licensed insurance brokerage -- Insurance Services, LLC -- will help interested parties enroll in insurance plans. While it’s not calling out its competitors, Walmart is posturing itself by saying it’s simplifying what has historically been a “cumbersome, confusing process.” 

“Health care can be complicated. But we think quality health care should be within reach of everyone, and pricing should be transparent and affordable,” said Lori Flees, SVP and COO, Walmart U.S. Health & Wellness, in the company’s announcement.

“Our money-saving $4 generic prescription program and, more recently, Walmart Health locations are helping customers save money and live healthier. Similarly, our Healthcare Begins Here program has helped customers navigate the very complex health insurance system for years.”

Ready for competition

Walmart has its geographic ducks in a row and is licensed in all 50 U.S. states and Washington, D.C., but its move into Medicare insurance won’t be a cakewalk. There are beaucoup insurance brands offering direct-to-consumer Medicare plans already. However, Walmart thinks it has a way to circumnavigate all those issues. 

At launch, Walmart Insurance Services will provide Medicare plans (Part D, Medicare Advantage and Medicare Supplement plans) offered by many of the larger insurers: Humana, UnitedHealthcare, Anthem Blue Cross Blue Shield, Amerigroup, Simply Health, Wellcare (Centene), Clover Health and Arkansas Blue Cross and Blue Shield. 

And that’s just the starting point. Flees said that more carriers may be added in the future. 

If your health insurance provider hasn’t reduced your premiums during the coronavirus (COVID-19) pandemic, maybe you should be shopping for a new provider.

As counterintuitive as it may sound, when a virus has hospitalized millions of Americans, major health insurance companies have begun reducing premiums for policyholders because of the money they are saving. Despite the threat of the coronavirus, overall health care spending has plunged since early March.

Over the last three months, the health care system has focused entirely on the virus. Elective surgery was postponed. Many patients, fearful of contracting the virus, put off going to the doctor for routine matters.

As a result, health insurance companies have been paying out a lot less money. Auto insurers found themselves in the same situation in April when stay-at-home orders drastically reduced traffic on highways and led to fewer accidents. Most major carriers, including Allstate and Geico, temporarily reduced policyholder premiums by up to 15 percent.

Anthem cuts premiums

Anthem has become the latest major health benefits provider to announce a premium reduction. The company said it is returning $2.5 billion to its policyholders and health care providers with premium credits of up to 15 percent next month.

Other major providers have already instituted customer rebates, including UnitedHealth Group, which announced last month it was cutting premiums by 20 percent in the month of June, citing fewer health care expenses. The company estimated that the move will put $1.5 billion back in customers’ pockets.

Mississippi Insurance Commissioner Mike Chaney and some of his colleagues in other states had been lobbying health benefits providers to do just that, and in May he was quick to praise UnitedHealth Group’s action.

“The coronavirus pandemic has placed a financial strain on thousands of people,” Chaney said in a statement. “The virus has disrupted how people are receiving care and negatively impacted our economy. I commend UnitedHealthcare for their response to relieve some of the burden consumers are facing.”

It’s possible more health insurance providers will follow suit. The Wall Street Journal reports that there are a number of reasons providers may decide its good business to cut policyholders a break.

“They don’t want to report windfall profits amid so much economic distress,” Matthew Borsch, an analyst with BMO Capital Markets, told The Journal. “It just won’t look good.”

Auto insurance customers have a couple more insurance company jingles to sing out loud. State Farm and Nationwide have joined Allstate, Geico, and American Family in announcing dividends that will go directly back to its customers. 

State Farm’s Good Neighbor Relief Program

The total program:  $2 billion

The amount of credit per customer: On average, State Farm Mutual auto customers can expect to receive a credit of about 25 percent of premium on their coverage. The percentage will vary state-to-state.

Dates the credit applies toward: The credit applies to coverage from March 20 through May 31 

When the credit will go out: State Farm says that every single auto insurance customer will receive credits applied against bills, beginning as early as June.

Could this continue if COVID continues: The company didn’t say if it would extend the program should COVID-19’s rampage continue, but it did say that it would “continue to monitor our loss experience and respond appropriately.”

Nationwide’s premium refund

Nationwide also announced that it is offering a one-time premium refund on top of existing discounts that customers may have already earned.

Here are the program’s particulars:

Who will receive the refund? Anyone who has a personal auto policy active as of March 31, 2020. PowerSports and motorcycle policies are excluded.

The amount per policy: A one-time payment of $50 -- equivalent to about 15 percent in Nationwide’s estimation.

Dates the credit applies toward: Nationwide said the refund is for two months worth of premiums, but it did not specify exact dates. 

What customers have to do: “You don't need to do anything,” Nationwide wrote in an email to its customers. 

How it will show up:  It will be returned to customers in the last form of payment they have made, whether electronic or paper. The refund will arrive in the next 30 days and is subject to individual state regulatory approval.

When will customers see theirs? “Refunds will automatically be credited to your most recent method of payment (for example, automatic withdrawal, credit card, personal check) within the next 30 days, subject to regulatory approval,” Nationwide said. 

Could this continue if COVID-19 continues: The company didn’t say if it would extend the program should COVID-19’s rampage continue.

As a side note, Nationwide is also offering extended payment terms for customers who might be experiencing hardship due to the pandemic. 

Giving back to the communities

State Farm and Nationwide are both taking a chunk of what they’ve saved in out-of-pocket costs during COVID-19’s impact on traffic.

State Farm is taking its good neighbor mantra past the customer level by providing $5 million in donations across the country. Nationwide is matching that with a $5 million contribution from its  Nationwide Foundation. The company said those funds will be directed toward local and national charities to support pandemic response efforts.

Questions?

As it typically goes with things like this, consumers are going to have questions that State Farm or Nationwide didn’t cover in their announcements. 

If that’s the case, State Farm and Nationwide both have FAQ pages that might answer any additional questions. State Farm’s can be accessed here, and Nationwide’s can be found here.

A new study conducted by researchers from the American Cancer Society explored the financial implications that cancer survivors need to contend with and how health insurance plays a role. 

According to the researchers, struggling to understand health insurance policies or medical bills is rather common. In these instances, that stress can spill out into financial decisions that aren’t medical, as well as into other areas of life. 

“Growing evidence suggests that health insurance literacy is a nationwide problem in the United States, and is associated with adverse effects,” the researchers explained. 

Health insurance literacy

To better understand how health insurance literacy plays a role in cancer survivors’ day-to-day lives, the researchers conducted a survey of over 900 adult cancer survivors. 

The survey covered a wide variety of questions designed to gauge participants’ current financial status, including how confident they feel reading and understanding medical bills and other medical documents, to what extent their medical care has been compromised by that lack of knowledge, and how their daily habits are affected or have changed following treatment. 

Overall, nearly 19 percent of survivors under the age of 65 and over 14 percent of survivors over the age of 65 reported problems with health insurance literacy. The researchers learned that when survivors struggled to understand their medical bills, or had questions regarding their health insurance policies, they felt it in other areas of their lives. 

Survivors were more likely to make financial sacrifices in other areas of their lives -- such as dipping into their savings earlier than planned or changing their living situation -- when they struggled with understanding the full spectrum of their health insurance. 

The study also revealed that health insurance literacy problems contributed to higher instances of mental health concerns for cancer survivors. The researchers suggest that work be done in this area to help ease the financial burden associated with medical care. 

“Interventions such as financial and health insurance navigation, decision aids, and more user-friendly and easier-to-read medical bills, which improve patients’ understanding of health insurance and medical costs, could potentially be applied to improve health insurance literacy and benefit cancer survivors,” the researchers wrote. 

Car insurance customers who purchase the bare minimum coverage required by their state pay a higher rate when they upgrade insurance policies.

That’s the conclusion of a Consumer Federation of America (CFA) analysis that compared  premium quotes from six companies in several cities for consumers who bought the least coverage and those who purchased more extensive coverage.

“Auto insurance is not just mandatory in most states, it is an important asset protection tool,” said J. Robert Hunter, CFA Director of Insurance and a former Texas Insurance Commissioner. “As folks’ financial situations improve and they opt to buy more coverage, they should expect equal access to the products and services available to others. Pricing auto insurance based on drivers’ prior purchases is both actuarially unwarranted and an entirely unfair tax for being poor.”

A la carte

Getting the best rate on car insurance, it seems, is based on a lot more than just a driving record. In all but a handful of states, carriers often use a consumers’ zip code or credit score to assign risk. Fabio Faschi,  Property and Casualty Team Lead at Policygenius, says that’s why consumers need to understand how car insurance works and what it is they’re buying.

