Computer apparatus and method for generating documentation using a computed value for a claims cost affected by at least one concurrent, different insurance policy for the same insured

A method for using a digital electrical apparatus to electrically process signals in generating output for insurance documentation for a first insurance policy for a first risk having a claims cost reflecting: a concurrent second insurance policy for a second risk, the second risk being different from the first, the policies being for the same insured person, and the second policy affecting a claims cost of the first policy; the method including the steps of: in a digital electrical computer apparatus comprising a digital computer having a processor, the processor electrically connected to a memory device for storing and retrieving operations including machine-readable signals in the memory device, to an input device for receiving input data and converting the input data into input electrical data, to a visual display unit for converting output electrical data into output having a visual presentation, to a printer for converting the output electrical data into printed documentation, wherein the processor is programmed to control the apparatus to receive the input data and to produce the output data by steps including: inputting actuarial assumptions defining the first insurance policy; and computing a value of a specific financial attribute of the first insurance policy; the method further including the step of inserting the value of the financial attribute in the first insurance policy and other printed documentation related to the first insurance policy.

I. TECHNICAL FIELD OF THE INVENTION 
The present invention is in the field of digital electrical apparatus and 
methods for making and using the same, and products produced thereby. More 
particularly, the present invention is directed to a digital electrical 
apparatus and method for data processing and data management having 
particular utility in the field of insurance. Still more particularly, the 
present invention pertains to a method for making and using a digital 
electrical apparatus to process digital electrical signals to calculate a 
financial attribute of a first insurance policy affected by a concurrent 
second insurance policy insuring the same person, along with automated 
generation of related documentation. 
II. BACKGROUND OF THE INVENTION 
Traditional thinking is that each insurance policy stands on its own. 
Accordingly, people do not tend to think of an automobile insurance policy 
influencing a health insurance policy, or of a health insurance policy 
influencing a life insurance policy. Sometimes, an insurance company, or a 
group of companies having entered into a business relationship, will give 
a premium discount to make a sale of more than one policy to a person, 
e.g., if a consumer purchases automobile and homeowners insurance from the 
company or group of companies. So far as is known, such a discount 
involves giving up some of the respective profits for each policy 
individually, or passing to the consumer some of the savings in 
administrative expenses realized by the company or group of companies. 
As another example, if different persons in the same family, e.g., spouses, 
are covered by the same type of insurance, e.g., nursing home insurance, 
an insurance company may give a premium discount to one or both spouses 
based on anticipated savings in claims costs that would accrue if one 
spouse became sick and was able to delay entry into a nursing home because 
the healthy spouse provided care in their home. 
However, so far as is known, such discounts are distinctly different from 
this invention wherein a first insurance policy that can be sold without a 
second insurance policy is affected by the concurrent presence of the 
second insurance policy; the second insurance policy being for a risk 
different from that of the first insurance policy; the policies being for 
the same person; and the second policy affecting a claims cost of the 
first policy. 
A more particular example involves a group of insurance policies 
collectively referred to as long-term care insurance. This group provides 
coverage to a person primarily for the risks of home health care and 
nursing home care, each of which can be covered in separate policies or 
combined in a single policy, and may include additional coverage for the 
person for the risks of community-based care, assisted living care, and/or 
care in any other type of setting approved by an insurance company. 
Long-term care insurance policies were first offered to the public by 
insurance companies at about the time when Medicare came into being in 
1966, a time in which the insurance industry was not known as being in the 
vanguard of computerization. These first policies were developed when 
almost everyone confined to a nursing home was elderly and unable to take 
care of themselves because of chronic cognitive or physical impairments. 
That is, their health conditions had deteriorated to the point that they 
were no longer able to care for themselves without the assistance of 
another person. They were not expected to recover from those conditions. 
(Anecdotal evidence strongly suggests that this stereotypical view of 
nursing home patients is still held by most people despite the fact that 8 
of every 10 of today's nursing home admissions are patients sent there to 
recover following hospitalization.) And, health care provided in a 
patient's home by skilled medical professionals was virtually 
non-existent. 
As a result, the first long-term care insurance policies covered only 
nursing home care. Pricing the policies was difficult because very little 
data--seemingly only the average length of stay and average daily cost of 
care--was available to assist insurers. Furthermore, computer modeling 
techniques and predictive tools apparently were not being utilized. Thus, 
the first policies provided fixed benefits without regard to patients' 
actual medical conditions, that is, their medical, physical, and mental 
states of health, at the time of claim. 
Under a fixed-benefit arrangement, insured persons select a specific 
benefit amount at the time they apply for a policy. The benefit amount can 
be expressed in a daily, weekly, monthly, or other duration-specific 
periodic manner. The benefit amount can also be expressed as a flat amount 
that, upon qualification, will be paid regardless of the cost of the care 
received. Or, it can be expressed as a benefit limit in which case a 
patient's expenses will be paid up to the periodic limit. Under a 
fixed-benefit arrangement, neither the flat amount nor the limit can be 
increased solely because a patient's health condition deteriorates after 
the patient qualifies for benefits. 
Sales of such nursing home policies remained low for almost twenty years, 
resulting in a corresponding low demand for advances in computer science 
as applied to such policies. Other than minor improvements, the policies 
continued to provide only nursing home benefits until two things occurred. 
