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Insurance

Why and how to opt out of healthcare.gov

I opted out of the Universal health care mandate. I did it legally. Why did I do this and how is the purpose of this post.

I opted out and I am glad I did. I choose not to be part of the system because of moral reasons, but I also found a better alternative.

Why Universal health care is so expense – for people who work

It is because you pay for others who abuse the system, a layer of newly added bureaucracy and people who generally are hypochondriacs, overuse of drugs in the US, opportunists in the medical system that know how to profit from the system or like many people who leave it up to their doctor to make the healthy,  rather than being proactive in their own health.

For example, if you have a job you pay for people like my neighbor on his 11th operation and on meds and is out fishing every day (he is 35). You pay for all the people who live promiscuous lives, smoke, drink, do not exercise and live on processed foods take advantage of the system. You pay for the doctors who charge just to charge.

I am a consultant and entrepreneur. I need to buy insurance so I do not get hit with a tax penalty under current US law. The company I work for has some plan that costs a lot and offers little. On healthcare.gov prices are not cheap either, do not believe the hype. I was about to pay over $600 dollars for a high deductible bronze plan.

Why I do not support Social medicine in the USA

It’s not the rude treatment I got on healthcare.gov numerous times or the economic idea that social medicine is inferior and results in a lower level of care ( I lived in a socialist country for many years).   It is not that it is one more way for the government to put all your life data in their matrix.

The reason I refuse to be part of the system is I object to where my money goes. If I want to contribute to a charity I do it, but not to people using my money in the wrong way. Remember charity is only charity if you freely give.   I could pay the Obamacare tax but I choose not to for moral reasons. I do not like the things it supports from abortion to birth control pills as I am a Christian (Roman Catholic). I do not like the idea of being forced to pay for things I do not believe in if I can.

What do I do to cover my family medically?

So instead I do something similar to a media-share PPO run by a Christian Care Ministry.

It is based on Christian ideals. The members share the cost. I can go to a doctor just like anyone but is base on a different ideal. It is just like insurance but does not cover things like abortion, which I find an abomination.  And you know what, it is a fraction of the cost for the equivalent plan in the health care system. The reason I think is the people in the pool live a cleaner life based on Biblical principles. For example, you can not have relations outside the context of marriage. Since I am loyal I have no problem with that. My total cost for my family for a good plan is about $250 dollars a month. It will be under $200 if I get a physical to prove my body weight and height are proportional. Even that is an incentive to have a healthy life.

Crazy things insurance does that actually harms you

People base their medical choices on if it is covered by insurance, however, that is not the optimal choice for long term health in many cases.

A lot of the things medical insurance covers but I do not want are medically useless or harmful.  For example, US insurance usually does a CAT scans first ( that is like 100 Xrays of radiation) instead of an MRI. I would rather pay cash for an MRI then get a deadly CAT scan. I would rather pay 250 dollars cash for an MRI then a CAT scan on some split that will be just as expensive to me and skip the radiation.

US insurance covers back surgery, in contrast, I paid cash for stem cells and it worked. Yes, some guy in my office is 30 something and did a couple of back surgeries in a few months. Insurance picked up the bill but it was expensive and he was happy about it even if it did not really work that great.  In contrast, I did stem cells to repair my back. I think I am better off.

My daughter was at the doctor for a sore throat. The doctor recommended steroids to help her breath. She has no trouble breathing she said, the doctor also agreed, but just in case. It was a sore throat that went away in a day. This is US medical coverage. Who gives steroids to a healthy five-year-old, just in case.

General US insurance plans coverage pays for oodles of drugs and painkillers and many outdated aggressive medical procedures. I believe in science, for example, stem cells that are more progressive. I do natural things like taking allergies quercetin for allergies (I live in Florida) and find it more effective than the side effect laden drugs written by doctors.

Take charge of your health

I did 23andme.com to get a complete genetic profile of health risks. I do complete blood work and pay cash and it is a fraction what you pay. I exercise and eat right and stay skinny. We all grow old and die why punish your body with many outdated scientific ideas pushed by special interests. You have to really conscious of the medical choices you make.

I would have no problem going abroad if I had something that was too expensive here or too regulated. medical tourism is another thing not covered under Obama care.