“Auto insurance, compared to some other types of insurance, is very ala carte in terms of choosing the types of coverages you might or might not want, and how much of that coverage you want,” Faschi told ConsumerAffairs.

And that, unfortunately, leaves a lot of room for confusion. Auto insurance has two functions: it protects a consumer’s property and it also protects them from being held responsible for the damage they cause to other people’s property.

Liability coverage

The minimum coverage states require drivers to have is liability insurance. It pays the other driver if you cause an accident. 

“This is what most consumers should be most concerned about because liability coverage is what’s going to protect you if you cause damage to others,” Faschi said.

Collision insurance pays you if you damage your car in a single-vehicle accident. If you’re financing your vehicle, the lender will likely require some collision coverage, as well as what’s known as comprehensive insurance.

“Comprehensive is essentially going to protect your car from other types of damage, such as weather-related damage,” Faschi said.

All three types of coverage add to the cost of the monthly premium. If you have all three, your cost will be higher than if you only have liability coverage.

Deductibles

Deductibles are another feature that can add to or reduce the cost of insurance. In the event of a claim, the deductible is the amount you have agreed to pay out-of-pocket before the insurance company starts to pay. 

Deductibles generally range from a low of $100 to a high of $1,000 or $1,500. The higher your deductible, the lower your premium because the insurance company is shifting more of the risk to you.

“Insurance is generally all about risk tolerance and the trade off between what you would be guaranteed to pay (through higher premiums) or between what you might potentially have to pay (out of pocket) in the event of an incident,” Faschi said.

But the best way to make sure you are getting the best car insurance rate is to shop your policy around to other companies. And Faschi says, it’s a good idea to do that often -- even once a year.

“The market does shift, though it’s not going to shift drastically from year to year. It’s really just a matter of covering your bases and making sure there weren’t any shifts that create a better deal.”

Major discrepancies are present between the prices paid to hospitals for privately insured patients and what the federal Medicare program pays, according to a RAND analysis of hospital prices in 25 states.

Overall, hospitals treating patients with private health insurance were paid 2.4 times the Medicare rates in 2017. RAND researchers found that the difference was most significant for outpatient care. In those cases, private prices were nearly triple what Medicare would have paid.

"The widely varying prices among hospitals suggests that employers have opportunities to redesign their health plans to better align hospital prices with the value of care provided," said lead author Chapin White in a statement. "Employers can exert pressure on their health plans and hospitals to shift from current pricing system to one that is based on a multiple of Medicare or another similar benchmark."

Suggested interventions

The researchers say changes are needed to drive down hospital prices in the private sector, whether they be in the form of federal intervention or a shift in industry behavior.

The study authors recommend that private insurers switch from discounted charge contracts for hospital services and to contracts “based on a percent of Medicare or another similar fixed-price arrangement.”

"Employers can also encourage expanded price transparency by participating in existing state-based all payer claims databases and promoting the development of such tools," White said. "Transparency by itself is likely to be insufficient to control costs so employers may need state or federal policy changes to rebalance negotiating leverage between hospitals and their health plans."

Legislative interventions might include placing limits on payments for out-of-network hospital care or allowing employers to buy into Medicare or another public option that pays providers based on Medicare rates.

Hospitals raise concerns

After the study was published, the American Hospital Association said it had a “number of concerns” about the results of the analysis.

In addition to pointing out the limitations of the small sample size, the group argued that paying hospitals at Medicare rates would have a huge impact on the industry and could cause many hospitals to close.

“Medicare payment rates, which reimburse below the cost of care, should not be held as a standard benchmark for hospital prices,” the AHA said in a statement. “In 2017, hospitals received payment of only 87 cents for every dollar spent caring for Medicare patients.”  

“Simply shifting to prices based on artificially low Medicare payment rates would strip vital resources from already strapped communities, seriously impeding access to care. Hospitals would not have the resources needed to keep our doors open, innovate to adapt to a rapidly changing field and maintain the services communities need and expect,” the AHA said.

If your car insurance rates are going up, you aren't alone. The Zebra, an insurance rate search engine, reports that 83 percent of drivers paid more for insurance over the last 12 months. The company says insurance rates are the highest they've ever been, rising 23 percent since 2011.

The researchers say the average motorist in the U.S. is paying $1,470 a year for car insurance. They arrived at that number by analyzing more than 61 million auto insurance rates in every zip code. That method breaks down the criteria insurance companies use to set rates — and how that pricing is unique to every individual.

"Some people are paying $500 a year while others are paying $5,000. Why? It could be weather in your state, your driving habits, or even your gender, marital status, or credit score," said Alyssa Connolly, director of Market Insights at The Zebra. "Car insurance is a major expense for most Americans, and drivers want to know how much their rates are changing  — especially as new technology comes into play."

Every state is different

Car insurance rates vary widely from state to state since every jurisdiction has its own set of policies. The least expensive states in which to insure a car are Michigan, Louisiana, and Rhode Island. The most expensive cities for car insurance are Detroit, New Orleans, and Hialeah, Fla.

In Colorado, auto insurance rates have surged 80 percent since 2011. But during that same time, they have fallen 20 percent in Oklahoma. The Zebra analysis also found that, even within a state, rates can vary as much as 265 percent depending upon the zip code.

One reason rates can vary so much by state is that some states have different rules for insurance providers. For example, some states have barred insurance companies from using non-driving factors such as credit scores to set car insurance rates.

Insurance companies say they use zip codes to measure a customer’s risk by looking at the number of vehicle crimes -- things like theft and vandalism -- within specific areas. Some providers also consider credit scores -- where allowed by law to do so -- because they believe the score is an accurate reflection of risk.

Type of coverage affects cost

The rate consumers pay also depends on the extent of coverage they select. Policies with a high deductible -- meaning the consumer pays for most minor damage and doesn’t file a claim -- cost less with low deductible policies with features like accident forgiveness.

Rates also tend to be higher for motorists with speeding tickets and other moving violations. The Zebra report found that a crackdown on distracted driving such as texting behind the wheel has resulted in an average rate increase of 20 percent.

Insurance companies are also making wider use of apps and plug-in devices to monitor how a driver operates their vehicle. This monitoring has resulted in some drivers seeing their rates go down while others are paying more.

Sometimes changing insurance providers will result in a lower rate. Read what consumers have to say about car insurance companies in these ConsumerAffairs reviews.

The six-week-long Affordable Care Act enrollment season kicked off on Thursday, and this year consumers will find more choices and stabilizing premiums.

“From a consumer perspective, the experience should be pretty good,” Kelley Turek, a policy specialist at America’s Health Insurance Plans, told Axios.

Here’s what’s new in the ACA’s sixth signup season:

• Short-term plans, which are typically cheaper, will be available for consumers to purchase as an alternative to comprehensive ACA plans;

• Nationally, average premiums are going up only by low single-digit percentages for 2019;

• Insurance brokers are expanding their participation this year because President Trump has cut funding for healthcare navigators -- people who get federal money to help customers compare their options and sign up for health coverage; and

• There won’t be a penalty for not buying health insurance, a change that takes effect in January.

Alternative coverage

Administration officials view the availability of short-term health plans and “association health plans” as a means of expanding lower-cost options for consumers. Premiums for short-term plans are around 54 percent lower than they are for comprehensive policies, according to a new study from the Henry J. Kaiser Family Foundation.

However, some say the additional options could lead to consumers buying less coverage than they need. Turek noted that they could also be a practical option for individuals who can’t afford ACA coverage, but consumers should be sure they know what they’re signing up for because short-term plans can have big gaps in coverage.

Consumers can enroll for health care coverage under the ACA by visiting www.HealthCare.gov. Enrollment for 2019 ends on December 15.

The cost of employer-provided family health coverage rose 5 percent in 2018 to an average of $19,616, while single coverage premiums rose 3 percent to $6,896, according to a survey released Wednesday by the Kaiser Family Foundation (KFF).

The annual survey, which drew on responses from more than 4,000 employers with three or more workers, found that workers are contributing an average of $5,547 toward the cost of family coverage while the rest is being paid by employers. For single coverage, workers are contributing roughly $1,200 a year.

Over the last decade, the general annual deductible for workers has climbed about eight times as fast as wages, Kaiser said. And with employer-sponsored health coverage being the most common form of health insurance in the U.S., that means more workers are pulling from their take-home pay in order to pay medical bills, despite having coverage.

