New Structured Settlement Annuity Provider, Independent Life


Today a new Structured Settlement Annuity Provider was announced and is entering the market for underwriting structured settlement annuities. Independent Life is announcing at the Fall NSSTA meeting and beginning the roll out and pre-launch phase ahead of their commencement of business. Per the press release provided to The Settlement Channel:

"After four years of designing and creating a new annuity provider with valuable input from industry leaders, Independent Life is weeks away from entering the structured settlement market. We will make a formal announcement at the NSSTA Fall Meeting in San Antonio where industry experts will have an opportunity to meet and greet the executive team."

The main features of this new company are:

  • Annuities only for the structured settlement market
  • Comprehensive medical underwriting for qualifying cases
  • Competitive upper-tier pricing
  • Ongoing financial support for broker and planner initiatives that promote the growth of the settlement industry for the benefit of all stakeholders
  • An executive team with over 100 years of previous structured settlement experience. 
  • Domiciled in a major state with excellent regulatory reputation for oversight. 

It is expected that over the next month more details on the new company and it's approach will become known. This is the first new life market to enter the structured settlement market since Mutual of Omaha several years ago and represents the first special purpose life market specifically designed to underwrite structured settlement annuities. 

It will be interesting to see what supporting business lines will be included in this venture as it expands, such as structured legal fees, non-qualified immediate annuities or possibly taxable damage annuity options as well. Either way it's good to see a new entrant into a stale market and hopefully this portends further interest in the market by life companies and investors in the coming years. Members of the executive team include long time industry experts Dan Durbin as VP of Marketing and Sales and Patrick Hindert, VP of Business Development. 

Posted on October 14, 2017 and filed under Settlement Expert.

How to Tell If a Pooled Special Needs Trust Would Fit Your Needs. Jennifer Lile Explains

Special needs trusts have been the subject of several reports on The Settlement Channel. There are several types of special needs trusts, including the pooled special needs trust. The pooled trust is not the right choice in every situation for a person with special needs, but it can be a valuable tool in the right situation. In this report, Jennifer Lile discusses the nature of the pooled special needs trust and how it may be beneficial.

Lile explains that a pooled special needs trust is a trust whose corpus is exempt from the means testing associated with public benefit programs like Medicaid and Supplemental Security Income (SSI). The exemption is provided by 42 U.S.C. § 1396p(d)(4)(C). Under the Social Security Program Operations Manual System (POMS), pooled SNTs are not counted as resources when making eligibility determinations. A pooled special needs trust is established and administered by a nonprofit entity to manage and protect the assets of individuals with disabilities who are dependent on government benefits to meet their basic needs.

Lile notes that there are two types of (d)(4)(C) trusts. First-party, or self-settled, pooled trusts may be established by the individual with a disability, a parent, a grandparent, or a guardian. They are funded with assets belonging to the individual with a disability (i.e. the proceeds of a personal injury settlement, an  inheritance, or a lump sum Social Security payment). Third parties may fund a (d)(4)(C) trust, but would be better served by using a pooled or private third-party discretionary trust,  because (d)(4)(C) trusts have a mandatory payback requirement. “Upon the death of the beneficiary, any funds remaining are subject to being retained by the nonprofit administrator” or being paid as reimbursement to a state or states in repayment of medical assistance provided to the beneficiary during the beneficiary’s life.

Lile says that (d)(4)(C) trusts can be established for anyone who has been determined by the Social Security Administration to have a qualifying disability and is under 65 years of age. In about twenty states, a person with a disability of any age may establish a pooled trust account.

When a beneficiary dies, any funds remaining in the trust must be administered in accordance with the provisions of 42 U.S.C. § 1396p(d)(4)(C) and the Social Security POMS. One option, Lile says, is for the remaining funds to be distributed to a specifically-authorized nonprofit entity, typically the nonprofit entity that administers the trust. Otherwise, to the extent that amounts remaining in the beneficiary’s account upon the death of the beneficiary are not retained by the trust, the trust must pay to the state(s) an amount equal to the total amount of medical assistance paid on behalf of the beneficiary by the state(s). Lile points out that the main purpose of this type of trust is to provide funds to improve or maintain the quality of life of the beneficiary, such as paying for items or services not otherwise covered by Medicaid.  In general, the goal should not be to have a large amount remaining in the trust upon the death of the beneficiary.   Some pooled trust companies will allow individual remainder beneficiaries to be named in the event that the Medicaid claim for reimbursement is small and a balance remains after the state has been fully paid back.