First, surveys showed that 75% to 80% of all seniors strongly preferred to 
receive care at home; only 1% to 2% preferred a nursing home. 
Second, beginning in October 1983, in response to rapidly rising hospital 
costs, Medicare began to reimburse hospitals using a prospective payment 
system based on Diagnosis Related Groups (DRGs). Before this change, 
seniors covered by Medicare remained hospitalized until, in most cases, 
they required only minimal assistance after discharge. This provided 
hospitals with a very strong financial incentive to keep patients 
hospitalized for as long as possible. 
But, under the prospective payment system, each patient was assigned to one 
of 472 different DRGs, each of which had a specific dollar amount allotted 
to it. The dollar amount was based on the relative severity of the medical 
condition for the average patient. Except in extraordinary cases, Medicare 
paid the hospital that dollar amount for the patient's treatment, 
regardless of the severity of the patient's actual medical condition. In 
most cases, if the patient remained hospitalized too long, the hospital 
spent more for the patient's care than it received from Medicare. Thus, 
for the first time, hospitals had a very strong financial incentive to 
release patients before their Medicare money ran out. 
In 1968, the average hospital stay for seniors was 14.2 days; in 1982, the 
last full year before the prospective payment system was implemented, it 
had dropped to 10.1 days; and, in 1996, the average hospital stay was only 
6.6 days. 
Today, almost half of all senior patients need skilled medical care--care 
that can't be provided by friends or family--during their recovery after 
release from a hospital. Technological advances now allow virtually all 
care provided in a nursing home to be provided in patients' homes. Thus, 
whether patients recover in a nursing home or in their own home now 
depends more often on what they can afford. Because home health care for 
recuperating patients is frequently more expensive than nursing home care, 
and because the combination of Medicare and private Medigap insurance 
policies can pay 100% of the costs for nursing home care during the first 
100 days, most recuperating patients are sent to nursing homes even though 
75% to 80% strongly prefer to recover at home. 
Whereas 30 years ago most nursing home patients were old, feeble, and at 
the end of their lives, today's "quicker and sicker" hospital discharges 
have dramatically changed the type of patients in nursing homes. Today, 
approximately 72% of the seniors who are sent to nursing homes typically 
stay for less than 90 days while they receive skilled medical care to 
recover after a hospital confinement. Contrary to the fears of many 
seniors, nursing homes are no longer "the end of the road;" indeed, 91% of 
Medicare's nursing home patients recover and are sent home to resume their 
lives. 
However, the inventors herein have observed a problem apparently 
unrecognized in the insurance industry--an inadequate response to the 
shift in the delivery of health care services. Newer versions of the old 
policies did include benefits for home health care, but with very little 
reliable information available to actuaries, insurers simply extended 
their old concepts for nursing home benefits to the new home health care 
benefits and increased their premiums accordingly. The insurers did not 
change the way they determined benefit amounts for nursing home or home 
health care, irrespective of the wide variance in the costs of providing 
care for seniors with different health conditions. 
At first, most companies limited home health care benefit amounts to 50% of 
the amounts payable for nursing home care, but the policies still didn't 
sell very well. They were too expensive for most people. Gradually, 
companies began to offer newer policies in which home health care was 
optional, and other policies that provided only home health care benefits. 
And, many companies began to offer equal benefits for both home health 
care and nursing home care. While the rate of sales did increase somewhat, 
the fact remains that, after 30 years of sales, only about 2% of people 
age 50 and older are covered by these policies even though long-term care 
represents the largest potentially devastating financial risk for most 
seniors. 
The newest versions of the policies include additional improvements. 
Benefits are now available for care provided in alternatives to nursing 
homes such as assisted living facilities. But all known policies still use 
the old fixed-benefit concept, with benefit amounts crudely based on where 
the care is provided, and for home health care, sometimes on the type of 
care provided The inventors herein have observed a general lack of 
appreciation by the insurance industry of the problems that can be caused 
by not basing benefits on the widely varying costs of providing care to 
patients with very different, specific health conditions; such problems 
can cause significant financial and emotional harm, particularly for 
people recovering after a hospitalization. 
Home health care frequently costs more than nursing home care; it is 
one-on-one care whereas nursing home care is shared among many patients. 
This is particularly true for patients recovering from more severe medical 
conditions. For example, if a patient requires 24-hour-a-day nursing care 
during the first days of recovery, home health care typically costs $30 an 
hour ($720 a day). But, very few of today's policies include benefit 
amounts greater than $150 to $200 a day. Yet, most policies with home 
health care benefits are sold to seniors with a strongly implied promise 
that they will keep people out of a nursing home. Thus, seniors who count 
on their policies to keep them at home often find themselves recovering in 
nursing homes, unless they or their families spend hard-earned savings to 
pay for expenses they thought would be covered by their policies. 
Home health care patients usually rely on a combination of their long-term 
care insurance policies and Medicare to pay for their care. While it does 
pay for 100% of the home health care required by some patients, Medicare 
on average pays only 45% of all billed home health care expenses. Because 
an insurance policy with home health care benefits can be inadequate to 
meet a patient's needs, particularly if highly-skilled care (nurses or 
therapists) is also needed, the patient, or the patient's family, must 
somehow make up the difference if the patient is to recover at home. 