Burden of deductibles

KFF found that premium increases exceeded both wage increases (2.6 percent) and inflation (2.5 percent) over the past year and decade. Moreover, employers are increasingly heaping more out-of-pocket costs onto employees.

The report said that 85 percent of workers have plans with deductibles compared to 81 percent in 2017 and 57 percent a decade ago.

“Health costs don’t rise in a vacuum. As long as out-of-pocket costs for deductibles, drugs, surprise bills and more continue to outpace wage growth, people will be frustrated by their medical bills and see health costs as huge pocketbook and political issues,” KFF President and CEO Drew Altman said in a statement.

Cognizant of the challenge posed by the current healthcare system, Amazon, Berkshire Hathaway, and JPMorgan Chase announced earlier this year that they were forming a joint venture to give their employees better health care choices and bring down costs.

In its report, Kaiser said it believed companies will soon need to find other ways to shift costs.

"If underlying healthcare prices and service use begin to grow as part of stronger economic growth, employer and health plans may need to look for tools other than higher cost sharing to address the pressures that would lead to higher premium growth," the authors wrote.

If you've started your first job and moved into your first apartment, chances are you'll shop for renters insurance.

But what if you're still in college and living in a dormitory? College Parents of America, which offers a number of college-related insurance products, suggests renters insurance should be on most college students' back-to-school shopping list.

The group cites recent data which shows the number of fires that occurred in on-campus student housing facilities was up 6.7 percent in 2016, from 1,916 in 2015.

Renters insurance also covers break-ins and thefts, something the group says is occurring with greater frequency on campus. It says the number of reported criminal offenses on campus increased by almost 3 percent in 2016.

At the same time, the typical college student now has more valuable belongings than in the past, including computers, TV sets, and bicycles.

Disruptive events

"We recommend families consider renters insurance because college students and their parents are often caught unprepared, and these unexpected incidents can also disrupt a students' education," said Bob Soza, President of College Parents of America: "In fact, a majority of state insurance commissioners recommend college students consider renters’ insurance.”

According to ConsumerAffairs' Insurance Contributing Editor Matthew Brodsky, renters are often exposed because a landlord's insurance will not cover their loss. He says renters' policies are usually very affordable, in comparison to homeowner insurance.

Nearly every major insurance company offers renters insurance coverage. You'll find ConsumerAffairs reviews of top renters' insurance policies here.

Especially important for off-campus housing

The National Association of Insurance Commissioners recommends renters insurance for college students, but it may be most important for those living off campus.

"Even if a student is a dependent under his or her parent's insurance, the student's personal property, in many cases, is not covered if the student lives off campus," the group advises. "Parents should check their policy or contact their insurance agent to see if renters insurance is right for their son or daughter who is away at school."

If a student is living in a dorm, the college may provide some coverage, but it will vary from institution to institution. Also, if a college student is under 26 years old, enrolled in classes, and living in on-campus housing, the student may be covered under his or her parents’ homeowners or renters insurance policy.

A lawsuit filed by 20 states could have a huge impact on the millions of consumers who still have health insurance under the Affordable Care Act (ACA), also known as Obamacare.

While Congress has been unsuccessful in its attempts to repeal the law, the Trump administration has taken steps to dismantle parts of it.

The tax cut passed by Congress in December removed the fine associated with the individual mandate, the requirement that everyone have health insurance. That led to the lawsuit, currently making its way through the courts.

The states claim that ACA is now unconstitutional, since the Supreme Court upheld the law only because it said the individual mandate penalty was a tax. Now that the penalty is not being imposed, the states say the individual mandate -- forcing consumers to purchase something the might or might not want -- is unconstitutional.

But the government estimates nearly 9 million consumers are covered by an ACA policy, even though the law has been weakened and insurance premiums have skyrocketed.

In many cases, policyholders can't get insurance through their employers or couldn't afford health insurance before ACA was passed.

Preexisting condition protection at stake

Many who could afford policies were denied coverage because they had preexisting conditions. Under ACA, insurance companies can't deny coverage because of a preexisting condition, but public health advocates now worry that protection is in the crosshairs.

The National Patient Advocate Foundation (NPAF) says the Trump Administration's support of the states' lawsuit is worrisome.

"The Administration's decision to oppose existing federal law imperils millions of patients nationwide," said the group's CEO, Alan Balch. "Not only does it bring back uncertainty to individuals' lives, it also destabilizes the entire marketplace, driving up costs for everyone."

Balch says if the states win in their court battle to overturn the ACA, consumers will return to the time when health insurance was unaffordable -- and for millions of people with a preexisting condition, such as diabetes or high blood pressure, unattainable.

Back to the past

"By allowing insurers to discriminate against people with preexisting conditions, the Administration will thrust millions of Americans back into that life," Balch said.

As the states' lawsuit awaits action by the courts, the Trump administration continues to whittle away at the law, which it has vowed to abolish. This month it all but eliminated advertising to encourage enrollment. It also cut funding for "navigators," people to help consumers select the right policy, by 40 percent.

It also cut $10 billion in "risk adjustment" payments to health insurance companies that provide policies to the sickest customers.

The Center for Medicare and Medicaid Services (CMS) has suspended payments to health insurers with a large number of sick Obamacare clients.

The agency said it had no choice after a U.S. District Court in New Mexico said the payments are invalid, due to the formula used to make them.

The risk-adjustment payments – from insurance companies with a majority of healthy clients to those companies insuring people with chronic illnesses – were written into the Affordable Care Act (ACA) as a way to stabilize the system. Companies that end up insuring a large number of people who require ongoing care tend to be less profitable than those insuring mostly healthy people.

Insurance is normally based on risk, with premiums costing more for clients who are expected to require more healthcare services. However, under Obamacare, insurance companies cannot charge higher premiums, or even deny coverage, to clients with pre-existing conditions.

February court ruling

CMS cites the late February court ruling in deciding to place a freeze on the $10.4 billion which it collected last year, and which ordinarily would be dispersed among high-risk insurers. The agency says the court ruling also prevents it from collecting additional risk-adjustment funds until the issue is resolved.

Without the funds, insurance companies insuring a large number of sick clients may be forced to raise premiums on all clients.

“We were disappointed by the court’s recent ruling,” said CMS Administrator Seema Verma. “As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold.”

Verma says CMS has asked the court to reconsider its ruling, and is hoping for a speedy resolution that allows CMS to “prevent more adverse impacts on Americans who receive their insurance in the individual and small group markets.”

Hostile to Obamacare

The Trump administration has made no secret of its hostility to the healthcare program, enacted in 2010. The White House supported two attempts in Congress last year to repeal the program, which insures about 20 million Americans.

Since then, it has taken administrative steps to weaken the law, including the removal of the individual mandate – which required everyone to purchase health insurance.

Earlier this year, Republican officials in 20 states filed a suit claiming that the healthcare law is unconstitutional.

Republicans made this argument once before, claiming 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.

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

In his annual letter to shareholders, JP Morgan Chase CEO Jamie Dimon outlined some of the goals for his company’s new healthcare venture with Amazon and Berkshire Hathaway.

The CEO says his focus is on improving several failures with the US healthcare system, including poor outcomes, high administrative and fraud cost, and a high percentage of healthcare spending devoted to chronic care.

“While we don’t know the exact fix to this problem, we do know the process that will help us fix it,” he wrote. “We need to form a bipartisan group of experts whose direct charge is to fix our healthcare system. I am convinced that this can be done, and if done properly, it will actually improve the outcomes and satisfaction of all American citizens.”

Six focus areas

Dimon said the joint venture with Amazon and Berkshire Hathaway would focus on:

• Aligning incentives system-wide;

• Studying the amount of money spent on waste, administration, and fraud costs;

• Leveraging health data and telemedicine to drive a consumer-driven approach;

• Developing better wellness programs that focus on chronic diseases like cancer, stroke, and heart disease;

• Determining why costly and specialized medicine and pharmaceuticals are frequently over- and under-utilized; and

• Studying the costs associated with specialty care, drugs, and end-of-life care

“The effort will start very small, but there is much to do, and we are optimistic,” he wrote in the letter.

Dimon said the company plans to focus on using “top management, big data, virtual technology, better customer engagement and the improved creation of customer choice” to address critical problems and issues. However, he added that it could take “years” for notable progress to be seen.

Berkshire Hathaway CEO Warren Buffet also appeared to temper expectations in an interview with CNBC, in which he said that he’s “hopeful” about the new venture “but don’t expect any miracles out of us soon.”

