North Dakotans who have incomes twice as high as federal poverty guidelines should be eligible for government health insurance for their children, the Democratic candidate for insurance commissioner says.

Jasper Schneider, who is a state representative from Fargo, said Tuesday that the change would add 3,300 children to the Children’s Health Insurance Program, which is financed by the state and federal government. North Dakota’s share comes to about 25 percent.

Schneider estimated the expansion would cost North Dakota taxpayers about $3 million, which he said was easy to justify given a state budget surplus that is expected to exceed $700 million by June 2009.

“As much as we love to brag about our huge surplus, in my mind it is almost irresponsible government,” Schneider said. “It’s the taxpayers’ dollars, and it’s not doing anybody any good to leave that money sitting in Bismarck, while at the same time we’re turning down 3,300 kids and their families, and saying, ‘Sorry, we can’t help.’ We can do better than that.”

In June, there were 4,119 children enrolled in the program, the Department of Human Services said. It offers coverage for immunizations, dental work, eye exams, health checkups and prescription medications, among other services.

Schneider is running against Republican Adam Hamm for North Dakota insurance commissioner. Hamm is seeking his first elected term after he was appointed last year to succeed Jim Poolman, who resigned.

Hamm said Monday that he supported making more children eligible for the program, but said the state’s initial focus should be on making sure children who are already eligible are getting health coverage. Low-income families who have children 18 years old are younger may qualify.

“To me, there can be a healthy and vigorous debate … about what is a reasonable expansion of the program, but I think all parties can agree that we need to immediately focus on trying to get as many kids that are currently eligible signed up,” Hamm said.

The program’s income limits are pegged to federal poverty guidelines. At present, families with incomes up to 140 percent of the federal poverty level may be eligible to have their children insured.

That percentage is rising to 150 percent on Oct. 1. Some expenses, including Social Security, Medicare and state income and federal tax withholdings, are not counted toward the limit.

Schneider’s proposal would make families with children eligible for coverage if their incomes were 200 percent or less of the federal poverty level.

Under Schneider’s terms, a family of four would be eligible for government insurance coverage for children if the family’s income was $42,400 or less, a 43 percent increase from the current limit of $29,676.

The ceiling would rise to $49,600 for a family of five, and $56,800 for a family of six. The current limits are $34,716 and $39,756.

Schneider said his proposed North Dakota expansion of children’s health insurance eligibility will depend on whether the federal government continues state subsidies of the program, which are now scheduled to end in March.

President Bush and Congress have been feuding about proposals to expand the Children’s Health Insurance Program. Last October, the president vetoed legislation that he said would have extended its benefits to middle-class families and encouraged them to drop private insurance coverage.

Maggie Anderson, the Medicaid director for the state Department of Human Services, said the state expects to spend $3.2 million on the Children’s Health Insurance Program during the next federal budget year, which begins Oct. 1. The federal government is expected to pay $9.2 million.

Schneider’s proposal also includes the establishment of an advisory board, headed by the state insurance commissioner, that would monitor the children’s insurance program and suggest ways to improve it and encourage enrollment.

The board would include two state legislators, representatives of North Dakota’s three members of Congress, a representative from Blue Cross Blue Shield of North Dakota, and two members of a nonprofit advocacy group, chosen by the insurance commissioner.

Blue Cross Blue Shield, which is based in Fargo, is North Dakota’s largest health insurance company.

No Comments »
Filed under: Insurance Today

A couple we’ll call Lawrence and Jocelyn live in a small town in Ontario. Professionals, they have two children, one 18 and starting university, the other 20 and finishing undergraduate studies.

Lawrence, 57, and Jocelyn, 56, are diligent asset builders. They have accumulated two homes worth an estimated $689,000, more than $500,000 in registered retirement savings plan investments in 23 mutual funds, and $58,000 in cash and guaranteed investment certificates.

