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The Structured MSA "Metaverse" | The Rapture v Raptor Episode

by Structured Settlement Watchdog

It's the time of Rapture. Not just THE Rapture, but 41 years ago last week, the last time inflation reached current levels, Rapture, by Blondie was finishing up a two week stretch at #1 on the Billboard Hot 100.  In the Structured MSA "metaverse" there are no "Men from Mars eating cars and eating bars" but a blog from one company suggests that there is the Raptor, or Raptors, velociraptors to be precise, just like in Jurassic Park. Technically speaking however, in real life however, a Velociraptor was roughly the size of a turkey, considerably smaller than the approximately (6+1⁄2 ft) tall and 80 kg (180 lb) reptiles seen in the Jurassic Park films.

Invasion of the Turkeys

So, when a company writes in block capitals " THE BEST WAY TO SAVE ON MSAS MAY HAVE JUST BECOME THE ONLY WAY: STRUCTURES!" accompanied by the picture below, has ANYONE considered that it could be interpreted as "invasion of the turkeys"?

"Invasion of the Jurassic Turkeys"?

"Velociraptor was just a scary turkey, say scientists"

"In a study of the fossilized forearms of velociraptors found in Mongolia in 1998, paleontologist Mark Norell of the American Museum of Natural History found "quill knobs" - bumps where the feathers used for flight in modern birds are anchored to the bone with ligaments. His results were published in 1998 in the Journal Science.

"The more that we learn about these animals the more we find that there is basically no difference between birds and their closely related dinosaur ancestors like velociraptor," said Professor Norell.  The Guardian, Alok Jha, Science correspondent September 21, 2007

Velociraptors were " speedy thieves"

In 1924, Henry Fairfield Osborn, then-president of the American Museum of Natural History, named Velociraptor. He bestowed the name on this dinosaur, which is derived from the Latin words "velox" (swift) and "raptor" (robber or plunderer), as an apt description of its agility and carnivorous diet.    Source:  Velociraptor: Facts About the 'Speedy Thief' By Joseph Castro published March 18, 2016

Velociraptors did not hunt and packs

It's also worth noting that Velociraptors did not hunt in packs as the above picture suggests. Research from University of Wisconsin Oshkosh revolves around an analysis of raptor teeth that shows Velociraptors did not hunt in coordinated packs. "Raptorial dinosaurs often are shown as hunting in packs similar to wolves," said Joseph Frederickson, a vertebrate paleontologist who led the study with Michael Engel and Richard Cifell.

Facing Bemusement with Amusement

When promoting Structured MSA, the devil is in the details. You know "a picture tells a thousand words".  A Structured MSA has tremendous benefits, but a mural of "scary turkeys" known as "speedy thieves" in the scientific community, does not showcase the characteristics that I would have in mind to promote them.  How about you readers?

 

 

 

 

 

 

 

What Happens to Medicare Set Aside Account (MSA) When You Die?

by John Darer® CLU ChFC MSSC CeFT® RSP CLTC

If you die with a balance in your Medicare Set Aside (MSA), here's what may happen:

• If death occurs before the Workers Compensation Medicare Set Aside (WCMSA), Liability Medicare Set Aside (LMSA) or No Fault Medicare Set Aside
  

  What do you leave behind in a Medicare Set Aside account after you take "the final curtain"
  
  (NFMSA) is fully exhausted, the Estate Administator, Executor, or if the MSA is professional managed, the MSA Adminstartor should notify the  BCRC  (see BCRC below)
  
• Medical Service provided before the death, and related to the injury that led to the creation of the MSA are outstanding claims that must be paid for by the Estate of the person who has died with the open MSA.
• If there is any money left in the MSA account after all related and outstanding bills are paid, the funds are distributed according to the last will and testament of the person who has died. If the person has died without a will, any balance is distributed according to your state's intestacy laws.
• If the MSA is a Structured MSA and the annuity that funds the MSA has a certain period, or a cash or installment refund, payment will be paid to the named beneficiary or beneficiaries.  Note that some annuity funded MSAs are temporary life or straight life annuities that have no survivor benefits.