To save money, friends and family members often provide non-medical 
assistance during a patient's recovery. This costs caregivers tens of 
millions of dollars in lost wages each year. And, a recent study found 
that 31% of the families of seriously-ill patients spent most or all of 
their life savings on the unreimbursed costs of home health care. 
Furthermore, Medicare provides no benefits for maintenance or custodial 
care at home. Thus, people who have developed cognitive impairment, e.g., 
Alzheimer's Disease or senile dementia, or lost the ability to perform 
some of the normal activities of daily living without the assistance of 
another person must rely upon friends and family, their savings and their 
long-term care insurance policies to provide and pay for the care they 
need. 
These conditions are degenerative; that is, as time passes, patients need 
ever-increasing care. Once their benefit maximums have been reached, 
today's fixed-benefit insurance policies force patients to spend their 
life savings more and more rapidly until they eventually become 
impoverished and qualify for Medicaid. As a result, patients' spouses and 
their families often suffer a steadily decreasing standard of living as 
their assets diminish. In many cases, especially when home health care is 
no longer affordable, this results in premature confinement in a Medicaid 
nursing home, with the concurrent loss of independence and privacy for the 
patient, an emotionally devastating event. 
In 1984, Jerry D. Wilson, a co-inventor herein, recognized the inadequacy 
of fixed-benefit home health care insurance arrangements and developed an 
insurance benefit system that was much more closely related to the home 
recovery care needs of patients discharged from hospitals. Wilson reasoned 
that the cost of a recovering patient's home health care should logically 
bear a direct relationship to the severity of the medical condition for 
which the patient was hospitalized. Thus, he based his benefit arrangement 
on Medicare's Diagnosis Related Groups (DRGs). That is, a specific 
aggregate dollar amount to pay for home health care was assigned as a 
maximum benefit limit to each of his DRG-based patient categories, with no 
daily, weekly, monthly or other duration-specific limits imposed on 
benefit payments. After incorporation into a home health care insurance 
policy, his rationale was validated over a 6-year development period 
during which it was found that more than three out of every four claimants 
had their expenses for their episode of home health care paid in full 
before they reached the maximum benefit limit for their medical 
conditions. As a result, these patients recovered at home, where they 
wanted to be, usually with little or no out-of-pocket expenses. In other 
words, their financial health remained intact, thereby allowing them to 
retain their standard of living after recovery. 
Wilson first offered policies incorporating his insurance benefit system to 
residents of the State of Washington in January 1985 through his own firm, 
Washington Health Services, Inc. Later, he licensed his system to three 
insurance companies as the basis for their own home health care policies: 
Equitable Life & Casualty Insurance Company, Great Republic Life Insurance 
Company and Commonwealth National Life Insurance Company. Thus far, more 
than 6,000 such policies have been sold. However, in spite of the success 
of Wilson's system in providing recuperating patients with sufficient 
funds to recover at home instead of a nursing home, his system is not 
known to have been used for any purpose other than as the basis for the 
benefit arrangement under home health care insurance policies. 
As home health care policies based on Wilson's system allowed more patients 
to recover at home, the number of patients who had to recuperate in 
nursing homes was reduced. Furthermore, for recuperating patients who 
spent the early days of their recovery in nursing homes, the average 
duration of their stays was reduced because policies based on his system 
provide sufficient funds for more expensive care at home. However, 
insurance companies have not reduced the premiums of their nursing home 
policies sold in conjunction with home health care policies based on his 
system, even though their nursing home claims costs are reduced when 
people are insured concurrently under policies based on Wilson's system. 
III. SUMMARY OF THE INVENTION 
The inventors herein have discovered a well-established pattern or problem 
within the insurance industry: That is, insurers charge the same premium 
for a first insurance policy regardless of whether the first insurance 
policy is issued with or without a concurrent second insurance policy; the 
second insurance policy being for a risk different from that of the first 
insurance policy; the second insurance policy affecting a claims cost of 
the first insurance policy; and the insurance policies being for the same 
person. This can reduce or deny benefit flexibility and/or premium savings 
to an insured person when he or she establishes an insurance program that 
includes two or more such policies. 
A. Objects and Advantages 
In view of the foregoing, the inventors herein have made a first innovation 
in the field of insurance that has created a need for a second innovation 
in the field of computer science, the latter being the subject of this 
patent application. Thus, an object of the invention for which a patent is 
sought is overcoming some or all of the drawbacks indicated herein by a 
computerized apparatus and method. 
It is a more particular object of the present invention to provide an 
apparatus and method for using a digital electrical computer system to 
process digital electrical signals to generate printed documentation for a 
first insurance policy affected by a concurrent second insurance policy. 
It is a further object of the present invention to provide an apparatus and 
method including a digital electrical computer apparatus including a 
digital computer having a processor, the processor electrically connected 
to an input device, for receiving input data and for converting the input 
data into input electrical signals, and to a printer, for converting the 
output electrical signals into printed documentation for a first insurance 
policy when a claims cost of the first insurance policy is affected by a 
concurrent second insurance policy, wherein the step of providing includes 
programming the processor to produce a programmed processor controlling 
the digital electrical computer apparatus and changing the input 
electrical signals into the output electrical signals in accordance with 
said method. 