God forbid if I get cancer or have to go to the ER of course my plan covers this. It works like insurance. It is just that I am not paying into a system I ethically and objectively do not see of value. My plan pays for office visits and surgeries like any other plans. But because of the cost savings in the monthly premium, I can channel this to other things a healthy lifestyle.

I think healthcare.gov does more harm than good and I find it morally objectionable, that is why I opted out.

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Insurance

Personal injury lawyer billboards

I do not know if it is the area I live or this is America today with the economy and all? But on network TV and along the any highway I see billboards for personal injury lawyers announcements dominating advertising landscape. Not a few mind you, but ever 1/4 mile, there are a cluster billboards from St. Augustine to Jacksonville.  On local TV, my wife and I can by heart recite the names of a dozen personal injury attorneys suing insurance companies for things from ‘medical errors’ to ‘auto accidents’.

Are there no other business that want to advertise then legal services?

 

Now I am not opposed to lawyers as much as I used to be, all lawyers are not bad. Further, having working for a few insurance companies I am not to enthusiastic about Tort reform either. It is not that insurance companies are so rich, it is that when someone is injured, almost no money can replace a physical loss. I mean come on what will $20,000 do for you if you have back problems for all the days of your life.

So my critique is not against lawyers, nor against insurance companies who want to contain costs and keep your premiums affordable, which I understand.

The first thing I would do is hang all the lawyers – Shakespeare

I am just asking the questions – here are some of my theories:

  • Lawyers have disposable income  -Are accident lawyers the most profitable game in town based on advertising in the area or at least have the most disposable income to throw around?
  • Service economy – Is the domination of personal injury law advertising the ultimate symptom of we are all pressing each others pants in a service economy?
  • ROI for law suits are high – Or does it mean the profit margin is the highest and they can afford the expense luxury billboards?
  • A cost of business – For lawyers, a service they have to invest in marketing to maintain a pipeline of clients?
  • Target market – Or does it mean that the target market for personal injury claims are people in their cars or sitting at home watching TV?

I am not sure, but coming back to the USA after about ten years abroad, this is one thing I noticed, lawyer announcements everywhere, even business cards left at fast food restaurants. Again maybe it is the area I live in now.  From Boston to Europe to St. Augustine.

  • My strongest theory is, the personal injury law suit business has a high Return on Investment but also need to invest to get any return. Their investment is marketing, rather than intellectual capital or time on a case.

A typical  law firm has green lawyers from law school and legal secretaries or para legal doing all the leg work while they collect fees. These fees are paid by the insurance company as a percentage of the settlement, typically 1/3. I imagine both the insurance company and the lawyers avoid court, all know each other and would rather settle for a modest claim out of court. It is all part of the game they play.

So objectively speaking with little work put forth, just knowing a little bit of legal procedure with a few hours of collecting data and organizing a case file the law firm can net a reasonable amount of money for the amount of billable hours and time invested.

They typically have quick screening phone hotlines to determine, not if your case is valid but if it is profitable. They also weed out or control needy, time or energy draining clients and just focus on simple cases with medically documented injuries insurance companies will pay on.

Can you image getting 10,000 dollars on a stock in a short time?

To support theory is the number of super stores of a more sensual nature billboards I see on the highway also. I do taxes on the side and talked to a former owner of one of those stores and he said it has one of the highest market ups of any business on their products. It is not a necessary good like bread but he was selling value added luxury items so to speak.

So companies with money can afford advertising and marketing. Companies that are trying to grow and expand.

The problem personal injury lawyers have is getting a steady pipeline of new clients. Clients that have medically documented injuries and walk though their front door. This is one of the reasons people do not like personal injury lawyers, it is they are making money off of someone else’s injury. But I guess they are a necessity and that  is another conversation.

So as long as they have a pipeline of new clients personal injury attorneys make a lot of money. In contrast, if you are selling facial tissue in Boston, there will always be a market as long as it is cold there. All companies have to do is create product differentiation and the customer will buy. But personal injury lawyers need to actively seek out new clients. It has a little big different supply and demand dynamic as well as margins on products and service sold.

However, I also think it is a symptom of the economy. If there were more business, say a value added, productive creative businesses then they would be advertising if the marginal benefit exceeds the marginal cost of adverting. But they are not. So clearly something is wrong not only with the economy, but the whole legal medical profession cost structure. This is because health is a priceless commonly that is difficult to ration.