 What is the BCRC?

The Benefits Coordination & Recovery Center (BCRC) is responsible for ensuring that Medicare gets repaid by the beneficiary for any conditional payments it makes related to a liability, no-fault, or workers’ compensation case. A conditional payment is a payment Medicare makes for services another payer may be responsible for. The payment is "conditional" because it must be repaid to Medicare when a beneficiary receives a settlement, judgment, award, or other payment. When the BCRC learns of a case, they will gather information about any related conditional payments Medicare made and request repayment.

 

 

Workers Compensation Medicare Set Aside | The Case For Professional Administration of MSA

by John Darer® CLU ChFC MSSC CeFT RSP CLTC

What is a Medicare Set Aside Arrangement (MSA)

A Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) is a financial agreement that allocates a portion of a workers’ compensation settlement to pay for future medical services related to the workers’ compensation injury, illness, or disease. These funds must be depleted before Medicare will pay for treatment related to the workers’ compensation injury, illness, or disease .

Once the funds in the WCMSA account have been exhausted and Medicare has been provided with information to document that payments from the account were appropriate, Medicare will begin paying for the beneficiary’s Medicare covered eservices that are related to the work related injury or disease. { Note that Medicare expenses that are not related to the work injury or disease are no affected by the WCMSA and are reimbursed by Medicare unless another entity under 42 U.S.C. 1395y(b) is primary payer.

For Medicare Set-Asides (MSAs), it is important to note that a Medicare Set-Aside allocates for all future medical and pharmacy expenses related to the work injury, that are covered and otherwise reimbursable by Medicare

The Argument for Professional Administration of Medicare Set Aside Arrangements  (WCMSA, LMSA or NFMSA)

Medicare Set Aside arrangements are intended to not only protect Medicare's interest, a requirement of the Medicare Secondary Payer Act (MSP), but to also protect the settling injured worker (or plaintiff if Liability MSA) from the loss of Medicare benefits. Ongoing compliance requires, among other things, keeping track of medical bills, sorting through and having the knowledge to determining what procedures, equipment and medication is covered by Medicare and filing attestations.  Compliance requires attention to detail that the injured workers or personal injury victim may not be able to, or willing to handle. A number of professional administrators charge cost efficient one time fees and some have harnessed technology and group buying discounts to enhance the value and accessibility to clients.  Call me at 888-325-8640 if you would like more details.

Long Beach CA Insurance Agent and Daughter Charged With Embezzlement and  Money Laundering of Injured Workers' MSA Funds

According to its July 21, 2017 press release, investigators with the California Department of Insurance Investigation Division, Tom Fallon, 63 and daughter Christina Fallon, 28 embezzled $273,954 from the injured workers who entrusted him to invest their Medicare set-aside settlement funds with his agency, Fortis Financial Insurance Services, Inc. Tom Fallon then simply diverted their funds into his own accounts, spending the money for their personal use, and with business ventures that include Big Daddy’s Cigar Lounge at 5844 E. Naples Plaza in Long Beach. CA. The Los Angeles County District Attorney's Office filed a criminal complaint against Tom and Christina Fallon on July 14, 2017, charging two counts of Theft by Embezzlement PC 504 and 487(a), and 15 counts of Money Laundering PC 186.10 including PC 186.11(a) (3) white collar crime enhancements. If convicted of all charges, the defendants face a maximum sentence of more than 16 years in state prison

By stealing from injured workers who depend on the funds for future care, the Fallons may have left many victims without the resources they need for medical treatment.”