An announcement of the joint venture was made back in January. At the time, Buffet referred to healthcare costs as “a hungry tapeworm on the American economy.”

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.

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.

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.

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.

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 FloodSmart.gov.

What to do

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.

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.

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.

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.  

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.  

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."

Republican presidential frontrunner Donald Trump has released a seven point health care policy containing items that likely both delight and horrify elements of both the Democrat and Republican bases.

A few proposals might even make consumers smile.

Item one is the complete repeal of the Affordable Care Act. Republicans have been trying to do it for six years while Democrats furiously defend it as the signature achievement of the Obama Administration. Perhaps no single issue has been so divisive along party lines.

Trump says he would replace Obamacare with a series of reforms to improve access to care through the free market and enhanced competition. He says he would achieve that, in part, with point two – allowing insurance companies to operate across state lines.

Tax deductible premiums

Point three is a tax break for everyone who pays for health insurance. Trump proposes allowing individuals to fully deduct health insurance premiums from their federal tax. Trump said consumers should get the same ability to write off their premiums that businesses currently enjoy.

Point four would allow consumers to set up Health Savings Accounts (HSAs) to pay for healthcare with tax-free contributions. The money would be allowed to accumulate and become part of an estate, passed on to heirs at death.

Trump would also change the way Medicaid is administered. His fifth point would convert funding for the federal healthcare program for the poor and turn it over to the states in the form of block grants.

Import cheaper drugs

The final point in his policy outline would allow consumers to legally import cheaper prescription drugs from other countries. This would be a tall order since both Republicans and Democrats have consistently joined to block this from happening.

“Congress will need the courage to step away from the special interests and do what is right for America,” the policy paper states. “Though the pharmaceutical industry is in the private sector, drug companies provide a public service. Allowing consumers access to imported, safe and dependable drugs from overseas will bring more options to consumers.”

In addition, Trump calls for eliminating healthcare services for people in the country illegally, reforming the mental health system, and growing the economy so that fewer Americans will need assistance to pay for healthcare.

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 Healthcare.gov 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.

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.”

Costs

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

FinAid.org, 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.

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.

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.

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 www.floodsmart.gov. 

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.

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.”

“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.

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, Bankrate.com'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.

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.

HealthCare.com, not to be confused with the government health insurance site HealthCare.gov, 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 HealthCare.com. "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 car insurance marketplace continues to get more crowded. There's Progressive, Allstate, State Farm, Liberty Mutual and Nationwide, along with newcomers Esurance and Elephant.

Add to the list the nation's largest retailer. At the end of last month Walmartannounced a partnership with AutoInsurance.com to offer car insurance to online shoppers. The company that promises to have lower prices pledges lower insurance rates as well.

While Walmart isn't actually selling the policies it stands to profit by providing the way for consumers to comparison-shop for insurance. While Walmart pulled back from entering the bank business a few years ago, this foray into insurance gives the retailer more exposure in financial services.

Big savings reported

The service launched after a pilot project in Pennsylvania last year won favorable reviews from customers, who Walmart says reported average annual savings over their old policies by $1,168 per year.

“Our business is driven by a commitment to taking products and services that are complex and pricey and making them easy and affordable,” said Daniel Eckert, senior vice president of services for Walmart U.S. “Our customers too often have to settle for auto insurance policies that aren’t the best fit and cost more than they want to spend. With AutoInsurance.com, we're helping our customers save money on one of their largest household expenses in a new, quick and easy way.”

Independent agents skeptical

Among the early skeptics of the venture are local, independent insurance agents, who already have to face pretty stiff competition. The National Association of Professional Insurance Agents (PIA), the trade group representing local insurance agents, isn't buying the $1,168 savings claim.

"As an average saving, that figure sounds unrealistic," said PIA National Executive Vice President & CEO Mike Becker. "Walmart says that the system it is using compares rates on an existing policy with rates on policies with the same coverage. If that is the case, we are skeptical that the average price difference for the same level of coverage can be that large."

While Walmart says its new service allows consumers to shop around for the best rate, Becker says independent agents do the same thing. But he says that when it comes to insurance, consumers should remember that price is just one factor.

The Insurance Information Institute (I.I.I.) advises that consumers should select an insurance company that has a good reputation for settling claims promptly, has good customer service and is financially stable.

Few shop online for insurance

AutoInsurance.com has conducted research it says indicates that only 1 in 5 consumers shops for car insurance, even though 90% say they comparison shop online for other types of products.

“We want to make comparison shopping for auto insurance much simpler and faster for everyone who wants to save money on their premiums,” said Joshua Kazam, founder of AutoInsurance.com. “We believe strongly in the power of comparing. It’s how you know you got a great deal on auto insurance.”

Here's how it will work: when consumers visit the website they enter their name, address, date of birth and contact information.

Next they can opt-in to have the site retrieve their current auto insurance policy. This allows AutoInsurance.com to automatically auto-fill most of the necessary coverage information and provide a direct apples-to-apples comparison.

Then the customer receives multiple quotes from participating insurance carriers. Coverage may be customized, including raising or lowering deductibles, and changes are immediately reflected in the quotes.

If satisfied, the consumer can purchase the policy online. If they have questions, they can call a toll-free number and speak with a licensed agent.

Lending its name

Walmart's role in this venture appears to be mostly branding. The company will not sell the insurance directly but will direct consumers to the AutoInsurance.com site through Walmart.com and in-store signage.

Consumers in only 8 states – Arkansas, Louisiana, Mississippi, Missouri, Oklahoma, Pennsylvania, Tennessee, and Texas – can purchase policies right away. But both companies say they plan to expand the business nationwide within months.

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. 

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.

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.”

Now that the Healthcare.gov 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  

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.  

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, Healthcare.gov, 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 Healthcare.gov 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.

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 Healthcare.gov 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 Healthcare.gov 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 GetCoveredIllinois.gov 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, HealthCare.gov 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.  

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. 

Over-insuring

"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.

Startling

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.

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 HealthCare.gov.
• 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.

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.

"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.

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 -- https://www.healthcare.gov/

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 HealthCare.gov will direct you to the insurance exchange site for your state, if there is one. You can also sign up for email updates.

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.

Miscommunication

“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 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.

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.

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.

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 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.

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 InsuranceQuotes.com 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, InsuranceQuotes.com. "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.

“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.

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.

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.

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

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

"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."

Advice

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.

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.

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.

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.

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.

Advice

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.

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.

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.  

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 CarInsuranceQuotes.com, a Bankrate company, found that the typical Michigan household pays a whopping eight percent of its annual income for car insurance.

CarInsuranceQuotes.com 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: www.carinsurancequotes.com/car_insurance-costs.

“The laws in each state vary widely,” explained John Egan of CarInsuranceQuotes.com. “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, CarInsuranceQuotes.com 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.

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.

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.”

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.

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.

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.

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

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.

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.

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 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.

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 ConsumerAffairs.com. “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.

Oops

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.

Seasonal

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 ConsumerAffairs.com. 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

PlanetRX.com 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.

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 ConsumerAffairs.com. “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.”

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 ConsumerAffairs.com.  “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 ConsumerAffairs.com. “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.

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
protected.

"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.

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?"

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 ConsumerAffairs.com. “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 ConsumerAffairs.com. “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.

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.

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.

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 ConsumerAffairs.com. “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 ConsumerAffairs.com 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 ConsumerAffairs.com. “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.

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 ConsumerAffairs.com. “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 ConsumerAffairs.com. “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 closeyourownloan.com 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.

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.

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.

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.  

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.

By Mark Huffman
ConsumerAffairs.com

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.

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.

By Mark Huffman
ConsumerAffairs.com

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.

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.

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 was greater in Massachusetts, perhaps, because the state had passed a law requiring all residents to have health insurance.

It is critical that companies who offer any kind of medical coverage plans or medical discount card clearly disclose what their plans do and do not offer, and whether they fulfill the individual mandate." Coakley said at the time. "We have received numerous complaints from consumers who have fallen victim to these deceptive discount plan scams."

The complaints are also being heard in California. Health officials say medical discount plans are being pushed the hardest in poor communities. The worst offenders, they say, are fraudulently marketing themselves as low-cost insurance.

"They're basically cheating poor people," Dr. Dev GnanaDev, immediate past president of the California Medical Association, told the Los Angeles Times.

After receiving more than 150 consumer complaints about misleading medical discount pitches over the last four years, the California Department of Managed Health Care is asking for new licensing regulations.