It is still a further object of the present invention to provide an 
apparatus and method to enable receiving, as part of the input data, 
actuarial assumptions defining a first insurance policy for a first risk 
having a claims cost reflecting a concurrent second insurance policy for a 
second risk; the second risk being different from the first risk; the 
policies being for the same insured person; and the second policy 
affecting a claims cost of the first policy. 
It is yet another object of the present invention to provide an apparatus 
and method to enable receiving, as part of the input data, actuarial 
assumptions defining a first insurance policy for a first risk, and 
actuarial assumptions defining a second insurance policy for a second 
risk, the first and second insurance policies having claims costs 
reflecting a concurrent third insurance policy for a third risk; the 
second risk being different from the first risk, and the third risk being 
different from both the first risk and the second risk; the policies being 
for the same insured person; and the third policy affecting a claims cost 
of the first policy and a claims cost of the second policy. 
It is a preferred object of the present invention to provide an apparatus 
and method for carrying out the changing of the input electrical signals 
into the output electrical signals so as to include, by utilizing an 
appropriate computational filter, a computed premium for said first 
insurance policy, or a computed premium for each of said first and second 
insurance policies; and generating printed insurance documentation, 
including the computed premium or premiums, at said printer. 
It is another preferred object of the present invention to provide an 
apparatus and method for efficiently calculating a change in a claims cost 
of a first insurance policy that is attributable to the presence of a 
concurrent second insurance policy; and generating printed insurance 
documentation, including the computed change in the claims cost, at said 
printer. 
It is still another preferred object of the present invention to provide an 
apparatus and method for calculating and carrying out a reduction in a 
claims cost of a life insurance policy that is attributable to the 
presence of a concurrent second insurance policy providing health 
insurance. 
It is a further preferred object of the present invention to provide an 
apparatus and method for calculating and carrying out a reduction in a 
claims cost of a medical insurance policy that is attributable to the 
presence of a concurrent second insurance policy providing home health 
care insurance. 
It is a further preferred object of the present invention to provide an 
apparatus and method for calculating and carrying out a reduction in an 
insurer's claims cost of a policy providing hospitalization insurance that 
is attributable to the presence of a concurrent second home health care 
insurance policy. 
It is a further preferred object of the present invention to provide an 
apparatus and method for calculating and carrying out a reduction in a 
claims cost of an insurance policy providing fixed benefits for long-term 
care patients in nursing homes and other group living arrangements such as 
continuing care retirement communities, assisted living facilities, etc., 
that is attributable to the presence of a concurrent second insurance 
policy providing home health care insurance. 
It is a further preferred object of the present invention to provide an 
apparatus and method for calculating and carrying out a reduction in a 
claims cost of a first insurance policy providing fixed benefits for 
recuperating patients in nursing homes and other group living 
arrangements, and a reduction in a claims cost of a concurrent second 
insurance policy providing hospitalization benefits, that is attributable 
to the presence of a concurrent third insurance policy providing home 
health care insurance. 
It is yet another preferred object of this invention to provide an 
automated apparatus and method for calculating and carrying out a 
reduction in a claims cost of providing benefits for patients in nursing 
homes and other group living arrangements under a first insurance policy 
having a benefit arrangement based on the related patent application 
bearing Ser. No. 08/843,345 and entitled, "Apparatus and Method for 
Determining Insurance Benefit Amounts Based on Groupings of Long-term Care 
Patients with Common Characteristics," (e.g., insurance policy provides 
benefit amounts for patients in a group living arrangement, the benefit 
amounts varying according to patient care categories) that is attributable 
to the presence of a concurrent second insurance policy providing home 
health care insurance. 
Yet one more representative object of the present invention is to provide 
an apparatus and method for calculating and carrying out a reduction in a 
claims cost of a first insurance policy providing benefits for patients in 
nursing homes and other group living arrangements that is attributable to 
the presence of a concurrent second insurance policy providing home health 
care insurance under a benefit arrangement based on Wilson's system, e.g., 
an insurance policy having maximum aggregate benefit limits for home 
health care, the benefits varying according to relative severity of 
patient medical conditions. 
Yet another representative object of the present invention to provide an 
apparatus and method for the foregoing such that the resultant reduction 
(savings) in a claims cost of the first insurance policy can then be used 
to reduce the premiums charged to consumers; or by utilizing an 
appropriate computational filter to add additional benefits and/or 
coverage at no additional cost to consumers; and/or to increase the 
profitability of the insurer's policy, without increasing the insurer's 
financial risk. 
These and other objects and advantages of this invention will become 
apparent from a consideration of the figures and ensuing description. 
B. Summary of the Invention 
These and other objects of the present invention, as apparent from the 
specification as a whole, are carried out by providing an improved digital 
electrical computer apparatus and method for calculating a financial 
attribute of a first insurance policy affected by the presence of a 
concurrent second insurance policy, especially where insured 
contingencies, risks, and/or perils of the two policies are different, but 
where the benefits of one policy reduce a claims cost of the other policy. 
The resulting savings in a claims cost of the first policy can then be 
used to reduce premiums charged to consumers, to add additional benefits 
and/or coverage at no additional premium charge to consumers, and/or to 
increase the insurance company's profitability. 
