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How a Top Disability Specialist Reads That Big Application Denial Story

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The New York Times startled players in the small, but passionate, individual disability insurance community Tuesday by giving them an awkward moment in the spotlight.

Donald G. McNeil Jr., a reporter at the paper, wrote an article about consumers who run into trouble when applying for indvidual disability insurance because they are taking Truvada, a $13,000-per-year drug that can help protect people from getting HIV.

State insurance regulators in New York state and California quickly put out statements objecting to the possibility that insurers might be discriminating against gay men who are taking sensible steps to avoid getting HIV.

(Related: Gilead Seeks Deals as U.S. Hepatitis C Sales May Flatten)

The article, and the regulators’ reaction, may have made typical life, health and annuity agents wonder whether helping clients with an occasional individual disability insurance application is worth the turndown risk.

Disability insurance specialists contend that informing clients about options for insuring their ability to earn a paycheck is more critical than ever, and that non-specialists need to know when to reach out to colleagues to help the clients get the possible possible results.

“Individual disability insurance is tougher, underwriting-wise, even than life insurance,” Larry Schneider, owner of the Disability Insurance Resource Center, said Thursday in an interview.

But, because income protection is so important, and so poorly understood, agents should continue to educate clients about that need, and know when and how to work with disability specialists when complications seem likely to arise, Schneider said.

The New York Times Article

Typical users of Truvada are physicians who work with patients who may have HIV, or people who have sex with people who may be at high risk of contracting HIV.

The U.S. Food and Drug Administration approved use of Truvada for “pre-exposure prophylaxis,’ or PrEP, in 2012.

In the New York Times article, McNeil highlights the case of a urologist in Massachusetts. The urologist began taking Truvada after sticking himself with a needle, while he was preparing himself to perform surgery on a patient with HIV. The urologist continued to take Truvada, because he has relationships with other men. Although he takes the other recommended precautions, he likes the idea of further reducing his risk by using Truvada.

The urologist applied for individual disability insurance. The insurer would only provide a five-year policy. The insurer said it had concerns about the Truvada regimen.

The urologist wondered why a disability insurer would impose extra constraints on him because he was using a medication purely for preventive purposes. He stopped taking Truvada, applied for disability coverage through another insurer, and received a long-term policy.

Some people McNeil cites suggest that insurers are endangering applicants’ lives by discouraging them from using Truvada. He also cites people who suggest that letting Truvada use influence disability insurance application decisions could amount to discriminating against gay men.

Maria Vullo, the New York state financial services superintendent, said in her response that denying access to life and disability insurance coverage based on discriminatory reasons is wrong.

Maria Vullo (Photo: New York State Department of Financial Services)

Maria Vullo (Photo: New York State Department of Financial Services) “There is absolutely no legal justification for denying or limiting insurance coverage simply because an individual takes pre-exposure prophylaxis (PrEP), a prescription drug used for the prevention of HIV infection,” Vullo said. “This is tantamount to penalizing applicants based on sexual orientation.”

California Insurance Commissioner Dave Jones said he has asked his department to open an investigation into reports about gay men’s problems with getting life insurance, disability insurance and long-term care insurance because of use of drugs that can protect users against HIV.

“Such denials, if they are occurring, could amount to illegal discrimination based on sexual orientation under California law, and if so, the companies doing so could be penalized,” Jones said.

Some agents may have responded by thinking about the old saying that, “You can’t insure a burning house,” and wondered why consumers who are so worried about their health risks that they take a prophylactic drug that costs $13,000 per year see themselves as good candidates for medically underwritten insurance products.

Schneider said he thinks the logical response for insurance advisors is to want to learn more, and to recognize that each player in the McNeil article disability insurance application drama might have a reasonable position.

From Schneider’s perspective, the urologist was right to want disability insurance, and to try to take the recommended steps to maintain his health.

The disability insurance company’s underwriters may have been right to have concerns about an applicant’s use of a relatively new, potentially risk medication.

The regulators are right to look into the matter and make sure that insurers are using solid, up-to-date, nondiscriminatory information to support their claim decisions.

“This is all kind of new,” Schneider said. What PrEP Experts Have Said

Officials at the Massachusetts Department of Health warned in a fact sheet posted in 2013 that people who are taking Truvada because they are at high risk for contracting HIV are often at high risk for contracting another dangerous disease not known to be prevented by Truvada, Hepatitis C.

People taking Truvada because they are concerned about exposure to HIV through sex should be screened for sexually transmitted infections every six months, officials said in the fact sheet.

Some studies have suggested that Truvada could, possibly, cause liver or kidney problems in some patients, officials noted.

Insurance underwriting specialists have also given the matter of Truvada PrEP use some thought.

In 2015, for example, Mark Skillan, the medical director at Munich Re, US (Life), suggested in an HIV PrEP analysis that use of Truvada to prevent HIV could present concerns for providers of medically underwritten products as well as benefits for the patients taking the medication.

Truvada prophylaxis can be quite effective, but it does not entirely eliminate the risk of contracting HIV, and Truvada may do nothing to prevent HIV if a patient fails to comply with the recommended medication regimen, Skillan wrote.

When applicants for medically underwritten products use a Truvada PrEP regimen, insurers might want to ask for evidence that the applicants have been taking Truvada as recommended and have tolerated it well, Skillan wrote.

Insurers might wants to consider rejecting applications from Truvada users who also have hepatitis, kidney or liver problems, or substance abuse problems, Skillan wrote. Schneider’s Thoughts

Schneider said his initial response to the McNeil article was, “It is what it is.”

“Anybody can get any kind of disease,” and, at some point, for the insurers, the costs of adding more barriers for disability insurance applicants may outweight the benefits, Schneider said.

But, at the same time, Schneider said, disability insurers face a complicated underwriting situation, because they have to assess applicant’s health, source of income, and work duties.

Disability insurers know that some people may come to see disability insurance as a resource they can use if they simply don’t feel like working, or if they have a hard time working because of reasons that have little to do with their own physical or mental limitations.

Even if an otherwise-qualified applicant is simply new to a particular position, a disability insurer might reject that applicant, Schneider said.

Insurers also reject disability applicants, or limit offers of coverage, based on many different health issues, Schneider said.

“It’s their prerogative to turn anybody down,” Schneider said.

Schneider said that he believes that, for most agents, the most practical response to disability insurance underwriting concerns is to work with a firm like his own that has a department aimed at serving hard-to-place applicants.

Non-specialists may not collect any health-related information about their clients, and, even if they do make a list of prescription medications taken, they may not understand the list, Schneider said.


A copy of the Massachusetts Truvada guidelines is available here.

A copy of the Munich Re Truvade analysis is available here.

Schneider’s website is here.

The International DI Society, a group for disability insurance specialists, has a website here.

— Read How to Enter the DI Market on ThinkAdvisor.

— Connect with ThinkAdvisor Life/Health on Facebook and Twitter.


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