Elder Defense Against Identity Theft

Elders are particularly prone to identity theft for a number of reasons. They are often not savvy about the risks involved, particularly when they involve online commerce. Elders are often overly trusting of telephone solicitors who use pretexts to obtain confidential personal information, and they often don’t check their bank and credit card statements for unauthorized transactions. As a result they or their families often discover months or years later that their assets have been subject to theft by criminals who were able to open bank or credit accounts in their names.

Many elders mistakenly believe that they are protected against identity theft because they never conduct on-line transactions, and use cash or checks in lieu of credit cards (both of these are still sensible measures for many elders). However, once a criminal obtains a name, address, phone number, date of birth and social security number they have everything needed to open a new financial account in the elder’s name, from which they can siphon off the elder’s savings, even though the elder has never authorized any credit accounts. Also, consider that the necessary personal information for identity theft is already in the possession of one of the most frequent types of criminal—other family members (it’s sad to say).

Elders find themselves solicited by large companies offering identity theft “protection” and insurance. The devil is in the details of these services, but suffice it to say that they are expensive and not water tight. An elder on a budget will often find that this kind of protection is simply not affordable. What’s more, the most effective part of these services is exactly what I am advocating elders do for themselves, for free (depending on their age—see below).

The reason that this protection is not widely known is a measure of its effectiveness: no one makes any money off of it! The answer: simply disable yourself from opening any new financial accounts!

Let me explain: when someone attempts to open a bank, investment or credit account, the first thing that happens is the institution collects personal information required for a credit check. They submit your personal information to the Big 3 credit bureaus (Experian, Transunion and Equifax, and to be completely safe you might also add the smaller bureau Innovis) which produce a comprehensive credit history and give each individual a credit score. When you fill in the account opening form you are giving the institution the authority to conduct this background check. It happens without your knowledge and you don’t receive any notice from the credit bureau that they have provided someone with a report (unless you have a credit monitoring account, for which you also are charged a monthly fee).

My adults in the US spend their adult lives opening and closing credit accounts. I will spare everyone my rant about how disregard for the consequences of indebtedness has caused this country a colossal nightmare, but in the case of elders it is something which they should wean themselves from permanently. All any elder needs is (at most) a single bank account, an investment account(s) (for their retirement savings and investments), and a single credit card (if that). Once these are in place it is doubtful that you will ever need another such account.

The trick to stopping most garden variety identity theft is “how do I prevent someone who has obtained my personal information from opening an account and using it to steal my money”.

Placing a Credit Freeze (sometimes called a “security freeze”)

The solution is simple: for a one-time fee of $5 in Arizona (free for adults over 62, or persons who are already the victim of identity theft), you can block a credit bureau from releasing your credit information to any one, and thus prevent a new account from being opened in your name. The thief with your personal information will discover that the bank where he is trying to open an account will refuse to cooperate because of this “credit freeze”.   

Most credit bureaus allow you to place the credit freeze on-line by visiting their website, but the procedure can also be done by calling them and obtaining the application materials through the mail. You do have to provide your personal information at the time of placing the freeze, but as long as you are providing it to one of the 4 credit bureaus listed below this is a low risk disclosure (they already have this information in their files).

What happens after you establish a credit freeze if you need a new account or additional credit from an existing bank account?

When I learned about this procedure about 6 years ago I immediately put credit freezes in place. Since then I have on one occasion needed to release the credit freeze (temporarily) to permit me to refinance the mortgage on my house. This proved to be extremely simple and for the same $5 fee I was able to have the freeze lifted for one month so that my mortgage lender could obtain a new report. At the end of the month I checked the credit bureaus and confirmed that the freeze was once again in place.

How do I put a “credit freeze” on my accounts?

  1. For Equifax call them at: 1-888-202-4025 or visit their website at https://www.freeze.equifax.com/Freeze/jsp/SFF_PersonalIDInfo.jsp
  2. For Transunion call them at: 1-888-567-8688           or visit their website at http://www.transunion.com/personal-credit/identity-theft-and-fraud/fraud-alert-vs-credit-freeze.page
  3. For Experian call them at: 1-888-397-3742 or visit their website at https://www.experian.com/freeze/center.html
  4. For Innovis call them at: 1-800-540-2505 or visit their website at https://www.innovis.com/InnovisWeb/pers_placeSecurityFreeze.html

 

For more information about Credit Freezes see the Wikipedia article (http://en.wikipedia.org/wiki/Credit_freeze). This article correctly states: “Credit freezes are frequently viewed as the most effective way to prevent financial identity theft.”

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MEDICARE UPDATE: DENIAL OF SKILLED NURSING CARE BASED ON “IMPROVEMENT STANDARD” IS NO LONGER AUTHORISED

In a landmark decision a federal district court in the class action case of Jimmo vs. Sibelius has entered a proposed settlement order which finds that it is improper for Medicare to deny skilled nursing care services to applicants based on the fact that their condition is not likely to improve. (a full report can be found here: http://www.medicareadvocacy.org/wp-content/uploads/2012/12/Notice-of-Proposed-Settlement-Final-PDF-00011763.pdf)

This ruling will have an immediate benefit for all persons covered by Medicare who were denied skilled nursing facility (SNF), home health (HH) or outpatient therapy (OPT), services because of a lack of improvement potential. Affected persons should consider re-applying for benefits at this time. This change will be reflected in a revised Medicare Benefit Policy Manual which will be published after final approval of the proposed settlement by the court. A Fairness Hearing to determine whether to grant final approval is scheduled for January 24, 2013, and it is expected that the court will grant final approval after this hearing.

HOW JIMMO CAN HELP RECIPIENTS OF HABILITATION SERVICES

This ruling may also provide support for Arizona recipients of ALTCS habilitation services who have had their services cut by DDD case workers because the recipient was not demonstrating improvement in reaching their stated goal. As families with members who suffer from autism and other disabilities know, one of the primary benefits of habilitation is the retention of learned skills. Skills that were gained after years of effort can easily be lost through regression when educational efforts are discontinued. Thus by analogizing from Jimmo (above), it is improper to apply an “improvement standard” to habilitation services. The state is actually hurt financially when a disabled person regresses, since the self-help skills which are lost end up being replaced by additional state-supported care. This argument was an important consideration for the court’s decision in Jimmo, where it was demonstrated that patients who are denied skilled nursing services end up requiring full time nursing home care much sooner than if the services were provided, regardless of the lack of improvement.