For example, it is accepted in the insurance industry that if a health 
insurance policy pays benefits for wellness services such as physical 
exams, mammographies, pap smears, prostate exams, PSA tests and lifestyle 
counseling (smoking cessation, weight loss, exercise, etc.), more people 
will utilize those services than would be the case if the health insurance 
policy did not pay benefits for wellness services. Furthermore, it is 
accepted in the medical industry that people who regularly utilize such 
wellness services will, on average, live longer. Therefore, the inventors 
herein have inferred that an insurer with a health insurance policy that 
pays benefits for wellness services will experience a reduction in a 
claims cost of providing a life insurance policy to the same group of 
people because those people will tend to live longer and have lower 
mortality rates that other groups of people not similarly insured. 
Consider another example. Most medical insurance policies include only 
incidental benefits for the contingency of home health care because 
recuperative care following a hospitalization can cost more if delivered 
in a patient's home than if delivered in a nursing home, particularly if 
skilled recuperative care is involved. As a result, a hospital patient is 
often sent to a nursing home to recover if a nursing home bed is 
available, or kept in the hospital until he or she no longer requires 
skilled medical care during recuperation. On the other hand, if the 
hospital patient were also insured under a second insurance policy whose 
home health care benefits were based on Wilson's system, sufficient funds 
would be available in many cases to pay for the full cost of skilled 
medical care in the patient's home. The inventors have inferred that such 
home health care benefits will reduce the average length of a hospital 
stay, thereby reducing an insurance company's claims cost of providing the 
medical insurance coverage. 
Under the present invention, the second insurance policy can overcome a 
failing common to fixed-benefit insurance arrangements for home health 
care; that is, benefit amounts available under the fixed-benefit policies 
can be inadequate to pay for recuperative care in patients' homes. Thus, 
recovering patients must often be put into nursing homes to receive the 
care they need, especially if that care must be provided by a skilled 
medical professional. As a result, fixed-benefit policies that provide 
benefits for nursing home care must be priced higher than would otherwise 
be necessary. On the other hand, a home health care insurance policy with 
its benefit arrangement based on Wilson's system can provide larger 
benefit amounts for many recuperating patients, without any daily benefit 
limits, thereby allowing them to be able to afford to receive their care 
in their own homes without going to a nursing home, or to return home 
sooner after a short-duration stay in a nursing home to receive intensive 
recuperative care. And, for stereotypical long-term care patients with 
degenerative conditions, a home health care insurance policy with its 
benefit arrangement based on Wilson's system can allow many to remain home 
longer before ultimately moving to a nursing home or other type of group 
living facility. Thus, the inventors herein have inferred that a policy 
with its benefit arrangement based on Wilson's system can reduce the 
percentage of recovering patients who must go to a nursing home, the 
lengths of stay in a nursing home for recovering patients, and the lengths 
of stay in a nursing home or other type of group living facility for 
stereotypical patients with degenerative conditions. These reductions in 
the frequency and duration of nursing home stays reduce an insurer's 
claims cost of providing insurance for patients in nursing homes and other 
group living facilities. 
Insurance policies with home health care benefits based on Wilson's system 
have successfully kept many patients out of nursing homes and other group 
living arrangements, and reduced the lengths of stay in nursing homes and 
other group living arrangements for many other patients. Thus, when such a 
home health care policy (i.e., a policy having primary benefits for 
maintenance care, recovery care, etc. of a patient at home) is purchased 
by a consumer (insured) together with a policy providing coverage for 
patient stays in nursing homes and other group living arrangements based 
on the related patent application, these reductions in the frequency and 
duration of said patient stays reduce an insurer's claims cost of 
providing insurance benefits for such patient stays. 
The invention includes apparatus, method for making the apparatus, and 
method for using the apparatus, articles of manufacture (e.g., program on 
a storage medium) along with necessary intermediates, most efficiently 
summarized with reference to the method for using the apparatus. 
Accordingly, the invention includes a method for using an apparatus to 
process digital electrical signals to generate documentation using a 
computed value for claims cost of a first insurance policy affected by at 
least one concurrent, different insurance policy, the method including the 
steps of: providing an apparatus including a digital electrical computer 
having a processor, the processor electrically connected to an input 
device, for receiving input data and for converting the input data into 
input electrical signals, and to a printer, for converting the output 
electrical signals into printed documentation, the processor being 
programmed to control the apparatus in changing the input electrical 
signals into the output electrical signals in accordance with said method; 
receiving, as part of the input data, actuarial assumptions defining a 
first insurance policy for a first risk having a claims cost affected by 
at least a second concurrent insurance policy for a respectively different 
risk for an insured person (preferably the policies are from a group 
consisting of life, accident, disability, health, and a combination 
thereof, where a first claim coverage can influence the likelihood or 
extent of a subsequent claim); wherein the changing of the input 
electrical signals into the output electrical signals includes computing a 
first value for the claims cost for the first insurance policy; and using 
the first value to generate printed insurance documentation at said 
printer. 
The method can be carried out such that the changing of the input 
electrical signals into the output electrical signals includes computing a 
second value representing an extent to which the claims cost for the first 
insurance policy is influenced by the second insurance policy. More 
particularly, the invention can be carried out such that the extent 
represents a savings in claims cost for the first insurance policy, and 
wherein the changing of the input electrical signals into the output 
electrical signals includes applying the savings in claims cost, at least 
partially, as an offset to a premium for the first insurance policy when 
it is concurrently in force along with the second insurance policy; and 
wherein the step of generating printed insurance documentation includes 
generating the reduced premium cost. Even more particularly, the invention 
can be carried out such that the extent represents a savings in claims 
cost for the first insurance policy, and wherein the changing of the input 
electrical signals into the output electrical signals includes applying 
the savings in claims cost, at least partially, as an offset to a cost for 
providing at least one additional benefit to the first insurance policy 
when it is concurrently in force along with the second insurance policy; 
and wherein the step of generating printed insurance documentation 
includes generating a representation of the at least one enhanced benefit. 