If anyone else has any insight about if this is, the place I live, the US economy, or just the nature of the lawyering business?

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Insurance

Economics of insurance fraud

The economics of Insurance fraud in graphs

I worked in the Insurance industry for many years. From time to time, we heard someone got caught doing something to defraud the company (usually auto insurance fraud). Since the penalty was pretty high I  would ask why would any rational person do it. If they were so clever they could use their talents in more productive ways. Can economics explain why?

Was it a matter of cost accounting, that is the opportunity cost of going to prison and forgoing earnings potential in the job market would be outweighed by potential earnings from committing insurance fraud?  Or is it a matter of simple utility, that is someone is trying to significantly increase their happiness (utility) but outsmarting an insurance company?

Here are some quick graphs I put together to try to explain the rationale of the individual and the insurance company.

Analysis of the mind of an insurance criminal

This is, of course, a simple chart but it tells an interesting story. I believe economic graphs are always almost obvious, but they do give insight into why people do what they do, especially when you look a the shape of the curve or the elasticity. After a certain penalty like ten years or even 5 years, the curve starts to get very steep. Who would want to spend five years of their life behind bars no matter what the payout? Of course, we all have different indifference curves but I would not.

There is also a huge moral factor. For example, most people’s curves would be a vertical line up the y-axis as there is no price for coming moral wrong. Most people might bend the rules in their personal interactions perhaps but to consciously try to cheat is only a few people. However, during the financial crisis, some people change as they are desperate.

How insurance companies later alter the rational decision-making of an insurance scam criminal

I think insurance companies most effective prevention is both fear and better methods for detecting fraud. Trying to lobby for increased penalties is harder.

Payout – Penalty for insurance fraud y-axis starting point

Note that there are some low levels of fraud that basically represent no risk (very low) for a penalty. This is why the curve starts at a higher level than zero. I have seen insurance companies pay 8,000 dollars even when the fraud was suspected or known, it was a lawyer or cost thing, it was not worth paying the lawyer and agents to pursue the case as it is often very difficult to prove fraud clearly. Many scams are very clever.

I would say for anything under 1,000 it would not be pursued but anything over 1,000 dollars they might investigate and over 5,000 they will do a check and over 10,000 they will look at it, for auto insurance fraud and pursue it if they suspected wrong.

However, for P&C or property and causality with homes, boats, etc there is a different level as well as with life insurance which has a bigger payout.

I, of course, believe all fraud is wrong and should not be done at any level for moral reasons and do you want to really go to jail, for some money. If you need to make money fast there are better legal ways. Some people, underestimate the long-term cost of the penalty if they get caught, such as a police record. With economics, I think you can analysis a lot of interesting things. I certainly did not do this topic justice but it is only an example of economic analysis applied to a particular case, that is a financial crime.

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Insurance

Is renters insurance worth it?

Renters insurance is a waste of money and time. I have rented for 30 years. That is right 30 years of paying rent, I know what I am talking about.  I can prove that insurance is not worth it.

Property insurance

Insurance is about ownership, not a monetary probability. You are made whole after a catastrophic loss that would destroy your life. If you own a car and home, which are large investments then these are things which you must insurance, but if you rent a place chances are the things you have in your flat are not worth insuring.   Why?  They would not set you back materially in your life.  The only thing worth anything is my laptop, no the unit but the data one it.

Do a cost-benefit on cost and risk of liability/loss.
  •  The premiums after a couple of years will be let us say $800, with this money you could have gone to IKEA and bought new furniture.

If you have a large diamond ring lets say, you take a separate policy out on that.  A new laptop at best buy will cost only $300 brand new.  So, in my opinion, its a total waste of money to insurance your pittance as a renter.

  • I have rented for countless years and never had a problem.  Further, if someone really wants to steal my TV, well good luck. I will leave it at that.
Look how humble I live, there is nothing to take or be damaged.

You overvalue your own things in your apartment

There is a tendency to value your own things more than they are worth in the market place.  On e-bay, you can buy replacements for what you have lost at a fraction of the price from the store. Who knows you might even find your own hot stolen item there.  I am just joking. Although one time I was at a market here where I live and I thought I saw my friend’s cell phone for sale.