A Structured MSA and a Professional Administrator Would Have Mitigated the Embezzlement Risk

It is unclear who advised the injured workers to use the Fallon's or Fortis. It does not appear that the MSAs that were the subject to the conduct that led to the  Fallons arrest were Structured WCMSA. One wonders what the applicant attorneys' advice was when settling the cases.  The amount of money that the victims could have saved between structuring the MSA and the discounts offered by certain administrators would be meaningful.

If you are thinking that embezzlement is a one-off consider this case where an improperly exhausted MSA by Sister while Claimant in Jail was not Dischargeable in Sister’s Bankruptcy  N RE DAVID K. JOUETT and SABRA B. JOUETT, Debtors. STEPHEN E. HUBANKS, Plaintiff, v. DAVID K. JOUETT and SABRA B. JOUETT, Defendants. Case No. 13-10005-M Chapter 7 Adv. No. 13-01015-M UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF OKLAHOMA 2014 Bankr. LEXIS 950 March 12, 2014, Decided

The July 10, 2017 release of the Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide Version 2.6 appends Section 17.1, the section covering MSA administrators, with a single sentence:

"Although beneficiaries may act as their own administrators, it is highly recommended that settlement recipients consider the use of a professional administrator for their funds."

Can you Fund a Structured MSA With a "Secondary Market Annuity"?

by John Darer CLU ChFC MSSC RSP CLTC

With a few settlement planners dabbling in structured settlement derivatives it won't be long before the question is raised about whether or not a Medicare Set Aside can be funded with structured settlement derivatives labeled " secondary market annuities".  A possible argument for is that such vehicles carry higher interest rates and thus can reduce the cost of the MSA even further than an annuity. 

You cannot fund a Structured  Medicare Set Aside arrangement with a  "secondary market annuity".   You cannot fund a Medicare Set Aside arrangement with a "secondary market annuity" because a "Secondary Market Annuity" is not an annuity.  A "Secondary Market Annuity" is a scam label for structured settlement derivatives.

The CMS Medicare Set Aside Self-Administration Tool Kit includes an attestation letter entitled "Worker's Compensation Medicare Set-Aside Arrangement (WCMSA)-Account Expenditure for Structured Annuity"   Download Account-Expenditure-for-Structured-Annuity-Attestation-Letter

The account holder must attest annually...choosing from one of the following

I the undersigned attest that I have a structured annuity WCMSA and have used the annual monies from the WCMSA account for the period of ____to ____ to pay for the following:

I the undersigned attest that I have a structured annuity WCMSA and have exhausted the annual money (and any applicable acrry-over from pevious years) in the WCMSA account for the period of ___ to ____ to pay for the following:

I the undersigned attest that I have a structured annuity WCMSA and have completely exhausted all monies in the WCMSA account to pay for the following:

Do you want to attest, or do you want to advise your client to attest, to having an "annuity" that is not, in fact, an annuity?

CMS Memo Q5  7/23/01  refers to "structured settlement"

• IRC 5891(C) defines structured settlement as follows:

(1) Structured settlement The term “structured settlement” means an arrangement—

(A) which is established by—
(i) suit or agreement for the periodic payment of damages excludable from the gross income of the recipient under section 104(a)(2), or
(ii) agreement for the periodic payment of compensation under any workers’ compensation law excludable from the gross income of the recipient under section 104(a)(1), and

(B) under which the periodic payments are—
(i) of the character described in subparagraphs (A) and (B) of section 130(c)(2), and
(ii) payable by a person who is a party to the suit or agreement or to the workers’ compensation claim or by a person who has assumed the liability for such periodic payments under a qualified assignment in accordance with section 130.

• IRC 5891(C)(2) defines the term “structured settlement payment rights” means rights to receive payments under a structured settlement. 

When doing at WCMSA allocation the CMS guidelines require that you Identify if the set-aside is paid out as a lump sum or an annuity. If the set-aside is paid out as an annuity, you must identify the following:

1. Name of the carrier

2. Cost of the annuity 

• the cost of the structured settlement derivative, which is not an annuity, is not the cost of the annuity from which the structured settlement payment rights are derived]
• in its 2016 WCMSA Guide Version 2.5, CMS says "If annuities are involved, use the lifetime payout amount in the total instead of annuity purchase price and include the annuity rate sheet to  support your calculation". 