Still more particularly, the invention can be carried out such that the 
extent represents a savings in claims cost for the first insurance policy, 
and wherein the changing of the input electrical signals into the output 
electrical signals includes applying the savings in claims cost, at least 
partially, as an offset to a cost for providing at least one benefit 
enhancement to the first insurance policy when it is concurrently in force 
along with the second insurance policy; and wherein the step of generating 
printed insurance documentation includes generating a representation of 
the at least one enhanced benefit. Ever more particularly, the invention 
can be carried out such that the extent represents a savings in claims 
cost for the first insurance policy, and wherein the changing of the input 
electrical signals into the output electrical signals includes applying 
the savings in claims cost, at least partially, to a value reflecting 
profit for the insurer of the first insurance policy. 
In any of the foregoing, the actuarial assumptions can reflect that the 
first insurance policy is for life insurance and the second insurance 
policy is for health insurance; that the first insurance policy is for 
life insurance and the second insurance policy is for medical insurance; 
that the first insurance policy is for medical insurance and the second 
insurance policy is for home health care insurance; that the first 
insurance policy provides hospitalization insurance benefits, and the 
second insurance policy is for home health care insurance; that the first 
insurance policy provides benefits for patients in a group living 
arrangement, said benefits not being based on defined patient-care 
categories, and the second insurance policy is for home health care 
insurance; that the first insurance policy provides benefits for patients 
in a group living arrangement, said benefits not being based on defined 
patient-care categories, and the second insurance policy having maximum 
aggregate benefit limits for home health care, the benefit limits varying 
according to relative severity of patient medical conditions; and/or that 
the first insurance policy provides duration-specific benefits for 
patients in a group living arrangement, the benefits varying according to 
defined patient-care categories, and the second insurance policy having 
maximum aggregate benefit limits for home health care, the benefit limits 
varying according to relative severity of patient medical conditions. 
In a more refined version of the invention, the method can be carried out 
wherein the at least one other concurrent insurance policy for a 
respectively different risk for an insured person includes a third 
insurance policy; and wherein the changing of the input electrical signals 
into the output electrical signals includes computing a third value 
representing an extent to which the claims cost for one of the first 
insurance policy and the second insurance policy is influenced by the 
third policy. More specifically, the method can further include the step 
of: applying at least a portion of the third value to a value representing 
a member of a group consisting of reduced premium, an additional benefit, 
a benefit enhancement, an increase in profit, and a combination thereof. 
Note that the coverages may or may not be in the same insurance policy. An 
advantage of having the coverages in the same policy is that 
administration of such policies is more efficient than is the case where 
the one policy is replaced by several policies. An advantage of having the 
coverages in more than one policy is that the policies can be provided by 
different insurers. 
The apparatus corresponding to the foregoing method, as well as the method 
of making the apparatus carry out the foregoing method are also 
contemplated as the invention. Additionally, the memory media, e.g., a 
diskette, containing a computer program, and the data corresponding to 
insurance documentation, are viewed as being part of the invention. 
More particularly, the present invention involves an improved method and 
apparatus for computing a premium for a first insurance policy reflecting 
the presence of a concurrent second insurance policy whose insured 
contingencies, risks and/or perils are different from those of the first 
policy, but whose benefits reduce a claims cost of providing insurance 
benefits under the first policy, the first and second policies insuring 
the same person, wherein the improvement includes the steps of: 
1. providing an appropriately-programmed programmable computer system; 
2. inputting actuarial assumptions for the first insurance policy, said 
actuarial assumptions reflecting the presence of the second insurance 
policy; 
3. computing, by utilizing an appropriate computational filter, the premium 
for the first insurance policy; and 
4. generating insurance documentation for the first insurance policy, 
including the computed premium, by the computer means. 
Even more particularly, the present invention involves an improved method 
and apparatus for calculating and applying the reduction (savings) in a 
claims cost of insurance benefits for a first insurance policy that is 
attributable to the presence of a concurrent second insurance policy whose 
insured contingencies, risks and/or perils are different from those of the 
first policy, but whose benefits reduce the claims cost of providing 
insurance benefits under the first policy, the first and second policies 
insuring the same person, wherein the improvement includes the steps of: 
1. providing an appropriately-programmed programmable computer system; 
2. inputting actuarial assumptions for the first insurance policy, said 
actuarial assumptions reflecting the presence of the concurrent second 
insurance policy; 
3. computing, by utilizing an appropriate computational filter, the claims 
cost for the first insurance policy based on the actuarial assumptions 
inputted in step 2; 
4. inputting revised actuarial assumptions for the first insurance policy 
without consideration of the concurrent second insurance policy, 
5. computing, by utilizing an appropriate computational filter, the revised 
claims cost for the first insurance policy based on the revised actuarial 
assumptions inputted in step 4; 
6. computing, by subtracting the claims cost determined in step 3 from the 
revised claims cost determined in step 5, the reduction (savings) in the 
first insurance policy's claims cost attributable to the presence of the 
concurrent second insurance policy; 
7. applying the savings, by utilizing an appropriate computational filter, 
to the provision of additional benefits and/or benefit enhancements for a 
person insured under the first insurance policy, and/or to increase the 
profitability of the first insurance policy for an insurer; and 
8. generating insurance documentation for the first insurance policy, 
including the additional benefits, benefit enhancements, and/or increased 
profitability, by the computer means. 