The second you carry an object out of a store it is nothing more than a depreciating asset on an accelerated curve.

If you are renter chances are you are in your 20s and do not have a lot of valuable stuff anyway.

Insurance company payouts

Receiving payment from insurance companies.  I have heard receiving payment from the insurance company’s on housing insurance is a hassle and sometimes even profitable.

The opportunity cost of investing vs insurance

If you rent a place your money is better to spend saving for a house rather than letting service companies, like and insurance company take your disposable income away.

Life is risk

What about better, safe than sorry.  My reply is there is always a risk in life.  You can take out a special insurance policy every time you fly in a plane.  I think insurance companies play on people’s fears.  I do not like it.  I have worked in insurance for many years and they will have you buy every type of insurance there is.

It is a waste of your time and money and psychologically you are not free, but governed by your fears. Insurance companies are greedy.

Buy apartment insurance if there really is a need.  A real need.  But not for every little thing.  This is why I believe tenants insurance is a waste of time and mental energy.

How much does renter’s insurance cost?

I think the average person will pay a couple of hundred dollars a year at most.  Not a lot, but not little either. You could invest this couple hundred in your 401k and you would be better off.

What if your landlord requires you to buy insurance.

My advice is to find a place where it is not required.

What if you live in a high crime area?

Move or do not have valuable things.  I love in Poland and everyone has three locks on their doors and everything here is solid, but no one would ever buy renters insurance.

The bottom line on insurance for renters

In my opinion, you do not need renters insurance.   If you want to browse around and compare costs and benefit, it does not hurt. If you disagree let me know and know why you think you need this in your flat or apartment.

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Insurance

Investment accounting for an insurance company – a strange job

My overview of  a job in investment accounting for an insurance company

One of the strangest jobs I had been the manager (director or whatever the title inflation is these days) for investment accounting for OneBeacon insurance company. Insurance accounting is a strange and funny world. The purpose of this post is to tell you a little about what that job entails if you have ever thought of being an investment accounting hero. I would say it is a fun job, but this post is just set your expectations.

  • Here is my resume which illustrates my intimate detailed knowledge of investment accounting. I am by the way available for consulting for implementations of investment accounting software.  If you are a recruiter you can consider placing me and ignore the comments here.

First, it is both thankless and rewarding Why? It does not have the flash or glamour of an investment front office job,  it has the long hours and you are maintaining rather than creating. You are simply making sure the reporting is perfect.  However, it does pay well and it is pretty easy.  It is not rocket science, it is just basic accounting.  Most of the accounting is handled with plug and play software. You might have an odd off security or investment but you can always find a workaround. Also just dealing with investments assets and derivatives has a fascination as it these are the world’s assets on an auction block.

Investment accounting front to backflow example

The conceptual model is simple, it all depends on how well the trade and investment accounting software speak to each other.

Software examples:

  • Blackrock Aladdin – front end software
  • Bloomberg front end software and data enrichment
  • PAM PFS by Princeton Financial – Back office
  • CAMRA by SS&C – Back office

These are all excellent choices and progressive companies use the above as they have been vetted with years of experience.  Smart leaders use this type of software so they can focus on their core book of business.

The problem in non-progressive back-office financial control situations is, they do not understand how important a unified front to the back system is, do not know how to create it in short time and are not adding value,  just processing.  There is not a lot of room from out of the box thinking unless management is supportive of that.  Further, the investment management team usually have inflated egos therefore, difficult to work with.  Really they have fancy degrees and huge egos, but get returns like everyone else if you average this out in the long-run.  I guess it varies from firm to firm.  So if you do not mind reporting to these types of people the job is pretty easy and most of the people in investment accounting in insurance companies are pretty nice.

The job consists of valuation of investment assets on book value (adjusted cost basis) and comparing them to market value and determining what they really should be stated at based on rules.   You also have to report income as well as transactions. Not hard, the software you set up calculated this for you. You just need to organize everything on your general ledger into accounts minor and major. Again a pretty easy job once everything is all set up.

If your firm is not sophisticated with technology then the job becomes difficult as breaks between the front office, the middle office, and the back office are common.  Regulatory reporting, risk and financial reporting need to to be reconciled.

