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About a month ago from ISAHU's Twitter via CoSchedule

In 40 years, Jim Santo never had to deal with a long-term care claim. Then his wife got sick.

Based partly on Jim Santo’s experience, ISAHU is working to change two things that are quietly harming agents and Hoosiers like him: commission expirations and making LTC plans more affordable.

Jim Santo and his wife Candy lived in New Jersey when the September 11, 2001 attacks shook the region and world. Seeking a sense of normalcy, security, and maybe just a quieter place to live out their retirement years, Jim said, “We’re moving.”

His wife, Candy, replied: “I know just the place.” A native Hoosier, she suggested the couple move to Bloomington where her brother earned a Ph.D. from IU. “We always wanted to retire in a college town,” recalls Jim. So in April 2002, they made the move. The insurance company Jim worked for had an office on the northside of Indianapolis for the occasional commute. They were close to their daughter and other family members. And Bloomington felt like home.

Indiana law takes away income after six years

Then two problems arose. The first was Jim’s commissions. “I was hired by Prudential in 1970 and went into sales in 1974. I officially retired from there in 2009 and re-invented myself into the senior market doing more of what I liked: senior health insurance,” says Jim. Having left his nearly 40-year book of business behind, he needed to not only reinvent himself but his commissions and income.

“In almost every other state, paid commissions on Medicare supplement plans last [for the] lifetime [of the customer’s plan],” says Jim. “Except Indiana.” After six years, the commissions expire, meaning Presidents can potentially spend more time in the Oval Office than a single agent can keep earning commissions on still-in-force policies. So agents have to creatively un-enroll or re-enroll customers back into another plan to keep earning income or just constantly keep selling. A good year in 2006 means a potential disaster in 2012.

“My concern was this really encourages churning,” says Jim. Churning, he says, “Is not usually a good thing for the client, but does produce a new commission for the agent. It also encourages others of us to look at Advantage Plans and Medicare supplements.”

Re-enrolling customers into Medicare supplement plans is a cumbersome process requiring proof of eligibility. And as customers age, getting favorable rates becomes harder. “Which is a small built-in way to prevent churning,” says Jim. “But aging doesn’t prevent the agent from moving them from a Supplement to an Advantage plan.” That process, too, can only happen in open enrollment periods.

Facing the new challenge of reinventing himself, his business, his income, and a six-year income cliff, a second problem arose when Candy became seriously debilitated. The resulting long-term care (LTC) claim proved frustrating, eye-opening, and expensive.

Christy and Jim Santo
Daughter Christy Santo and Jim Santo

The struggle with starting a LTC claim

“My wife has been on two LTC claims,” says Jim. “The first in 2013-14. There was no question she qualified. She could not perform any of the six activities of daily living.” Those activities include being able to feed, clothe, and bathe yourself. “She came home in a wheelchair and needed help with everything,” he recalls. Over the next nine months, Candy made a full recovery. 

“But I submitted a claim immediately and I followed the particular company’s guidelines. Problems arose because they said I had to have approved vendors, paperwork, and more,” all of which he used and provided.

“Each time you call, they say you get someone assigned to help you, like a care coordinator. That didn’t really exist,” he says with an ere of frustration. “And each time the paperwork said something was missing. I’d make more calls and re-submit.” The mild-mannered Jim adds, “Over three months of reimbursement expenses racked up and I blew my top.”

A call to the Indiana Department of Insurance had the matter fixed within about a day. He was reimbursed $16,500. The experience—of a veteran insurance professional no less—proved eye-opening. “Regardless of whether you have insurance or not, you have to have some deep pockets just to get a claim started,” he says. “The insurance companies don’t want to start a claim, but once you have one approved, it’s easy to submit each month. But you’re still a month behind. A lot of people don’t realize that.”

Candy’s policy has a zero-day waiting period. But some require a 90-day waiting period. “People think they’re going to get a check on the 91st day. But they really have to go three full months, then one month on claim, submit the paperwork, and now you’re four or five months out. Plus, you have to wait two more weeks before you see any money,” he says.

After recovering, Candy is now on a second claim today for Alzheimer’s and lives in an adult facility in Bloomington, but under different criteria. “This time instead of a claim based on the six activities of daily living, it’s based on cognitive impairment,” he says. A process that requires an insurance company nurse practitioner to evaluate patients on a battery of tests, in consultation with a physician. “She lives comfortably,” says Jim, noting he and their daughter visit her a couple of times each week and do Sunday Zoom sessions to attend church. A son lives in Houston and also stays in close contact.

Statehouse action for 3% plans and lifting commission expirations

ISAHU, in conjunction with its lobbyists of record at Torchbearer Public Policy, is working with legislators to fix both of these problems. The first is lifting the six-year expiration on commissions and the second on changing IDOI policies regarding patient choices on LTC plans. 

In Indiana, LTC plans are either “in partnership” or not, with “in partnership” plans receiving asset protection from Medicaid. These plans require 5% compounding for cost of living adjustments. This way the interest the plan draws for each policyholder can sustainably fund a patient’s long-term care needs. 

“I highly recommend LTC insurance, preferably on an Indiana Partnership plan,” says Jim. The Santos’ have two LTC policies, one with and without the partnership. The non-partnership plan has been funding Candy’s care in full. “But the premiums have skyrocketed for new applicants and very few people can afford partnership plans.” For most Hoosiers without the time, expertise, or deep pockets to self-fund the initial reimbursements, LTC plans are prohibitively expensive.

ISAHU is pushing the IDOI to give consumers the option to elect either a 5% compounding cost of living adjustment or 3%. A 3% policy would be more affordable and could generate more sales in the LTC marketplace with the tradeoff the funds might not last as long. The law currently says only 5% plans are allowed.

Professional and life advice for everyone

In 40 years, Jim’s first LTC claim was with his wife. For agents who may not have any or much experience with LTC claims, he says, “You must be extremely persistent. Ask lots of questions. And if you’re trying to help a client, fight for that client. You have to fight like hell.”

Jim counts himself lucky for being able to afford the upfront costs, and for having the skills to navigate the process. Additionally, the cost of long-term care in Bloomington has risen slower than the compounded interest the LTC plan provides, meaning the pool of money available to keep Candy in adult living remains stable.

Jim also has life advice for everyone: “The biggest complaint I hear from seniors is a lot of people put off vacations until they retire. Then they can’t because one of them gets sick. Fortunately for my wife and I, we did a lot of camping back when we had little money. We camped in forty-eight states and Canada. Then after the kids left, we’ve vacationed in fifteen different countries. I have no regrets about that. The last couple of years have been difficult. But I think we did it right.”

If you have had issues with LTC plans or agent commissions on Medicare supplement plans, contact David Berman at dberman@torchbearerin.com. You can also contribute to ISAHU-PAC to help fund political action at the Statehouse.


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Indiana State Association of Health Underwriters

Indiana State Association of Health Underwriters