It is important to note that steps 2 through 5 can be rearranged without 
affecting the results of this embodiment of the invention provided that: 
the claims cost described in step 3 is always based on the actuarial 
assumptions described in step 2; the revised claims cost described in step 
5 is always based on the revised actuarial assumptions described in step 
4; and the claims cost is always subtracted from the revised claims cost.

IV. DETAILED DESCRIPTION OF A PREFERRED EMBODIMENT 
As a prefatory note, attention is drawn to the unique language of today's 
health care environment: (1) 72% of the seniors sent to nursing homes stay 
for less than 90 days, and (2) 83% of Medicare's home health care cases 
last for less than 90 days, but the insurance industry and its regulators 
often consider these patients to be a sub-set of "long-term care" patients 
because they receive care in the same settings, e.g., at home or in 
nursing homes, as stereotypical long-term care patients. While they are 
actually short-term recovering patients, the present specification has 
adopted the industry's nomenclature throughout the description of this 
invention. Thus, this invention not only applies to stereotypical 
long-term care patients who are unable to take care of themselves because 
of chronic cognitive or physical impairment, but it also applies to 
short-term recovering patients. 
Most references in the description of this invention are to people age 65 
and older (seniors); however, long-term care is also needed by younger 
people, but less frequently. Therefore, this invention applies to people 
of all ages. 
Whenever the terms "insurance policy" or "policy," or the plurals thereof, 
are used in the present specification, they include any contract, or any 
part thereof, or any rider, endorsement, program, plan or any other 
arrangement under which one party undertakes to indemnify or guarantee 
another party against loss due to one or more specified contingencies, 
risks or perils, except the federal or state Medicare and Medicaid 
programs and their successors. "Coverage" means the specific contingency, 
risk or peril, or group of specific contingencies, risks and/or perils 
covered, and for which a benefit or benefits are provided, by the 
insurance arrangement. "Financial attribute" means a premium, discount, 
commission rate, claims cost, elimination period, benefit period, benefit 
amount, benefit limit, benefit coordination, exclusion, limitation, 
renewability, coverage duration, morbidity factor, mortality factor, 
expense, or any other similarly financially-related element of, or 
associated with, an insurance policy. "claims cost" or "claims costs" mean 
monies paid to claimants in accordance with an insurance arrangement and 
do not include any costs associated with administration or adjudication of 
claims. "Insurance company," "company," or "insurer," or the plurals 
thereof, include Blue Cross and Blue Shield organizations, health 
maintenance organizations (HMOs), self-insured programs by companies and 
other organizations, and all other insurance arrangements, except the 
federal or state Medicare and Medicaid programs and their successors. 
Whenever the terms "medical condition" or "medical conditions" are used in 
this invention, they also include patients' physical and mental 
conditions; whenever the terms "condition" or "conditions" are used, they 
include patients' medical, physical and mental conditions. Whenever the 
terms "benefit amount" or "benefit amounts" are used in this invention, 
they include the terms "benefit limit" or "benefit limits" unless the 
terms "benefit limit" or "benefit limits" are used separately. 
FIG. 1 shows, in block diagram form, the computer-based elements which can 
be utilized to implement the present invention. The present invention 
involves computer system 1, which includes processor circuitry 2 in a 
digital electrical computer 4. For flexibility, it is preferable to have 
the processor circuitry 2 formed by means of a computer program 
programming programmable circuitry, i.e., programming the computer 
(processor). The programming can be carried out with a computer program 
(or programs) 6, which for flexibility should be in the form of software 
stored in an external memory 8, such as a diskette, hard disk, virtual 
disk, or the like. (The virtual disk is actually an extended internal 
memory 10 which may assist in speeding up computing.) A diskette approach 
is optional, but it does provide a useful facility for inputting or 
storing data structures that are a product produced by the host software, 
as well as for inputting a software embodiment of the present invention. 
Of course storing the computer program 6 in a software medium is optional 
because the same result can be obtained by replacing the computer program 
in a software medium with a hardware storage device, e.g., by burning the 
computer program 6 into a ROM, using conventional techniques to convert 
software into an ASIC or FPGA, etc., as would be understood by one having 
a modicum of skill in the arts of computer science and electrical 
engineering. (It is well known in the art of computer science that it is a 
trivial technical exercise to go from hardware to software or vice versa. 
See, for example, James R. Goodman, Todd E. Marlette, and Peter K. Trzyna, 
"The Alappat Standard for Determining That Programmed Computers are 
Patentable Subject Matter," J.P.T.O.S. October 1994, Volume 76, No. 10, 
pages 771-786, and James R. Goodman, Todd E. Marlette, and Peter K. 