There is a cottage industry of people who perform this archaic reconciliation and even defend the paradigm to create job security. There are often middle managers who are PowerPoint pros and make their living asking “what are people working on?”.   If you are in a progressive company this is not the case.  My experience at OneBeacon and Metlife was positive for example. I worked for a vendor of investment accounting software and this was also a progressive company.

What is Statutory Accounting

The first oddity you will notice when you work for an insurance company is something called STAT. When I worked in the investment accounting STAT or Statutory Accounting always made my life more difficult. Why? I had to create separate financials for every company on a STAT and GAAP basis.  If I did not use SS&Cs CAMRA it would have been almost impossible.  But with CAMRA the STAT basis was calculated with ease just enter the cost and other data from an asset and it would calculate the BV (book value).

What is STAT accounting?  It is a more conservative accounting method than GAAP.  GAAP tends to overstate cost and liabilities while on the other hand understate income and assets.

The reality of Statutory insurance Accounting

Every asset has a GAAP and STAT value, STAT being a more cautious valuation. The valuations are such because the states want to make sure that insurers are doing their job and protecting the policyholders in case of losses.  Statutory accounting is particularly important with investment assets.  These assets are where insurance companies store premiums for future use.

The rules of statutory are set by the NAIC or the National Association of Insurance Commissioners.  They also make you buy their manuals and interpretations regulations and GAAP to SAP tables.  These guide books come at a pretty price.

STAT in the future

In the next four years, I think we will see a whole new ball of wax in terms of insurance accounting as Obama has plans to take insurance regulation from the states and move it to a central bureaucracy.

Investment insurance accounting  made easy – use standard reports

I was a consultant for insurance companies all over the US for many years,  I also was a manager and director for other companies.  I used many different software products for investment accounting. Some better than others.  SS&C’s CAMRA was the best.  PAM or Princeton financial in my experience did not have the customers service or the full features CAMRA and SS&C had, but still worked.  I worked with both companies and I would choose SS&C any day of the week for the trust factor and fewer headaches.  Your investment management team and accountants will be happier. But that is up to you, I am just conveying personal experience based on years of using the two systems.

My main piece of advice if you are running an investment accounting department for an insurance company is this, use the standard reports.  Do not get into custom report building or any customization of the system if you can. Why? I have seen more professionals defeated my customization and run up budgets because some ‘big wig’ in the investment or accounting department wanted to see a particular report.  These standard reports are time-tested. they will serve all the required reporting needs. Anything else is usually fluff.  If you have a report writing wizard on site, why not use them, of course.

Banks use CCAR reporting this is another twist to the story but beyond the scope of this discussion

My theory for investing in accounting

My theory of management with investment accounting reporting is, keep it simple.  This is accounting, and the goal of accounting is to report numbers to regulators, it is not the core line of business.  You could argue it is to support management’s decision-making process, but that can be done with most standard investment accounting insurance reports.
Each customization of the system or reporting you do will have to be upgraded and as things changed will have to be maintained.  Investment accounting for insurance companies can be fun if you keep it simple.

But the bottom line insurance accounting jobs are pretty easy and stable and well paid but not very exciting.  There is no rush in accounting. If you are in investment accounting for insurance companies you will have a pretty nice life if you have an existing other life.  Ask me any questions if you like about this type of job.

Are the manager or director level jobs worth it?

More compensation comes with more stress. It’s not easy being a manager unless you have the right people work for you. Most people don’t have a strong work ethic. I trained over ten people in the last ten years; I haven’t seen a really good one. That’s another reason I am doing three people’s job. I don’t mind getting paid $80k being a senior analyst, this way I can spend more time with my children. I can do a senior analyst job easily and I don’t have to manage people and deal with politics. The extra 20-30k is not worth it.

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Insurance

Insurance fraud

The following is a series of facts and stories about insurance fraud.  It is a bit of a collection of stories from my life in the insurance world and what I have seen.  Many people are wondering what the penalty is for insurance crimes and what are the chances or getting caught. It is more a series of ideas linked to one major post. Let the headers be your guide for this insurance post.

This post will talk about insurance fraud penalties, the morality of insurance fraud and the chances of getting caught.  It also has some stories. I used to work in the insurance industry so even though I am not an expert I do have the insider’s perspective. I am a very moral person, I hope and do not recommend trying to convey any false information to an insurance company.

