New York Elder Law Attorney Blog

The New York Department of Financial Services recently published a proposal to add a “best interest” standard to insurance regulations that imposes suitability requirements on annuity recommendations by producers and insurers in New York. The move comes soon after the National Association of Insurance Commissioners (NAIC) suitability working group issued its own proposed guidelines for best interest standards for the NAIC Model Suitability Regulation which seeks to create a national standard for insurance regulations.

The proposals would require that an annuity purchase and replacement recommendation not only be suitable but also be in the best interest of the consumer at the time the recommendation is made. The proposal defines “best interest” as “acting with reasonable diligence, care, skill and prudence in a manner that puts the interest of the consumer first and foremost” and does not necessarily mean the cheapest policy available.

Although the proposed NAIC models are only recommendations to state regulators overseeing their respective insurance markets, they are nonetheless important because many professional organizations rely on these private interest groups for guidance on how to conduct their business. New York is one of the majority of state that already have adopted laws requiring insurance producers to make “suitable” annuity purchase recommendations and require insurers to maintain supervision systems designed to ensure compliance with regulations.

Promising statistics recently came out early this year indicating the mortality rate for older Americans is down from 2015 to 2016, perhaps due in part to the greater access to healthcare our elders enjoy now that insurance companies cannot deny individuals with pre-existing conditions. For Americans age 75 to 84, the mortality rate improved by 2.3 percent between 2015 and 2016, or twice the rate of improvement seen between 2011 and 2016. The figures come from the Society of Actuaries and is based on data provided by the Centers for Disease Control.

Mortality also improved for those 85-years and older by 2.1 percent, which is more than three times the rate of improvement between 2011 and 2016, according to new analysis from the Society of Actuaries. However, Americans aged 25 to 34-years old saw their mortality rates increase by 10.5 percent in 2016 which represented the highest of all age brackets.

The Society of Actuaries believes the uptick in mortality rates for younger Americans is due to a spike in accidents and the nationwide opioid epidemic. According to the report, opioid deaths are up almost 25 percent across the country in 2016, which constituted the highest increase for any single type of death.

The White House recently announced it planned to scale back initiatives put in place by the previous administration to reduce wasteful spending created by the complexities of the country’s healthcare system. As a result, officials from the Center for Medicare and Medicaid Studies (CMS) said they will no longer be operation on an aggressive timeline put in to place which sought to link increases in Medicare payments based on the quality of care patients received from hospitals which received the funding.

The objective of the direction taken by the Obama administration was to overhaul the nation’s largest health care program by altering payments to doctors and hospitals so that these providers would be incentivized to reduce unnecessary services that can put a drain on resources. The hope was that doctors would coordinate patient care, resulting in lowering healthcare costs while still maintaining vital revenue streams from Medicare that providers rely upon to do business.

To reach that goal, officials announced back in 2015 that in just three-years, half of Medicare payments to hospitals would be tied to standards on patient quality of care. However, White House officials recently told some news outlets that the new administration would instead conduct a review of how well the plan did or did not work at achieving this goal. While the Trump administration is not likely to fully do away with the initiatives, it is unlikely the proposed timeline will remain in place.

A recent audit conducted by the Social Security Office of the Inspector General found that the program has failed to fully pay the overwhelming majority of surviving spouses entitled to receive survivor benefits in addition to the regular Social Security benefits. According to the report, the Social Security Administration shorted $131 million to over a combined 9,000 widows and widowers aged 70 and older, or about 82 percent of those eligible.

The issue stems from a provision passed in the Bipartisan Budget Act of 2015 which ended the so-called “file and suspend” strategy which activates one spouse’s monthly benefit and suspends the other’s in order to increase payments on the delayed account after the individual reaches 70-years old. The members of Congress who passed the bill did so under the assertion those types of provisions constitute loopholes that unfairly increase payments to married couples.

However, the law was never meant to impose restrictions on couples filing a restricted application for survivor benefits where beneficiaries elect to claim their survivor benefits and delay taking their own Social Security benefits until the age of 70. This allows the widow or widower to grow their own Social Security benefits by 8 percent annually up until he or she reaches the age of 70. For those who are aware of the opportunity and take advantage of it, the increased benefits can make a tremendous difference in quality of life.