“It seems to us that financial companies would have us save so much that, unless disaster struck, it wouldn’t be possible to use up all that money,” Jocelyn says. “We want to enjoy the bulk of it ourselves while we’re still young enough.”

Facelift asked financial planner and portfolio manager Adrian Mastracci, head of KCM Wealth Management in Vancouver, to work with the couple.

“These folks have lived fairly frugally, but they wonder when to reduce savings,” the planner says. “There is no question that they can sustain their lifestyle in retirement.”

Lawrence and Jocelyn already have substantial retirement investments and a savings rate high enough to pay for their children’s remaining educational needs. Their net worth, according to their carefully calculated data, is $1,193,000. They want to reduce work to part time in three years and then retire at age 65 with $60,000 pretax income in 2008 dollars.

If they converted $600,000, about half their net worth, including registered assets, to cash and invested in a high-quality corporate bond with a 5-per-cent running yield, they would have $30,000 a year. Add in their total benefits at age 65 from the Canada Pension Plan – $10,615 a year for Lawrence and $9,300 for Jocelyn – $6,070 a year for each from Old Age Security and $40,000 a year in pretax pension benefits from a previous job that will accrue to Lawrence. With all that, the couple could have a total of $102,055 a year in pretax 2008 dollars at retirement at age 65.

By pension splitting, they will be able to avoid the OAS clawback that begins at about $64,000 in 2008. They will have close to double their retirement target in pretax income. As far as can be seen, they will have no financial issues of great concern.

Yet they do have a different kind of problem. Their flock of nearly two dozen mutual funds are mostly from one vendor. All are relatively high-fee products that could be emulated by low-fee exchange-traded funds (ETF). Over time, ETFs that replicate benchmarks for their domestic and foreign funds are likely to outperform their managed portfolios, Mr. Mastracci notes.

They have no financial plan in place, and little understanding of what is in the funds or, indeed, why they have a half-and-half mix of Canadian and foreign assets. They have life insurance in sufficient amounts to provide either spouse with additional income, even though with their children nearly independent, they have no real need for the coverage.

Their retirement plans are also not firm. Lawrence and Jocelyn have a house and a nearby condo for their retirement, which is currently rented out. They want to travel to Australia or Antarctica, and perhaps the Yukon or Inuvik. They have an interest in doing volunteer work and staying at home and running a small farm operation that could turn a profit.

Lawrence and Jocelyn are eight and nine years, respectively, from retirement.

There is no need for them to cast their plans in stone with so much time to go before ending their careers, Mr. Mastracci notes. But they should begin to narrow their choices.

First, in retirement, it will be costly to keep two homes. They should decide whether to keep the condo or their house and its substantial acreage. If they want to keep the condo, then they should pay down its $130,000 mortgage more quickly. They can deduct the mortgage from their gross rental receipts, for it is an income property.

Lawrence currently has disability and long-term care coverage through his employer. When he retires, he will have no need for disability coverage, but a long-term care policy would be valuable. It would be useful for the couple to check on the costs of such insurance and to be prepared to shift to their own policies for long-term care and supplement medical expenses when they retire. Insurance of this kind is not cost effective until it is needed. Then it can provide a quality of care that would tax their financial resources. It is worth investigating, he says.

For now, they have more than enough savings for retirement, Mr. Mastracci concludes. They should use up their RRSP space for tax reduction, make a long-term plan to substitute low cost exchange-traded funds for high-cost mutual funds, and make a plan for a retirement sufficiently definite that its costs can be more accurately estimated. As well, with their retirement already adequately financed, they can spend more money now on travel and other pleasures or even giving to charities.

“This couple has worked hard and has achieved a lot of flexibility for their retirement,” Mr. Mastracci says. “They have more than they need. They could see this as a reason to start spending now and saving less, but I see their substantial savings as a valuable option to make choices that others, who have not saved so well, might envy.”

“I feel relieved that we have enough money for our future,” Jocelyn says. “A lifetime of savings does have its reward in the security we appear to have earned,” Lawrence adds.