Auto insurance fraud

One-quarter of the drivers could have invalid insurance. 26% of UK of the drivers in the UK have an auto insurance information that was reported and is false. This means if they are found out, their auto insurance could be invalid. The most common things that car owners lie about are they are the mileage, what that they do, where they live, past claims, where the car is parked, and of course points on their license. Cutting corner, pun intended seems innocent until you are caught. Auto insurance companies have huge departments set up just to investigate these types of things. It seems innocent but what it does is puts drivers in insurance risk categories that are lower than the rest and therefore unfairly gives these car owners discounts on auto insurance. They are usually not found out unless there is a car accident and an insurance claim detective looks deeper into the insurance policy for some reason. And certainly, this auto insurance fraud is not on the same scale as other types of Auto insurance fraud. But it is a form of fraud.

Scam story

Have you heard of the company names of Citizens Insurance, Meridian Insurance, and Nationwide Mutual Insurance? Well here is the problem, a man in Grand Rapids was selling computer generated auto insurance policies for a $40 dollars a policy. He knew something about I would imagine Photoshop and scanning and created an auto insurance scam that milked about 500 people out of $40 dollars. First, I think the guy must be an idiot, he sold the insurance too low and this tipped people off as people started talking about this as a shady deal. Second, he sold this in his own back yard, and therefore, the community talked. Third, besides moral reasons for not doing this, auto insurance scams can land you in jail for a while. He put up fliers around his house to sell the scam auto insurance. I imagine he was desperate for cash. What I do not understand is why such a talented man, talented enough to fool 500 people would not use his skills in a productive legal way instead of scamming people out of $40. All things considered, though his scam auto insurance documents looked quite real.

Insurance fraud fails because:

Insurance scammers are poor planners. That is it. The people committing insurance fraud are in economic trouble.  They are in this trouble because they do not know how to manage their own personal finances.   These type of people are poor planners.  And hence they when they plan an insurance fraud they are poor planners also.  They act out of desperation.

Fraud equals guilt and people want to get caught – People commit insurance fraud are good people gone bad.  They have a moral conscious but want to do something bad, maybe on time.  They are rarely professional crooks.  Therefore at some level, they want to get caught.

Insurance companies do not take these cases lightly they take them to court. Insurance companies have large sums of money and lawyers to get dishonest people.  Insurers have 100s of years of experience finding these guys and in my opinion usually, do and come down hard to act as a warning.

Fraud of any kind is immoral and not the way to make money

Why I think insurance fraud is stupid.   Because in live ‘virtue is its own reward.’  I have never known a rich insurance crook.  But I have known many rich hard-working people including working for insurers.

Classifications of types of false claims

Auto insurance fraud penalties fall in two four classifications,  hard, soft, free from injury, and injury. An example of hard car insurance fraud is if you intentionally stage an accident such as to collect a claim.  An example of a soft would be if you exaggerate your claim on a legitimate accident.  It is estimated about 25% of people do this.  So it is very widespread.

Car insurance fraud penalties

Now the law has separate penalties depending if there was any bodily harm.  If there are no bodily hard 10 years is the maximum jail time, but if there was you can get 20 years.  Again this all depends. Most people get a fine for their penalty, however, it is a crime and goes on your record.  Virginia and Oregon do not classify it as a crime. The average criminal penalty, I do not know, maybe 10,000 dollars.  But this is a guesstimate. But really do you want to destroy your life by doing something like this?

Motives for the cheats

The motives for fraud are clear, it’s a financial crime. People cannot pay the bills. They figure stealing from an insurance company which is big and greedy is no great moral wrong and no one will miss the money. However, even if the company is big and greedy it is still wrong.

How people get caught by an insurance company

Fraud units at insurance companies are experts.  But the reason people get caught is for obvious reason.  People make stupid mistakes. However, as a word of warning, I worked in the insurance industry for years, they have a very good trick for finding fraud.  They are very clever.  So please do not consider it. If you want something to think about Auto insurance fraud penalties.

Auto insurance fraud investigation limit

The purpose of this post is to tell you about the least claim limit for investigation for fraud.  Usually, Auto insurance companies do not investigate claims under $1,000.  Therefore, a lot of claims that are called ‘paper claims’ are under this $1,000 investigation limit and not arouse suspicion.