Lile says that there are several reasons why someone might consider using a pooled trust. First, in most states, there is a $2,000 limit on funds that can be retained by a person in order to be eligible for federal public benefit programs, so the pooled trust account is a way to avoid the immediate spend down of assets above this resource limit. Another advantage of a pooled trust is the long-term access to a professional trustee. Lile explains that pooled trusts must be administered by a qualified nonprofit partnering with a financial institution that serves as a professional trustee, and because funds are managed as a pool, the trustee and administrative fees are not as expensive as they would be with an individual trust. Also, a pooled trust makes sense where the amount of assets coming to the beneficiary is too small to justify the legal fees or professional trustee fees associated with other types of special needs trusts, such as a trust established under 42 U.S.C. § 1396p(d)(4)( A).

In the case of third-party funded pooled trusts, some states allow “dry” trusts, where the paperwork is done to have the trust in place in advance, but not funded until, the death of a parent or grandparent.

Another advantage of a pooled trust is the expertise of the nonprofit administrators. In order to properly administer pooled trusts, they must stay abreast of the law in ways that family members typically would not. Finally, a pooled trust is advantageous in that the assets are invested as a pool, allowing broader market exposure and the potential for generating greater growth.

Jennifer Lile

Jennifer Lile

People who are thinking about using a pooled trust should consider the following: What services does a particular pooled trust company provide? What are the set up costs and annual fees? What is the process for distributing funds? What are the trust’s investment policies? How often are reports issued and what details are included in their reports? What are the opinions of other families or special needs attorneys who have worked with a particular pooled trust company?

Jennifer L. Lile is a shareholder and director with Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A. Her practice focuses on the areas of estate and special needs planning, trust, probate and elder law. Jennifer is a Certified Specialist in Estate Planning, Trust and Probate Law, by the Ohio State Bar Association, and a Certified Elder Law Attorney (CELA) by the National Elder Law Foundation, as accredited by the American Bar Association and by the Ohio State Bar Association. She has served on many non-profit boards and is currently an officer on the board of directors for the Special Needs Allianceas well as president of the Stark County, Ohio, Bar Association. The Settlement Channel is a featured network of Sequence Media Group.

Posted on October 13, 2017 .

The October 1, 2017 Medicare Secondary Payer (MSP) reimbursement changes

Beginning October 1, 2017, the Centers for Medicare and Medicaid (CMS) will implement a new policy regarding Medicare Secondary Payer (MSP) reimbursements—specifically,liability Medicare set-asides (LMSAs). At the request of CMS, the Medicare Administrative Contractor will begin to track the existence of any LMSAs related to a claim and deny payment for items or services that it deems should be paid from that LMSA rather than being paid for by Medicare. According to CMS, “Liability and No-Fault MSP claims that do not have a MSA will continue to be processed under current MSP claims processing instructions.”

I can not stress how important it is for trial lawyers nationwide to be aware that these changes in Medicare policy are going to generate a lot of additional issues, and potential liability, when injury victims and their lawyers settle claims with a Medicare component. 

Many trial lawyers believed this was a settled issue, but it is vital to note that Medicare's authority in this area has never changed! There has been no change in statutory or regulatory policy. Rather this is a notice of CMS commencing enforcement of a long standing provision in the law allowing for CMS to deny future payments for claims in which a liability settlement was in place. 

While this instruction from CMS does not create an affirmative directive for Medicare beneficiaries, both current and future, to create a liability set-aside (Medicare Set Aside Account), it does indicate that you MUST evaluate and begin to resolve any lien early in the settlement process. 

Further, and possibly of greater importance, is the need to understand the MSP statute even if you are currently contracting out your Medicare Lien Resolution to a third party. The stakes are substantial and you absolutely must make plans for FUTURE Medicare clients at the time of settlement by way of a set aside and determine if funds need to be placed in a MSA account to resolve that liability at settlement. 

It is the opinion of Mark Wahlstrom, at Wahlstrom & Associates, that these changes are going to dramatically impact the settlement process and increase the cost of settlements once trial lawyers understand the importance of including the present value of this possible future liability in their settlement demands and ultimately their settlements. 

If you have questions on how to handle these new MSA and MSP issues, contact your current expert or contact Mark Wahlstrom at Wahlstrom & Associates for a better understanding of the options for staying compliant and protecting both the injury victim and their attorney from future liability.  It is clear that CMS is attempting to shift towards a mandatory LMSA regime and trial lawyers must have a legally sound,and efficient strategy and process in place to deal with this increase demand for Medicare reimbursements. 

Posted on September 27, 2017 and filed under Medicare Set Aside.