No Comments »
Filed under: Insurance Today

While most flood-damage claims in Wisconsin have been for homes and businesses, insurers are starting to see more claims for waterlogged automobiles and trucks.

Representatives for two of Wisconsin’s major auto insurers say they have begun to see new claims coming in for flood-damaged autos and trucks headed for the salvage yard.

At American Family Insurance, the state’s largest auto insurer, claims on more than 300 cars were logged as of Friday, according to American Family spokesman Steve Witmer.

At State Farm, the state’s second-largest auto insurer, more than 377 claims for autos or trucks have been recorded so far this month, company spokeswoman Kelly Savage said.

With more claims expected in the days and weeks ahead, state Department of Transportation officials say there are provisions in place to help would-be consumers avoid buying autos that are water damaged.

Under normal circumstances, a car owner with a water-damaged vehicle will call his or her insurance agent to make a claim. The agent will examine the vehicle and give the car owner a check for the damage.

The insurance agent is supposed to take the title to the car and retitle the vehicle under the insurance company’s name. Under Wisconsin law, the vehicle is then branded as a flood-damaged car. If the car cannot be repaired, the title also will reflect the car is salvage.

According to DOT official Steve Krieser, information on each car is recorded on the agency’s computer system and relayed to the National Motor Vehicle Titling Information System.

That should prevent the problems that cropped up after Hurricane Katrina, when thousands of water-damaged vehicles were cleaned up and shipped to other parts of the country for resale.

No Comments »
Filed under: Insurance Today

Colorado motorists who are unfortunate enough to be injured in a crash will have one less thing to worry about thanks to a bill signed by Gov. Bill Ritter late last week.Or they’ll have one more thing to worry about. It depends on your perspective.Ritter signed a bill, Senate Bill 11, that will require every auto insurance policy issued in Colorado to have $5,000 of medical payments coverage, known as “med pay.” It has an opt-out clause, too, so people who determine they don’t need the extra coverage don’t have to get it if they don’t want it. But now they will have to have the option.

The law will help motorists, especially those who don’t have health insurance, by offering enough money to cover the cost of a typical ambulance ride, for instance. Those who do have health insurance could use the med pay to cover their deductible or out-of-pocket expenses.

But the new system is also likely to increase the cost of insuring your car.

Colorado ended its long-standing no-fault auto insurance program in 2003 and switched to an at-fault system. Under the old system, a driver injured in a crash would have his medical expenses covered by his own insurance, even if it wasn’t the driver’s fault. Under the newer system, the at-fault driver is responsible for payment, and before payment can be made, someone has to determine whose fault it was.

Medical payments coverage became optional under the new system, and many motorists either thought they didn’t need it or decided to save money on premiums by going without it.

But some drivers who don’t know about that or don’t buy enough coverage can’t afford their medical bills. They can sue the at-fault driver, but that might not matter if the person at fault doesn’t have much money.

That has meant trauma care providers are often unpaid because the injured motorist can’t afford to pay.

The Trauma Care Preservation Coalition, a group of ambulance companies, hospitals and other emergency services providers that formed to address the problem, said the system has cost hospitals and ambulance companies millions of dollars in unpaid bills, and that translates to higher costs for patients who can afford to pay.

In 2002, under the old system, hospitals were reimbursed for about 60 percent of the care they provided to motor vehicle accident patients, according to a report commissioned by Ritter’s office in February. By 2006, that number had dropped to 36 percent, the report found.

Reverting back to a mandatory med-pay system will ensure that more of those expenses are covered—$5,000 worth, at least.

Ritter said the bill would help consumers and emergency services providers.

“Almost everyone has out-of-pocket medical expenses, such as co-pays and deductibles, which could be paid for by medical coverage in the event of an accident,” he said in a statement. “Senate Bill 11 will help ensure that every Coloradan has the coverage that he or she needs and that ambulances, physicians and hospitals are paid for the critical care that they provide.”

