HHS May Kill Stand-alone Indemnity

[RayNY]

We are approved in Texas

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I know it sounds like too good to be true
The return is thru sharing of reserves not thru investments
When the person does not have claims his HMI account grows as do our reserves
Claims reduce his account balance and our reserves dollar for dollar
Don Levit

Excuse my ignorance, but how is this not a pyramid scheme? Claims reduce reserves dollar per dollar, there are no investments, returns are paid from reserves.

I presume you didn't hit the lottery and decide to fund the reserve as a charity, and you're not running a charity to create profit just to give away. I'm sorry, but I can't imagine a way you can even beat inflation without investment, let alone, provide a return greater than any financial instrument available on the market.

 

[Post Quartermaster]

Excuse my ignorance, but how is this not a pyramid scheme? Claims reduce reserves dollar per dollar, there are no investments, returns are paid from reserves.

I presume you didn't hit the lottery and decide to fund the reserve as a charity, and you're not running a charity to create profit just to give away. I'm sorry, but I can't imagine a way you can even beat inflation without investment, let alone, provide a return greater than any financial instrument available on the market.

Fractional reserve supplemental insurance.....lol.....

 

[Happy Texan]

Excuse my ignorance, but how is this not a pyramid scheme? Claims reduce reserves dollar per dollar, there are no investments, returns are paid from reserves.

I presume you didn't hit the lottery and decide to fund the reserve as a charity, and you're not running a charity to create profit just to give away. I'm sorry, but I can't imagine a way you can even beat inflation without investment, let alone, provide a return greater than any financial instrument available on the market.

I did not say we have no investments
The investments will be very conservative earning maybe interest of one percent
We can provide such returns precisely because as the HMI account value reduces like any defined contribution plan when it is used
When that occurs the risk increases for the employer and decreases for NPLH
We are assuming the employer's risk in self funded plans from dollar one
As the HMI account balance grows so does our risk and the reserves
When the account reaches $50,000 in month 57 (guaranteed less claims made) the employer is taking the risk for that person after $50,000 reducing the total premium
by 50 percent
Don Levit

 

[somarco]

We are assuming the employer's risk in self funded plans from dollar one

Not needed if the employer truly is a self funded candidate (and not everyone is).

When the account reaches $50,000 in month 57 (guaranteed less claims made) the employer is taking the risk for that person after $50,000 reducing the total premium

Spec and agg also limit risk exposure in self funded plans and probably at a much lower cost than your examples.

And what happens if the account bails on this scheme before month 57? How long do you keep the reserves to pay runoff claims?

 

[RayNY]

I understand how they can pay you $50,000 and have $50,000 in their account, less claims. You claimed they can do this "while earning 35% return - guaranteed on their contributions." to quote your post. By my math, that's about $49,500 in returns over the course of 5 years (60 months, $833 contribution, $0 starting balance, 35% compounded annually).

To hit $50,000 in 60 months (I'm just using a round number), you'd have to contribute $10,000/year, or $833/month, not $300.

($300/month gives you $17,100 in 57 months, or $35,840 if that 35% return was real and interest compounds annually. It's just shy of $48k if you compound monthly.)

Something just plain isn't adding up. Are you planning on giving Employees cash from the employer? Are you confusing "35% savings compared to other plans" with interest return?

 

[FLM2]

How did stand alone indemnity turn into a discussion of a product that doesn't exist?

 

[AllenChicago]

How did stand alone indemnity turn into a discussion of a product that doesn't exist?

SERFF filings in my state show that effective 1/1/2015 Limited Medical Products (Hospital, Critical Illness, etc..) will have new applications. Applicants must attest to the fact that they have Minimum Essential Coverage. And agents attest (as always) that the answers given by the applicant are true. Applicants in the family who do not have MEC cannot be included on the applied-for plan. The wording is in BIG FONTS. No doubt a HHS/CMS requirement.

Ref: https://filingaccess.serff.com/sfa/home/il
-ac

 

[RayNY]

How did stand alone indemnity turn into a discussion of a product that doesn't exist?

Mr. Levitt offered it as an alternative. It seemed too good to be true, so I asked a few questions, and he responded.

You're right though, it doesn't exist, and I still can't seem to wrap my head around his numbers. I'm usually very good with numbers.