3. Proposed initial deposit (seed money)

4. Minimum annual deposit for the balance of the claimant’s life

5. Annuity starting date

6. Length of annuity

7. Annual payout of annuity

8. Annual funding date

If That Wasn't Enough....

• Structured settlement derivatives are not able to make life contingent/lifetime payouts
• The cost of insurance to cover the potential of vacated transfer order could not be taken out of the MSA.
• The legal expenses to fight an attempt to vacate the transfer order or negotiate a rescission of an order cannot be charged to the MSA.
• Chopped up streams of income sewn together like a patchwork quilt are not an annuity.

Medicare Set Aside (WCMSA) Exempt Property in Pennsylvania Chapter 7 Bankruptcy

by John Darer® CLU ChFC MSSC RSP CLTC

Are MSA's Exempt Property in a Bankruptcy?

The United States Bankruptcy Court for the Middle District of Pennsylvania has decided that assets in a Workers' Compensation Medicare Set-Aside (WCMSA) are exempt property and therefore not available to creditors in a Chapter 7 bankruptcy case (In Re: Jesus Arellano, Debtor Steven M. Carr, Chapter 7 Trustee Objectant v. Jesus Arellano, Respondent. Decided January 5, 2015).

Can You Use Medicare Set Aside (MSA) Money to Pay Child Support?

by John Darer CLU ChFC MSSC RSP CLTC

You may not pay child support out of your Medicare Set Aside account

The funds in the Medicare Set-Aside Account (MSA) shall be placed in an interest bearing account and used solely for legitimate medical expenses incurred for those medical needs related to or resulting from your work-related or accident related injury, which would otherwise be reimbursable or paid for by Medicare. Funds in the Medicare Set-Aside Account shall not be used to pay for medical services not covered by Medicare.

A copy of the booklet, Medicare & You, can be obtained from your local Social Security office for a list of services not covered by Medicare. If there are any questions concerning what Medicare covers, you can also call 1-800-MEDICARE.

All interest earned on the Medicare Set-Aside Account accrues in the account and can only be used solely for medical expenses, that would otherwise be covered by Medicare.

In the event CMS determines that Medicare has paid benefits prior to the depletion of funds in the Medicare Set-Aside Account that should have been paid by you, CMS, or its designated intermediary or carrier, has the right to seek and receive reimbursement of any such conditional payments or overpayments from the Medicare Set-Aside Account to the extent that there are funds remaining in your  MSA account at that time.

You must maintain maintain accurate records of the distributions and expenditures from your Medicare Set-Aside Account

Such records should show the date of service, the diagnosis, the service you received, the doctor or service provider you paid, and the date you made payment. Be sure to keep receipts or other evidence of every payment made from your Medicare Set-Aside Account.

Aviva Structured Settlements and the Athene Buyout of Aviva USA Business

by John Darer CLU ChFC MSSC CeFT RSP CLTC

The New York Department of Financial Services (DFS) agreed to bless Athene Holding Ltd.'s pending $1.55 billion acquisition of UK insurer Aviva PLC's  U.S. operations after a series of negotiations with Athene Annuity and Apollo representatives, the agency said August 14, 2013.  Athene is largely funded through an Apollo affiliate, and the Apollo manages money for the insurance company.

Apollo and Athene agreed to a set of new rules not typically required of insurers, the agency said. They include heightened capital standards to protect against potential losses and tougher disclosure requirements.