Department officials say a number of plan marketers have promised consumers unrestricted access to medical providers, when in fact the cards were worthless.

At best, a medical discount card will offer patients a negotiated discount for services with participating medical service providers. If you go to a doctor or hospital or doctor that has an agreement with the medical discount plan, you would receive a discount.

However,it is a fact that health care providers routinely discount their services -- often at an inflated price to start with -- for patients who lack insurance, or who must pay a large deductible out of pocket. So in some cases, an uninsured patient might get the same break as someone who had paid for a medical discount card.

The Times reports the industry trade group that represents the medical discount plan industry is also pushing for regulations, to keep "bad actors" out of the business and damaging the industry's reputation. With California's unemployment rate high and still rising, state officials say it's a fertile environment for those tempted to blur the line between health insurance and a medical discount plan.

By Jon Hood
ConsumerAffairs.com

November 11, 2009
AARP is taking more heat over marketing of one of its insurance plans, as a Texas couple files a class action lawsuit claiming that ads led them to believe the group's Medical Advantage Plan -- which is no longer being sold through AARP -- was a primary insurance plan, rather than one providing limited coverage for crucial medical care.

James and Alison Halperin received a packet touting the Medical Advantage Plan in early 2008, and were so excited that they dropped their existing policy and signed up. Shortly thereafter, Alison was diagnosed with breast cancer and informed that she would need costly surgery. In case that wasn't bad enough, the Halperins were treated to another kick in the gut when they found out their new AARP-provided plan wouldn't cover the urgent procedure.

The Halperins' policy, provided by UnitedHealth Group, is a so-called limited benefit plan: its coverage is limited to a specific dollar amount. Typical insurance plans, by contrast, cover a percentage of all health-related costs, regardless of how high the bill ends up being. Unfortunately for the Halperins, AARP's plan is especially stingy in its coverage of surgical procedures, providing anywhere from a few hundred to $10,000, depending on what kind of surgery is needed.

The plan's appeal lies in its relatively low premiums, attractive for consumers who might have trouble attaining a traditional plan or who are struggling in the still-gloomy economy. The plans are targeted to consumers between 50 and 64. An AARP spokesman said the plans were not designed to be comprehensive insurance, nor should they be communicated in this manner.

The Halperins accuse Washington, D.C.-based AARP of violating the city's Consumer Protections Procedure Act. Their complaint alleges that AARP has preyed upon Plaintiffs and thousands of Americans over age 50 by luring unsuspecting consumers in need of affordable health care to enroll in AARPs health insurance program.

Plan canceled

The Halperins' allegations are only the latest in a series of claims that AARP misled consumers as to the extent of the plan's coverage. Last year, Sen. Chuck Grassley of Iowa sent a letter to AARP's then-CEO Bill Novelli voicing concerns that consumers who purchased the plan might not realize that it only provides limited coverage. Grassley also sounded the alarm about Essential Plus Health Insurance, a second AARP policy with similar terms as the Medical Advantage Plan.

Insurance is supposed to limit your exposure to the potentially high cost of a serious illness, Grassley told USA Today. These plans do the opposite.

The ensuing firestorm led AARP to stop offering the plans, technically known as "fixed-cash benefit indemnity plans."

Unkind year

All in all, 2009 has not been kind to AARP.

Approximately 60,000 seniors have canceled their memberships since July, apparently in protest of the group's support for health insurance reform. A competing, conservative-backed group creatively named the American Seniors Association has been trying to woo AARP members over to its side. While AARP originally refused to back a specific bill, the group last week endorsed the Affordable Health Care for America Act, the bill currently snaking its way through Congress.

A medical discount card is not a health benefit plan. Many a consumer has learned that lesson the hard - and costly - way. All too often, the marketers of these discount plans have done their best to blur the difference.

In Massachusetts, Attorney General Martha Caokley has 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 proposed regulations are part of the Attorney General's general crackdown on deceptive marketing of medical discount plans.

In addition to the regulations, Coakley has also published a consumer education advisory and pursued law enforcement actions to protect consumers from medical discount plan scams.

"As a result of health care reform in Massachusetts, all residents are required to have health insurance and are presented with a wide range of coverage options. It is critical that companies who offer any kind of medical coverage plans or medical discount card clearly disclose what their plans do and do not offer, and whether they fulfill the individual mandate." Coakley said. "We have received numerous complaints from consumers who have fallen victim to these deceptive discount plan scams. The new regulations that we are proposing will complement ongoing efforts to protect consumers from these deceptive practices."

Medical discount plans claim to offer consumers discounts for specific health care products or services from certain providers in exchange for some form of fee. Under a medical discount plan, the plan member receives a discount, but is obligated to make all payments for services provided. Medical discount plans are not insurance products and are not regulated by the Division of Insurance. These plans also do not meet the minimum coverage standards as required under health care reform.

The proposed regulations filed with the Secretary of State's Office would require organizations marketing medical discount plans for sale in Massachusetts to fully disclose how the plan works and whether the plan is limited to certain services or products from certain providers. The disclosures must make clear that the discount plan is not insurance and that the consumer will be required to pay for any services or products. In addition, the regulations will require medical discount plans to maintain lists available to consumers of any providers who have agreed to offer the plan's members discounts.

By Truman Lewis
ConsumerAffairs.com

September 13, 2009
It's not unusual for businesses to respond aggressively when consumers go online to complain about them, but it's not often a billboard causes a major dust-up. In Los Angeles, the non-profit consumer group Consumer Watchdog is demanding that CBS Outdoor reinstall a bright yellow billboard that read "Consumer Watchdog Says: 'You Can't Trust Mercury Insurance'".

CBS Outdoor must re-install the billboard immediately and fulfill its contractual obligation, the consumer group demanded in a letter to the billboard company sent last week. The letter, from First Amendment lawyer Anthony Glassman said that Consumer Watchdog would sue CBS Outdoor if the company did not honor the contract.

On August 24, after following the standard protocol for posting billboard ads, CBS Outdoor posted the billboard at Wilshire Blvd. and Witlon Place near downtown Los Angeles. Sometime around September 3rd, CBS Outdoor ripped the sign down without notifying Consumer Watchdog in violation of the contract. According to a CBS representative, Mercury Insurance's Chairman, billionaire George Joseph, complained and threatened CBS, leading to the removal of the sign.

At its Web site -- the nonpartisan, nonprofit organization has listed the Top 10 Reasons that Mercury, the third largest auto insurer in California, can't be trusted. The group cites punishments Mercury received from regulators in California and Florida for its claims-handling practices, as well as smoking gun documents exposing the company's practices of lowballing policyholders with claims and incentivizing its body shops to use aftermarket and junkyard-refurbished parts rather than original manufacturer parts when repairing policyholders' cars.

The group also posted a legal brief from the California Department of Insurance in which the Department wrote: "Among Department [of Insurance] staff, consumer attorneys, and consumer victims of its bad faith, Mercury has a deserved reputation for abusing its customers and intentionally violating the law with arrogance and indifference."

Consumer Watchdog's Executive Director Douglas Heller said: "What's worse than CBS Outdoor breaking its contract and pulling down the billboard, is the fact that Mercury's customers who might have been informed by the billboard, won't be apprised of the problems they might face if they ever need Mercury to pay a claim."

In its letter calling on CBS Outdoor to replace the billboard, Consumer Watchdog's attorney Glassman cited the group's contract with the billboard firm, which reads: "If Copy is furnished and delivered as required above and such Copy is not rejected by Company pursuant to the terms hereof (i) the Copy shall be posted... "

Glassman wrote: "The "Copy" furnished and delivered to CBS Outdoor was not rejected and was subsequently posted by CBS Outdoor as required by the terms of the contract. Once posted, it should have remained through the term of the contract as the Copy did not violate any of the terms requiring removal under the contract, i.e., it did not contain [n]udity, pornographic, profane or obscene copy, which would have precluded its initial posting." Glassman added, "Having been approved by CBS Outdoor, and not being in violation of any of the terms of the contract, you are estopped from removing it prior to the period paid for under the contract."

The group is demanding that the billboard be reinstalled for 16 days, which represents the least number of days left on the contract when CBS removed the billboard. Consumer Watchdog has not yet determined when the billboard was actually removed.

Thursday's announcement by Senate Majority Leader Harry Reid (D-Nev.) that the issue will not come up for a vote before the month-long recess was seen by some as a stumbling block -- but others said that lawmakers will get an earful from their constituents as they make the obligatory round of fairs, picnics and festivals in their home districts.

