Top Adding - Insurance

The need for some clients to protect assets from Medicaid Spend down is obvious. It can be because of the well spouse’s needs, a handicap child or a myriad of good solid reaso

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

ns. This is where the annuity salesperson come charging to the rescue.

Most agents know that certain types of annuities can avoid spend down and can provide protection for th

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

assets in the annuity. These annuities have specific language to make them fully qualified under Medicaid rules. Most annuity contracts DO NOT contain the language to qualif

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

y for the Medicaid rules.

The monthly payout must be for the life expectancy of the annuitant. The annuity cannot have any free look in the contract and the value of the annu

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

ty is agreed by all parties to be zero. The only value of the annuity is the monthly income. These features are actually part of the contract and are allowed by 29 states in

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

the US. It is sometime referred to as the “name on the check rule.”

The personal liability comes into play when an agent does not fully understand the rules nor the process t

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

at must be adhered to in order to qualify the funds. An agent will sell “just an annuity” explaining to the client the funds are safe from spend down. You have to ask yoursel

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

f why would this happen? The reason is obvious, large commissions.

Commissions for the Medicaid spend down annuity are often very low while the commissions for a standard ann

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

ity are usually much higher. The agent will sell the concept of the annuity but provide a product that will never qualify for Medicaid spend down. This is where the liability

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

issue comes to the surface. Of course by then the agent could be on to a different career or the obvious answer is “I didn’t say that.”

At the time of need the client could

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

be faced with additional stress and maximum exposure to exposed assets. This creates a very unfair situation for the client and the agent is almost never left holding the bag.

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

Then of course there is this sales pitch and explanation.

Recently I ran into a situation where an annuity agent had sold a 17 year surrender contact to a widow aged 77. Sh

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

was told that the annuity would protect all her assets and she could leave those assets to her children. In a couple of years she became ill and was in need of nursing home c

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

ar and the annuity was the primary asset. Of course as a single person there was no way to protect the funds in the annuity and with the children, I called the agent. His rep

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

y was amazing, he said he knew the annuity was not going to be Medicaid qualified but it was not his problem, it was his “errors and omissions” problem. He knowingly sold the

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

product for the monstrous commission and had calculated the insurance company would make things right.

The client had to eventually cash in the huge surrender penalty annuity

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

nd suffer the losses. She was ill and not up to a fight with anyone and just wanted to be left alone.

The shame of this story is as annuity salespeople we are all considered

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

guilty by the actions of a few. So here is my advice.

• Always work with an attorney who specializes in Medicaid planning

• Never call yourself a Medicaid specialist

• N

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

ver give legal advice

• If you sell a Medicaid qualified annuity make certain the contract will work in your state, ask the home office, they are there to help

And finally,

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

be honest and open. Make certain the prospect understands exactly how a Medicaid Qualified Annuity works and how the benefits directly affect them and their personal situation

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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