New York DFS has highlghted, and continues to highlight a spike in private equity firms and other investment companies moving into the annuity business.  Insurance Circular Letter 5 (2022): Acquisitions of Control and Disclaimers of Control | Department of Financial Services (ny.gov)

This trend raised concerns since such firms typically have a more short-term oriented business model than traditional insurers, and the annuity business is focused on ensuring long-term security for policyholders

As part of the new set of rules, New York Department of Financial Services wanted higher capital standards because they serve as a buffer to absorb unexpected losses. Athene Life Insurance Company of New York agreed to capital levels of not less than 450 percent and a separate backstop account with $35 million to top off those funds if they fall below a certain level. The New York regulator will also scrutinize Athene's operations, dividends, investment strategies and potential reinsurance transactions. If Athene pursues a so-called material change in its operations, it will need written approval from the New York agency first. Athene will also now have to file quarterly reports detailing its capital position.

Link to New York DFS statement on the Athene acquisition of Aviva New York dated August 14, 2013.

Aviva and Structured Settlement Annuities

A substantial amount of structured settlement annuity business has been placed with Aviva life companies and their predecessors until Aviva ceased writing new structured settlement annuity business at the end of 2008. The company has roots going back 300 years. Through a series of mergers and renamings the following compnanies wrote structured settlement annuity business and current structured settlement annuitants may be receiving payments from Aviva that originally had structured settlements paid from the following life insurance companies.

• CU Life Insurance Company
• CU Life Insurance Company of New York
• CGU Life Insurance Company
• CGU Life Insurance Coompany of New York
• Aviva Life Insurance Company
• Aviva Life Insurance Company of New York

The following qualified assignment companies applied to

• CGU Annuity Service Corporation (later  Aviva Assignment Corporation)
• CGNU London Annuity Service Corporation  (later Aviva London Assignment Corporation)The obligations of certain structured settlements funded with CU Life annuities were backed by a  surety bond issued by Commerical Union Insurance Company.

The obligations of certain obligations assigned to Aviva London Assignment Corp had a Capital Management Agreement (CMA) with Aviva UK based affiliate, CGU International Insurance.  As stated therein the agreement ensures that Aviva London Assignment will have the funds necessary to satisfy all Structured Settlement obligation to make funds available to Aviva London Assignment Corp is absolute, unconditional and continuing.

What is the impact of the Athene acquistion of Aviva on the structured settlement portfolio?

I telephoned Aviva customer service on August 22, 2013 and the response, as I expected, was that what is in the contracts will be honored. I specifically asked about the surety bonds and the Capital Maintenance Agreement obligations with those structured settlements where periodic payment obligations were assigned to Aviva London Assignment Corporation and was informed that these would still apply.

Structured settlement annuitants who wish to confirm for themselves or who have any concerns whatsoever, should contact their structured settlement consultant or Aviva directly at their toll-free number, which is 888-285-4332

What Then Happened?

About 15 months following the publication of this post, in October 2014, the fate of the CMA was learned to not be as described by Aviva. After learning of an occurrence that seemed inconsistent with what the Aviva customer service rep said in 2013. John Griffiths, an annuitant from Hawaii contacted me and after dealing with some unfortunate obfuscation, we learned in a written letter from Athene, that "the CMA was terminated according to its terms", seemingly quite the opposite of what was in Aviva's marketing materials. John Griffiths became the lead plaintiff in a successful class action lawsuit against Aviva and Athene. 

Athene ended up providing annuitants a new CMA and certain annuitants received a modest financial recovery.

It was a needless and unfortunate episode for the insurers and underscored the importance for structured settlement consumers and their advisors to be vigilant when insurers transition, or runoff their product lines.

Extensive coverage of the story can be found using the Google search on the right side of this blog

Who is Athene Annuity? 

Athene annuity is a significant underwriter of annuties in the United States. While Athene acquired the structured settlement book of Aviva, Athene does not underwrite structured settlement annuities as of the date of the last update to this blog.