Car insurance investigation

I am an honest person.  I do not have a criminal mind.  I would recommend anyone reading this post on auto insurance fraud investigation limit thinking of scamming a car insurance company not to. Why? I have worked for insurance companies and although they do not catch everyone many people get bonuses on how many people who are frauding them they can get, including from time to time claims under $1,000.

There is no end to falseness

One tactic used by scammers is to pay a false witness.   A witness will stand in the staged accident and wait for the police to arrive.  If this is an all-cash deal and the slammer and the false witness to not have any traceable ties to each other than it is very hard to catch someone on this.  The insurance company’s fraud unit will obviously look for any connection between the witness and the false claimant.  If these are really well-planed accidents could be anything from hit and run or sideswiped etc.  I think hit and run is very common for anyone planning insurance fraud.  However, often others must be involved, like doctors or chiropractor (who often had a bad reputation when it comes to claims).

In my opinion insurance fraud and bearing false witness is morally wrong.  I am not telling you how to do a scam, rather, what people do base on what insurance companies find out about people who scam. If the people doing the scam do this more than once they will get caught.  I think if it is planned and only a one-time thing they may or may not get caught and punished for their insurance scam, wrongdoing.

Story 2 of someone trying to get money from an insurance company wrongly

I am 100% against insurance fraud.  I think it is stupid and immoral. However, I heard one person who planned a small-time fraud and I do not know if to this day he got caught.  What he did was had a car with serious problems.  1000s of dollars needed for repair. He had a good auto theft insurance policy.

How he committed insurance fraud

He hired a guy from the city to steal his car.   He went to the movies on a date with just some girl.  Some honest random girl.  When they came out of the movies the car was stolen.  Of course by some guy he hired. The insurance company paid and he got a new car. The date was a witness to his fake shock etc.  And everything was airtight.  Insurance fraud that worked. See the only problem with this story was he did something morally wrong. He got a new car but at the cost of other policyholders who pay premiums.  I think what upsets me about car insurance fraud is that other people have to pay for it.

One-quarter of the drivers could have invalid insurance. 26% of UK of the drivers in the UK have an auto insurance information that was reported and is false. This means if they are found out, their auto insurance could be invalid.  The most common things that car owners lie about are they are the mileage, what that they do, where they live, past claims, where the car is parked, and of course points on their license.  Cutting corner, pun intended seems innocent until you are caught.  Auto insurance companies have huge departments set up just to investigate these types of things. It seems innocent but what it does is puts drivers in insurance risk categories that are lower than the rest and therefore unfairly gives these car owners discounts on auto insurance.  They are usually not found out unless,there is a car accident and an insurance claim detective looks deeper into the insurance policy for some reason. And certainly ,this auto insurance fraud is not on the same scale as other types of auto insurance fraud. But it is a form of fraud.

Car insurance fraud is on the increase
There has been a 33% increase in the number of insurance fraud cases being pursued in the last year.  BMWs and Saabs are being abandon, burned or hidden and these are

being found by insurance fraud claims investigators for insurance companies.

Many Americans are taking their cars to Mexico and abandoning them there.T hey then make false statements to the Police, which is considered a felony.
Debt is increasing auto fraud

The reason for auto fraud is obvious, people have credit they can not pay. In fact, when investing suspicious claims auto insurance fraud agents take into account the financial conditions of the suspect.  If you find a person desperately in debt, there is your motive.

It is interesting to note that fraud is worst in places like LA or Nevada where the economic crisis is the worst.  I do not know the percentages of convictions insurance companies get.  If anyone knows concrete percentages please let me know. There is 1) fraud 2) accusations 3) convictions.  I would be curious what the percentages on each are.

This post was a lot of posts cut and pasted together. Let me know your thoughts and if anything struck you or it was way off base.

Categories
Insurance Politics

Expats and US health Care Reform Insurance?

I am an American living as an ex-pat abroad full-time. Will I have to pay for health care insurance in the US ( which I will not use) under this new health care reform bill? This is a good question. The purpose of this post is to clarify the rule for ex-pats regarding new mandatory health care insurance.

Do ex-pats need to pay for US health care reform?