But that comes at a price.

Mandatory extra coverage will likely drive up insurance premiums, said Alan Miller, assistant public affairs manager for State Farm Insurance based in Greeley.

“We were opposed to SB11 from the standpoint of, as much as we are happy to sell people our products, we don’t feel people should be forced to buy additional insurance that they may not need, want or, frankly, be able to afford,” he said. “This bill will require people to buy additional insurance.”

Though they can opt out, Miller said many people don’t, not only because they think they have no choice but because that option requires a written declination of the coverage. That will result in higher costs for everyone, as insurers are forced to carry more policies.

Since the at-fault system went in place, auto insurance premiums decreased throughout the state, up to 35 percent, he noted.

“That’s really what moving away from no-fault was designed to do. With no-fault, it was so out of control; there were so many things that had been added on that, that it was becoming so expensive. It was just skyrocketing,” he said.

Industry representatives said things like massages and even aquariums were covered under the old system, because they were considered rehabilitative. While SB11 won’t reintroduce those kinds of problems, rates will likely creep skyward, Miller said.

“I think we’ve hit the bottom, and because of these legislative mandates, we’re going to be seeing rates go up,” he said.

No Comments »
Filed under: Insurance Today

Homeowners often don’t take time to reassess home-insurance coverage when it’s time to pay the premium. But with many Americans looking for ways to save a buck these days, examining that paperwork could pay off.

While raising the deductible is often an easy way to reduce premium costs, it isn’t the only way. Discounts in the form of credits are also available for many homeowners.

“Credits can really add up and become substantial,” says Pete Spicer, vice president and new product manager for Warren, N.J.-based Chubb Group of Insurance Companies.

A renovated-house credit, for example, is available through Chubb for homes that have been renovated in the last 10 years. Those eligible to take advantage of that credit may shave off as much as 10% of their premium if the renovation occurred in the last year.

It’s likely that some of these breaks will be brought to your attention by your agent, says Dick Luedke, spokesman for Bloomington, Ill.-based State Farm Insurance, but it doesn’t hurt to ask about them yourself if you think you may qualify.

Below are five home-insurance credits that are offered. Availability and eligibility will vary by carrier.

• Security protection credit. Many carriers offer a credit if a home has a functioning security system, with the amount of the credit dependent on the type of system. According to the Insurance Information Institute, homeowners can often get at least 5% off their bill for a smoke detector, burglar alarm or dead-bolt locks. Add a sophisticated sprinkler system and a fire and burglar alarm that rings the police, fire department or another monitoring station, and you may be in for a premium reduction of as much as 15% or 20%, according to the institute.
 
• Central monitoring. Central monitoring systems can shut off the water if there’s a leak detected while the homeowner is away, or raise the indoor temperature if it moves out of a specified range. Chubb, for example, offers 2% credits for water-leak detection systems as well as temperature monitoring systems that protect a home’s pipes from freezing.
 
• Disaster preparedness. Credits are available for people who guard their homes against natural disaster. Storm shutters and shatter-proof glass can help reduce premiums in some areas, according to the Insurance Information Institute. At State Farm, a wind-resistant roof can result in a discount from 3% to 20%, Mr. Luedke says. At Chubb, an automatic seismic shut-off valve that protects gas lines in the event of an earthquake, as well as a back-up generator, can reduce an insurance bill.
 
• Other discounts. Live in a gated community? Chubb provides a 5% credit for that level of security. Many carriers will also offer breaks if the home’s plumbing or electrical system has been completely modernized, according to the Insurance Information Institute.
 
• Discounts for repeat customers. There’s often a discount if at least one car is insured under the same carrier that insures your home, Mr. Luedke says. And the longer you’ve been a customer — and haven’t racked up any claims — the better the price break. At State Farm, for example, a claim-free customer who has used the company for more than nine years is eligible for a 20% break on his or her premium.

No Comments »
Filed under: Insurance Today