The roots to Athene Annuity go back to 1905, when Liberty Life Insurance Company was started by one "Hipp"  guy,  Here is a helpful timeline from the Athene website. The company, which previously acquired former structured settlement annuity issuer Presidential Life Insurance Company,  offers some innovative retirement annuity products. At the time this blog was last updated Athene Annuity held a A (Excellent) rating from A.M. Best and a A+ from both Standard & Poors and Fitch ratings as well as an A1 from Moodys. The ratings represent an IMPROVEMENT from the ratings at the time of the Aviva/Athene deal. For more details see Financials | Athene.

Also see The best annuity companies for April 2024 | CNN Underscored Money which has ranked Athene as one of the best annuity companies as of April 2024.

Last updated April 2, 2024

 

 

 

 

 

Einstein Structured Settlements Promoted Fraudulent Academic Credentials

by Structured Settlement Watchdog®

Einstein Structured Settlements jokes that doing business with them is genius, that is if you believe "it is genius" to do business with a someone that acts as if it is ethical to intentionally mislead American consumers about his education and academic degrees.

Ryan Einstein is the alter ego of Ryan William Blank, 28,  of Owings Mills, MD and Baltimore, MD.

Exhibit #1

Download Http___einsteinstructuredsettlements.brandyourself 8-7-2013   

BrandYourself is a company which states it has the first product that empowers you to
control what people find when they Google your name. Res Ipsa Loquitur!  (emphasis added)

Exhibit #2

The link cited in our January post contained the false claim that Ryan earned a LLM/PhD degree from  in 1997  (see immediately below)

Download Education of Ryan Einstein - Structured Settlement and Funding Deals in Rapid Fashion - Los Angeles, California, United States

As we pointed out previously, Yale Law School denied any record of a Ryan Einstein  [The 28 year old Blank would have to have been like 14 when he got his law degree if it wasn't a fabrication and would have graduated college when he was a "precocious" 12 year old] and when I reached out months ago and spoke with Barry Blank, Ryan Blank's father, he shared that his son actually went to a school in Charleston, South Carolina. Have the addresses too.

What values does Ryan Blank have that he would promote, or authorize the promotion of his company in such a dishonest fashion? Ryan Blank and his cohorts apparently care more about making up easily disprovable hoaxes about malware.

There's no shame in not being a Yale Graduate. But shame on him, for pretending to be one when he's not and using false "imprimatur" to gain the trust of American consumers. That's not genius. That's just plain dumb.

 

 

 

 

 

 

Medicare Set Aside Arrangements | CMS Publishes Reference Manual Version 3.9 (2023)

by John Darer CLU ChFC MSSC RSP CLTC

The Center for Medicare and Medicaid Services ("CMS") published a helpful 175-page reference guide for Workers' Compensation Medicare Set-Asides (WCMSAs) on September-2023

Download Workers Compensation Medicare Set Aside WCMSA Administration Guidelines CMS March-2023

Other information

• Medcare Set Aside Arranagement- What is It? Why Is It Needed? Save With a Structured MSA
• Medicare Set Aside FAQ
• WCMSA Self Administration Tool-KI Version 1.4 July 3, 2023

Last updated January 15, 2024

Liability MSA 2012- CMS Request for Comment-What's Next?

by John Darer CLU ChFC CSSC RSP

The Center for Medicare and Medicaid Services recently issued an Advanced Notice of Proposed Rulemaking (ANPRM), seeking public comment concerning Medicare Set Aside Arrangements and protecting Medicare's interest with respoect to claims in "automobile and liability insurance (including self-insurance), no-fault insurance, and workers' compensation when future medical care is claimed or the settlement, judgment, award, or other payment releases (or has the effect of releasing) claims for future medical care.". A copy of the ANPRM can be found here.

Medicare Set Aside | How Structured MSA Saves | Why MSA? (4structures.com)

 

 

 

 

 

 

Copy of  April 25, 2006 CMS memorandum detailing how annuities may be used to fund the Workers Compensation MSA cases (WCMSA).