Do you live abroad? What is your medical status with regard to insurance? Here is my situation. I am a dual Polish and US citizen. I live in Poland, not the USA. I pay for Polish national medical insurance and do not need US insurance coverage for my family, as I am never in the USA and living as an EU citizen in the EU. The rule is I have to pay normal federal US taxes no matter what, which I do. However, under this new health care bill, I do not have to pay for this new insurance because I reside outside the USA.

It will be required that all US citizens and US visa holders buy national US health care insurance, if and only if they live in the USA. However, do I have to pay this also if I am not residing in the States?  No, because I am an ex-pat. This also applies to ex-pats who are not dual citizens, that is, they just work or live overseas of course.

Of course, every US citizen living in a foreign country and with or without dual citizenship will be responsible to file normal USA taxes. The United States is one of the few countries that requires its citizens to file a tax return on all worldwide income, forever, with no exceptions.

I have two words for you: ‘”medical tourism”. If I need to have any medical procedure I would go abroad as the cost is a fraction of the US and unless it is brain surgery. The quality is the same or better overseas often. I lived abroad and I can tell you the doctors really take their time with you and you can pay cash for little money. The US health care system is a rip-off.

New health care insurance bill for ex-pats

Summary:

  • Expatriates do not pay for health care reform
  • US residents are required to pay for health care reform or face a penalty
  • I live in a post-communist country and see how socialism destroys the national economy

The health care legislation affects people living in the US, citizen or visa holders as this is where you will get treatment.  Therefore, citizenship status does not matter, only legal residency an important condition in this bill. Based on a place of residency test, you may or may not have to pay for this insurance coverage as an American living in a foreign country.

Here is the rule.  If you live in the USA you must pay or have a penalty for exempting out. Most of the health care reform will start in 2014. Therefore, unless the law is changed ex-pats will not be required to buy health insurance like the rest of the Americans because they are paying for it in another country anyway, and will not use it.  They are not resident (see US tax code resident test) even though they are citizens. Therefore ex-pats do not need to purchase insurance ( I am not a legal or tax expert, just my understanding of this new insurance bill). I think this is very fair for me as a US expatriate not paying for the new US health care bill.

I make very little because of the currency exchange, but it would be a burden with another tax, it would be a huge disincentive for work and productivity. I live in Poland, a post-communist country and I have seen with my own eyes how socialism destroys the economy. Socialism is fine until you run out of other people’s money. Obama has done something that he really is not aware of the full effects. Ronald Reagan said ‘government is the problem’. I am pro-government just not a socialist and if you are come to the former eastern bloc and live as I do.

I am very happy that this new legislation passed by Congress will exempt me out as an ex-pat. Now I am still required to pay normal US taxes, but at least this is not one more straw on the camel’s back.

The impact for consumers if you live in the US will be of course different and the rule for residency for ex-pats will be strict. Foreign multinational employees will also be exempt from buying these health care insurance premiums.

The risk for ex-pats US health care reform

One note is as an American living abroad, if I go to the USA, I do not think I am covered by the US health care plan. I would be covered under my EU insurance policy for someone traveling to the USA.  Therefore, I am not without insurance but if you are an ex-pat making a trip back home be clear as to what the rules are and the type of insurance you have.  I can buy extra private insurance here in Europe when traveling with my family to America. I do this anyway. Just make sure you do not assume you are covered if you are living in a foreign country.

I am not for socialized medicine personally. The government that governs least governs best. However, I will have to wait and see what impact this will have on the US economy as a whole and the political process.  Congress, the House of Representatives, the Office of the President has given this a green light to the American people have spoken. I am just glad as an ex-pat I will not have to pay double for national health care insurance.

Update – I am no longer an expatriate: US social medical coverage will be repealed or largely dismantled by the time 2014 rolls around. I moved back to the States after almost a decade as an ex-pat and am shocked how spotty US medical care is. I think someone is making a lot of money and the average citizen suffers. The last generation was got medical coverage but I think future generations will have access only if you are relatively wealthy. although I am a libertarian, I have no idea about how people will pay medical bills in this new economy.

My advice is to stay healthy or consider medical tourism. My local dentist here wanted $3,000 dollars for a procedure. In Poland, I did it for $300. Insurance is a racket here in the U.S.