The cost of insuring a family of four with an employer-sponsored health plan in the United States averaged $12,298 in 2008, according to the latest News and Numbers from the Agency for Healthcare Research and Quality. In most cases, employers and employees shared the cost. Another study found that small businesses are being crushed by health care costs.

The federal agency's new data for private industry further showed that the annual premium for covering an employee and one family member, known as an "employee-plus-one" plan, averaged $8,535, while the annual premium for a plan that only covered the employee averaged $4,386.

Almost 20 million of the 62.5 million workers enrolled in employer-based insurance in 2008 had family plans, while about 11 million had employee-plus-one plans. The 31.5 million remaining workers had single-coverage plans.

AHRQ's 2008 private-industry data also showed that:

• Nationally, workers enrolled in family plans last year contributed an average of $3,394 toward the cost of their premiums, compared with $2,303 for an employee-plus-one policy and $882 for a single-coverage plan.

• Across all states, workers in Florida contributed the most for a family plan ($4,412) while Indiana workers contributed the least ($2,472); for employee-plus one plans New Hampshire workers contributed the most and Idaho workers the least ($3,005 and $1,736 respectively); and for single coverage, New Hampshire workers again contributed the most ($1,264), and workers in Hawaii contributed the least ($451).

• For about 22 percent of workers with single-coverage plans, their employers paid the entire premium amount. In contrast, employers paid the entire premiums for just 11 percent of workers with family plans and 9 percent of those with employee-plus-one plans.

Small business

"In this economy," said U.S. PIRG's Health Care Advocate, Larry McNeely, "health care costs are killing small business owners. But instead of leading on this important issue, the national Chamber of Commerce and other inside-the-beltway groups are playing politics with a crucial issue and actively impeding reform efforts."

The new report, The Small Business Dilemma, which surveyed hundreds of small business owners and managers across the country, makes clear that small business owners want and need health care reform.

Mike Brey, owner of the Hobby Works hobby stores located in communities around Washington, is one of those small businessmen, and he is eager to speak out on the issue.

"We are creating a greater downward spiral," Brey said about the current health care system and its rising costs.

U.S. PIRG surveyed 309 small business owners and managers around the country for the snapshot survey. The data collected found that the costs and administrative hassles associated with offering insurance weigh particularly heavily on small businesses.

According to the 14-page report:

• Small businesses value health insurance as a key to business success because it allows them to attract better employees.

• 78% of small business owners surveyed who do not offer coverage would like to do so.

• 80% of those who would like to offer coverage cite the expense of coverage as a reason why they don't.

William Dennis, a senior research fellow with the National Federation of Independent Business Research Foundation tells Consumeraffairs.com that the U.S. PIRG findings complement what his surveys show. "Health care," he says, "is a major cost item" for small business.

Dennis agrees that small business has traditionally been left out of the health care debate, but notes that "this time it's much better. At least we're getting some consideration."

Recent analysis by MIT Professor Jonathan Gruber, commissioned by the Small Business Majority, found that health reform would save up to 128,000 small business jobs that would otherwise be lost due to high health care costs.

Achieving these benefits will require ensuring that health reform legislation has a mix of policies that work for small businesses, according to the study, including health insurance exchanges, ending discrimination in issuance, renewal, and pricing of coverage plans based on health history, small business tax credits, and a comprehensive push to reduce the growth in overall health care spending.

As Dennis puts it, "Everyone agrees that change is needed. The big question is 'how do you do it?'"

February 2, 2009
New York Attorney General Andrew M. Cuomo today announced an agreement with Aetna, the third-largest health insurer in the country, to reimburse health insurance claims by over 73,000 students at over 200 colleges nationwide.

Under the agreement, Aetna will pay more than $5 million, plus interest and penalties, for claims involving out-of-network care.

The agreement resolves an investigation into the use of outdated reimbursement rate information by Aetnas subsidiary, Aetna Student Health, which shortchanged students and doctors across the nation.

The investigation disclosed that Aetna Student Health underpaid in excess of $5.1 million in student health insurance claims nationwide between 1998 and April 1, 2008. More than $2 million worth of these claims were attributable to almost 21,000 students who attended college in New York State.

The health plans in question were sponsored by the students colleges, underwritten by Aetna Life Insurance Company and administered by Aetna Student Health, formerly known as Chickering Student Health.

Health insurers must honor the promises they make to reimburse consumers fairly. Here, students were particularly vulnerable to being cheated because they placed their trust in health care plans sponsored by their colleges. Aetna Student Health broke that trust, said Cuomo.

Aetna has agreed to pay students or, where appropriate, their doctors, more than $5.1 million for underpayments, plus interest and penalties calculated under governing state law. Late payments in New York are subject to 12 percent interest. The scope of the agreement is nationwide.

Under the agreement, Aetna will also:

• update Aetna Student Healths claims processing system within 30 days after receiving new market rate schedules and annually certify when that was done;

• hire an independent third party examiner to review Aetna Student Healths compliance and training procedures, and improve those procedures based on the examiners recommendations; and

• provide all employees of Aetna and its subsidiaries enhanced training on reporting compliance issues.

"At a time when tuition and educational expenses at many colleges and universities are going up, students and parents simply can't afford to overpay for health care," said Charles Bell, programs director for Consumers Union.

"We are very pleased that Aetna has agreed to refund $5 million to students who were shortchanged on their health insurance claims. This national settlement also establishes strong consumer protections to ensure that students will be fairly reimbursed when they use out-of-network medical services in the future," Bell said.

Todays agreement is related to a settlement between the Attorney General and Aetna announced on January 15, 2008, in which Aetna agreed to stop using databases operated by UnitedHealth Group, Inc.s subsidiary, Ingenix, Inc., to determine out-of-network reimbursement rates.

Under that agreement, Aetna agreed to pay $20 million to a qualified nonprofit organization that will establish a new, independent database to help determine fair out-of-network reimbursement rates for consumers throughout the United States.

Todays agreement concerns the use of outdated schedules from the Ingenix databases to reimburse students. Because the schedules were out of date, they indicated lower reimbursement rates than the students were entitled to. The agreement resolves restitution issues arising from the use of outdated schedules to reimburse students; it does not resolve any other restitution issues arising from the use of the Ingenix database.

In February 2008, the Attorney General announced an industry-wide investigation into allegations that health insurers unfairly saddle consumers with the cost of out-of-network care.

At the center of that investigation is Ingenix, the nations largest provider of healthcare billing information, which gathers data from health insurers and creates schedules insurers use to formulate out-of-network reimbursement rates. Ingenix is used by the largest insurers in the country and is a wholly-owned subsidiary of UnitedHealth Group Inc. (NYSE: UNH), the nations second largest health insurer. The Attorney Generals office learned of Aetna Student Healths underpayments through the industry-wide investigation.

Aetna will send notice to all affected individuals with details on securing reimbursements.

Customers across the state accuse Blue Cross of California and its subsidiary, Blue Cross Life and Health, of canceling their policies as soon as hefty bills start to roll in.

When Jessica Bath of Morro Bays son Jack was born with a hole in his heart, Blue Cross took a closer look at her medical records and rescinded her coverage.

Heres how it works: After a consumer applies for health insurance coverage, a company has two years within which it can cancel (rescind) coverage if it believes the applicant has made a false statement on the application or perhaps failed to disclose a medical fact.

This situation applies to the individual, private insurance market. Policies issued through an employer are not subject to underwriting (background investigation).

Among Blues shady practices recently uncovered: letters to physicians asking them to double-check health insurance applications for accuracy and report any errors to the company (usual result: pre-existing condition = fast-track to being uninsured.)

Powerful allies

Consumers have picked up powerful allies in battling Blue during the past year. Both Blue Cross and Kaiser Permanente were fined by Californias Department of Managed Care for improperly cancelling policies, and the states Department of Insurance is seeking to fine Blue Shield Health and Life Company for $12.6 million.

More recently, the 35,000-member California Medical Association and the California Hospital Association (representing 450 hospitals) joined pending consumer class actions against Blue, charging unlawful rescission of over 6, 000 policies.

What does this mean to someone whos suddenly found themselves among the nations 47 million uninsured?

It's hard to say but the game may be up soon. In a case similar to Jessica Baths, Blue Cross cancelled Raudel and Maria Rodriguezs policy after Raudels medical bills topped $100,000. The Rodriguez family filed a class action, alleging that the company engaged in post claims underwriting, or illegally canceling after the bills got too high.

In another coup for consumers, both the trial court and the Court of Appeals ruled that consumers cant be forced to waive a jury trial and shoehorned into binding arbitration without a clear and specific warning. Unknown to many consumers, arbitration rulings have several drawbacks: theyre expensive (and consumers must pay half), they dont create legal precedent and they cant be appealed to a higher court.

LA takes action

Officials across the state have gotten involved, including Los Angeles City Attorney Rocky Delgadillo, who has sued Blue Cross for fraud and created a Web site, www.protectingtheinsured.org, where doctors and patients can post their own experiences with health insurance problems.

The Department of Managed Care has ordered 26 of the most outrageous cancellations to be reversed, and promised to investigate all rescissions between 2004 and 2008 by the five largest insurers in the state.

The five largest companies selling individual policies in California are Anthem Blue Cross, Kaiser Permanente, HealthNet, Inc., Blue Shield of California and PacifiCare of California.

While there may not yet be an across-the-board solution to the problem, individual consumers are winning some pretty impressive victories.

Patsy Bates, diagnosed with breast cancer, recently won a $9.4 million judgment against HealthNet, which cancelled her insurance while she underwent chemotherapy; $8 million of that amount was for punitive damages, awarded to punish a defendant for intentionally unlawful conduct.

No, not the Federal Emergency Management Agency. A new study suggests Wal-Mart, Home Depot and Lowe's would be a lot more helpful.

The study, from the Mercatus Center at George Mason University in Fairfax, Virginia, stresses that successful disaster relief depends upon responders having detailed knowledge of a local area and the right incentives to act on that knowledge.

Examining federal and private responses to Hurricane Katrina, the study by St. Lawrence University Professor of Economics Steven Horwitz shows why FEMA was destined to fail, and why for-profit firms succeeded at disaster recovery.

It also looks at the Coast Guard -- the only federal agency lauded for its Katrina performance -- which rescued more than 24,000 people in the two weeks following the storm.

Local knowledge

The study by Horwitz shows Wal-Mart, Home Depot and Lowe's made use of their local knowledge about supply chains, infrastructure, decision-makers and other resources to provide emergency supplies and reopen stores well before FEMA began its response. He says their local knowledge enabled the big-box stores to make plans ahead of the storm and put them into effect immediately after.

Also, leadership gave tremendous discretion to store managers and employees to make decisions rather than waiting for instructions from upper-level management, allowing for more agile disaster response.

Horwitz says the Coast Guard also places a strong emphasis on local knowledge. A flat organizational structure and unique agency culture allow for subordinate officers to alter the plans for a specific operation so long as they follow the commander's intent.

The Coast Guard's day-to-day activities (search and rescue operations, and work in the marine environment) as well as its division into specific geographic areas provide greater expertise for disaster response.

Horwitz also examined the conventional wisdom that businesses take advantage of disasters through price-gouging and other unsavory business practices.

While some price gouging obviously occurs during disasters, Horwitz's paper details how Wal-Mart, Home Depot and Lowe's actually sent truckloads of free supplies to the hardest-hit areas in the aftermath of Hurricane Katrina. No, it wasn't all altruistic, Horwitz notes. The businesses were just practicing good public relations, hoping to build long-term customer loyalty.

"Disaster response happens at the local level," Horwitz said. "FEMA is not local to anyone except people who live in Washington, D.C."

Insurance plans

With hurricane season approaching, now is the time for homeowners in the Southeast to review their insurance coverage. Read more ...

Consumer advocates are asking a New Orleans federal court to keep public key documents from a Hurricane Katrina-related lawsuit against Allstate Insurance Company.

The groups want to ensure that Allstate cannot seal court records that reveal the claims practices and policies it used to leave homeowners empty-handed after Hurricane Katrina.

Representing Foundation for Taxpayer and Consumer Rights (FTCR), a consumer watchdog group, Public Justice, a national public interest law firm headquartered in Washington D.C., today filed an opposition to Allstate's motion to "seal" the trial exhibits in Weiss v. Allstate, the case of a New Orleans couple who earlier this year won a $2.8 million verdict against Allstate for illegally refusing a hurricane-related claim. The parties subsequently settled; the terms are confidential.

The insurance company has asked the court to either return or seal the trial exhibits. Those documents include Allstate's manual for handling claims and an operational guide for subcontractors engaged to work on Katrina-related damage.

Opposing Allstate's request, FTCR says the trial exhibits "provide insight into Allstate's decision-making process" and that denying public access to them "would directly impede FCTR's mission of educating the public about insurance practices and abuses."

FTCR, which has fought for comprehensive insurance reforms in California and nationwide, says Allstate and other insurance companies have accepted premium payments from customers like the Weisses for years, only to deny or drastically reduce property owners' claims when catastrophe strikes.

"It appears that Allstate devised its claims-handling process to avoid paying claims to homeowners and did so at the very same time homeowners were, quite literally, stranded and desperate due to the devastation caused by Hurricane Katrina," said Michael Lucas, a Public Justice attorney.

"These records shed light on Allstate's behavior after Hurricane Katrina and Allstate is afraid of the public scrutiny," Lucas said.

"Allstate doesn't want anyone to know the internal procedures by which it delays and denies the claims of Katrina survivors and other policyholders in the wake of a disaster," said FTCR's Harvey Rosenfield, author of California's insurance reform initiative, Proposition 103.

"These documents may embarrass Allstate, but that's no reason to keep them secret. The law says they must remain public."

Last month, the Consumer Federation of America criticized AllState Insurance, accusing the carrier of unjustifiably raising home and automobile insurance rates relative to the amount paid out in claims, using questionable practices to settle claims, and attempting to shift costs to taxpayers.

Miller launched the probe after the state's chief insurance regulator said he had insufficient authority to handle the investigation.

The attorney general's office can use the state's tough Consumer Fraud Act to subpoena witnesses and prosecute offenders.

Miller has long taken an aggressive stance towards fraud aimed at seniors. The state ranks second in the nation in the percentage of residents age 85 and over and is often seen as a primary target of elder scams.

Besides denied claims, elderly consumers say their long-term-care premiums have risen faster than they anticipated.

A recent New York Times series documented problems and abuses nationwide, sparking a Congressional investigaiton into two of the leading LTC issuers, Conseco and Penn Treaty.

Long-term care insurance is sold with the promise that it will help pay for in-home health care, assisted living or other types of elder care. Seniors are told the policy will help them remain in their homes or, if they must be in a nursing home, will pay a major portion of the cost.

Seniors often fear that if they become unable to care for themselves, they will have to spend down their assets before Medicaid will help with nursing home costs.

New York Attorney General Andrew M. Cuomo announced a settlement affecting nearly 400 New York consumers whose credit reports were unlawfully accessed by an insurance company. Under the settlement, Administrators for the Professions, Inc. (AFP), a New York insurance company, is paying $229,600 in compensation to those consumers.

Between November 2000 and March 2006, AFP obtained more than 800 consumer credit reports on approximately 400 different individuals from the credit reporting agencies Equifax and TransUnion. An overwhelming majority of the consumers' credit reports were acquired for purposes not permitted by the federal and state Fair Credit Reporting Acts.

Credit reports may be legally obtained by agents such as potential credit grantors, employers, or insurers, or with a consumer's permission. AFP, however, illegally provided credit reports for use as investigative tools in civil litigation, for use in connection with insurance claims, and for satisfying requesters' personal curiosity.

Credit reports were also unlawfully attained for investigators trying to locate parties in matrimonial and other personal matters, and for individuals looking to acquire information about an estranged spouse.

"Companies with access to a consumer's credit report must be vigilant in ensuring that such access is not abused or used unlawfully. Consumers' privacy must be protected, and the integrity and confidentiality of a consumer's credit report must be preserved."

Rebecca J. Weber, Executive Director of the New York Public Interest Research Group (NYPIRG), said, "Misuse of an individual's credit report can cause a lifetime of financial trouble. This scheme has affected hundreds of New Yorkers, and NYPIRG applauds Attorney General Cuomo for a successful crackdown on corporate crime."

Phyllis Hill Slater, Executive Council Member for the New York State office of the American Association of Retired Persons (AARP), said, "AARP commends Attorney General Andrew Cuomo for his efforts to ensure New Yorkers' personal credit information is not accessed without their consent. As older New Yorkers tend to be prime targets of fraud and abuse, it's important our laws are enforced to protect them."

Chuck Bell, Programs Director for Consumers Union, the publisher of Consumer Reports, said, "Consumer credit reports contain highly sensitive personal financial information, including social security numbers, home addresses, credit history, and employment information. It's critical that businesses obey the restrictions in federal and state laws that protect this information from unauthorized disclosure."

As a result of AFP's unlawful acquisition of consumers' credit reports, the credit files of those consumers inappropriately reflected that a credit "inquiry" had been made. The inclusion of such an inquiry in the credit files of these consumers could adversely affect their credit score or result in other negative consequences.

Under the settlement with the Office of the Attorney General, AFP agreed not to acquire a consumer credit report unless it is for a permissible purpose as set forth in federal and state law. AFP agreed to pay $229,600 in compensation for consumers whose credit reports were illegally accessed; those consumers whose credit reports were obtained on one occasion will receive $600, while consumers whose credit reports were accessed on two separate occasions will receive $1,000. AFP will also pay the State of New York $85,000 for penalties and $15,000 for costs related to the investigation.

In addition, AFP will provide the list of all affected consumers to Equifax and TransUnion, and direct those credit reporting agencies to delete all references to the illegal inquiries from each consumer's credit file.

Stinging from defeat in a Hurricane Katrina damage claim in Biloxi, the company says it will no longer insure homeowners and businesses in the state, where it is the largest single insurer with a 30 percent market share. Allstate pulled out of Mississippi's six coastal counties last year.

"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 statement.

State Farm is among a number of insurance companies hit with staggering claims in the wake of Katrina and other storms that have pounded the Gulf Coast in recent years.

While Allstate and some other carriers have cut back on coverage in storm-prone coastal areas, none until now has blacklisted an entire state.

The decision is expected to have significant impact on consumers. Currently State Farm holds 30 percent of the homeowner policies in the state. Other companies currently serving Mississippi will have to fill the gap.

State Farm has had a number of setbacks in Mississippi since Hurricane Katrina ravaged the state in 2005.

In January, a proposed $50 million class action settlement between the company and Mississippi homeowners was derailed by the judge hearing the case. U.S. District Judge L.T. Senter said the proposed settlement did not adequately spell out how payments would be determined and which homeowners would get them.

Also last month Gulf Coast property owners who lost nearly everything during Hurricane Katrina won a victory in court when a U.S. District Judge sided with them, ordering State Farm to pay $223,292 in damages the company had initially rejected.

Mississippi Attorney General Jim Hood had also filed suit against State Farm but dropped his state court suit when State Farm agreed to the tentative class action settlement. Hood had predicted the class action settlement would cost State Farm as much as $500 million.

Hood has also been pursuing a criminal investigation of State Farm, which he said he would drop when the class-action settlement is finalized.

After learning of State Farm's announcement, Hood said the company was trying to back off its commitment to remain in the state, which he said was part of the lawsuit settlement.

"The whole reason for reaching the settlement with them was to keep them here," Hood said.

Homeowners in Mississippi's coastal counties who can't find a private insurer can turn to the state's wind-insurance pool, where rates are as much as 90 percent higher than commercial insurance.

The suit also claims that the insurance company did not adequately disclose that seniors could have their limited savings tied up for as long as 15 years, could not cash in their annuities early without paying hefty surrender penalties, and that payments advertised as "immediate" bonuses were not payable for up to 15 years.

"Allianz and its agents aggressively marketed deferred annuities to seniors without regard to the suitability of the sale and without disclosing that seniors' limited savings could be tied up for years," Attorney General Lori Swanson said.

"It is wrong for a company to mislead seniors into tying up their retirement savings in unsuitable investments in order to generate commissions," she said.

Swanson noted that the sale of unsuitable, long-term annuities to senior citizens using aggressive and deceptive sales tactics has recently drawn significant national attention. She said her office was reviewing other companies' annuities sales practices for evidence of unsuitable sales and/or deceptive marketing.

Swanson said that Allianz agents often lured seniors to attend "estate planning" or "wealth management" seminars, the real purpose of which was to sell Allianz annuities to the seniors who attended. Swanson said Allianz also lured seniors to purchase the annuities by offering "immediate" bonus payments of five to ten percent of the principal of the annuity. In fact, the lawsuit alleges that Allianz does not pay the "immediate" bonus for as long as 15 years.

The lawsuit contends that, after luring seniors in the above fashion, Allianz agents often:

• Failed to ensure that the annuity was a suitable investment for the particular senior. Minnesota law requires an agent to ensure that an annuity is suitable for the purchaser's financial needs. Allianz's deferred annuities are often unsuitable investments for seniors because the circumstances of many seniors requires them to have current income or access to liquid funds to pay living expenses, nursing home expenses, or medical costs. With Allianz's deferred annuities, seniors could see their savings tied up for as long as 15 years.

• Misled seniors regarding the terms of these "deferred" annuities. In a deferred annuity, after holding the annuity until its "maturity" date (often five to ten years), the senior cannot simply cash it in but rather must have the annuity payments spread out, or "annuitized," over another lengthy period of up to five to ten years.

• Misled seniors regarding the hefty surrender penalties of up to 15 percent that apply if the senior withdraws more than a small portion of their money before the annuity "matures" (which sometimes exceeds the life expectancy of the senior.)

Allianz Life Insurance Company of North America is based in Golden Valley, Minnesota and is owned by Allianz SE of Germany, the largest financial services company in the world. Allianz Life Insurance Company of North America has approximately $75 billion in assets and approximately $3.5 billion in net worth.

Judge L.T. Senter, Jr. ordered State Farm Fire & Casualty to pay $223,292 in damages to a Biloxi couple, who suffered the loss of their home in the devastating storm. The judge declined to award punitive damages in the case, but said the jury may choose to do so.

In an unusual move, the judge issued a directed verdict from the bench, then ordered a recess. He sent the jury to the jury room to begin deliberating punitive damages.

Norman and Genevieve Broussard say they lost their home when a tornado spawned by the massive hurricane slammed into it, leaving only a concrete slab.

The insurance company refused to pay, saying the home was destroyed by Katrina's storm surge, and that the policy did not cover water damage.

Attorneys for the property owners accused State Farm of breaching their contract, trying to "chisel" their way out of legitimate obligations. In addition to covering the replacement cost of their home, the plaintiffs are also seeking $5 million in punitive damages.

"We are surprised and disappointed by the court's ruling," said State Farm spokesman Phil Supple. "The expert testimony supported a different result. After the conclusion of this case, we will evaluate our next steps in this lawsuit."

The Securities and Exchange Commission has filed suit against a Waco, Texas, insurance company and its affiliates for targeting American military personnel with a deceptive sales program that misleadingly suggested that investing in the company's product would make one a millionaire.

Since 2000, approximately 57,000 members of the United States military services purchased the product. The vast majority earned little or nothing on their investment.

The complaint, filed in the United States District Court for the Southern District of California, charged affiliated entities American-Amicable Life Insurance Company of Texas, Pioneer American Insurance Company, and Pioneer Security Life Insurance Company (together, American-Amicable), all based in Waco, Texas, with securities law violations.

American-Amicable has agreed to settle the action by paying $10 million to the approximately 57,000 military personnel who invested in the product sold as an investment known as "Horizon Life."

The settlement is part of a global settlement of claims brought by the Commission, state insurance regulators led by the Georgia Department of Insurance and the Texas Department of Insurance, and the United States Attorney's Office for the Eastern District of Pennsylvania.

The settlement with the other regulators will provide additional relief, which the other regulators value at approximately $60 million. In the agreed settlement, the company has neither admitted nor denied the Commission's allegations.

Under the settlement, American-Amicable will discontinue sales of Horizon Life and will terminate the deceptive sales program, which it called the "Building Success" system.

Unlike insurance products legitimately offered to a wide range of potential buyers with a potential interest in the insurance features of those products, Horizon Life was targeted at military personnel who had little or no interest in insurance because they already were provided access to low-cost insurance sponsored by the government. Instead, American-Amicable represented Horizon Life to military personnel as a security and a wealth-creating investment.

As a material element of its marketing, American-Amicable senior staff trained its sales agents to hold themselves out as "financial advisers" or "financial coaches." Purporting to play that role, the sales agents then misled military personnel to believe they could become millionaires if they invested in Horizon Life.

At the same time, the agents denigrated other investment alternatives, claiming that mutual funds, bank savings accounts and government bonds were not sensible investments compared to Horizon Life.

Although the written materials ultimately provided to investors apparently accurately described the Horizon Life product, the company's deceptive sales pitch did not. Contrary to the representations, the overwhelming majority of military personnel who purchased Horizon Life earned little or nothing from their investment.

Linda Chatman Thomsen, Director of the Commission's