Trzyna, "Toward a Fact-based Standard for Determining Whether Programmed 
Computers are Patentable Subject Matter," J.P.T.O.S. May 1995, Vol. 77, 
No. 5, pages 353-367, both of which are incorporated by reference.) In 
this regard, it should also be noted that "input" can include inputting 
data for processing by the computer program 6 or inputting in the computer 
program 6 code itself. 
An internal memory 10 works in cooperation with the external memory 8. An 
input device 12 could be a keyboard or equivalent means for a user to 
input the data discussed below. A visual display unit 14 can be employed 
for a visual representation, and a printer 16 can be employed for 
producing hard copy output 22. Note that output electrical data can also 
be stored to memory 8. 
For such an embodiment, the following specification should operate 
satisfactorily: an IBM or compatible PC (type XT or upwards) computer with 
a 386 or higher processor, having at least 640 kb of memory (RAM). The 
environment/operating system could be MS-DOS/PC-DOS (or equivalent) 
version 3.0 or later. A numeric (math) co-processor is also advantageous 
in speeding up computing times, as is an extended memory. Alternatively, a 
Windows implementation could be used. The input device 12 can be any ANSI 
standard terminal, and the visual display unit 14 can be a Trinatron color 
monitor. 
Still other alternatives include using a network of other computers 18 or a 
mini-computer or a mainframe system. With such larger scale approaches, 
the external memory 8 could be a tape or a CD ROM for data retrieval. A 
VAX or Microvax system running VMS 5.0 or later is an acceptable approach. 
As indicated above, an embodiment could also be carried out in hardware, 
though this is not recommended as it is an inflexible approach. 
Accordingly, a hardware implementation is described here for exemplary 
purposes. Of course it is well known that a computer program can be stored 
in hardware by many approaches, not the least of which is burning it into 
a ROM. More sophisticated than burning a ROM, but also entirely 
conventional, is to use techniques to translate the computer program 6 
into an ASIC or a chip that will carry out the invention in an equivalent 
manner, and in fact with equivalent circuitry to that formed by 
programming programmable computer circuitry. It is all just digital 
electrical circuitry processing digital electrical signals, transforming 
them to output different electrical signals. 
The present invention can best be implemented by utilizing a database 20 of 
files (or an equivalent, e.g., records, a relational database, etc.) 
pertaining to insurance documentation data for processing as discussed 
herein. In FIG. 1, respective dotted lines between database 20 and input 
device 12, and between computer program 6 and input device 12 illustrate 
that the computer program 6 and contents of database 20 can be obtained 
from data input at the input device 12, which converts the respective 
input data into respective electrical signals for handling by the digital 
electrical computer 4, and processor 2, including storing the respective 
digital electrical signals in the memories 8 and 10. Output electrical 
data, in the form of digital electrical signals, is generated by the 
processor 2 processing the input electrical data in a manner specified by 
the executable program 6, such that when operated, the system 1 as a whole 
produces a tangible presentation, such as that represented in FIG. 1 as 
documentation 22, including such documents as insurance and illustration 
documentation. 
There can be five basic types of file or data stored in the external memory 
8: 
1. The main program file (i.e., computer program 6). 
2. Local files 24 (files specific to a particular user and not available to 
other users). These include files describing the configuration of the 
user's preferred output format, private dictionary files, input and output 
files generated by the user, etc. 
3. Data files 26 local to a user, which in a single computer system, would 
include the main database file. 
4. User utilities 28, which assist in customizing reference files and in 
the creation of private dictionaries. 
5. Reference files 30, which are accessible to all users (e.g., users of 
other computers 18) and include the standard (or "public") dictionary 
files, files containing the menus, error and information messages and 
prompts. 
Of course if the invention is carried out with one computer and used by one 
user, reference files 30 are kept along with local files 24. In any case, 
a user should have access to the files that include the above-referenced 
insurance documentation. 
The programmed processor circuitry 2 uses the contents of files 24-30 which 
represents some or all of the data input by the user to produce output 
data in a digital electrical form of a string of bits which correspond to 
processed data. The processor circuitry 2 carries out its operations by 
using at least one "filter", which can be characterized as an analysis or 
process restricted by a precise definition. Elements of the definition can 
be characterized by at least one logical operator or operand to indicate 
the precise definition or process to be carried out, e.g., whether the 
union or intersection of two elements or the complement of an element is 
required. The term "filter" is also applied to the process of applying 
this definition to change, create, or generate, or exclude data other than 
that defined from subsequent processing. 
This invention can also be implemented by utilizing at least one pointer to 
insert a computed piece of data into the preformatted text of the 
above-referenced documentation in the appropriate data file(s). 
Alternatively, a plurality of pointers can be logically linked so that the 
output electrical data can be inserted in a plurality of locations in the 
aforementioned insurance documentation 22. The computer program 6 
controlling the digital electrical computer 4 checks for the pointer(s) to 
ascertain whether any electrical output data should be inserted in 
generating the insurance documentation 22. This is preferable to an 
approach of doing the computing described in FIG. 2 and then manually 
entering the computed amounts on printed insurance documentation 
preformatted to accommodate the inserted amounts. 
In FIG. 2, four steps are included in the computing, by digital electrical 
computer means, of a financial attribute, e.g., a premium, for a first 
insurance policy affected by a concurrent second insurance policy. 
Step 1 includes providing, as described in FIG. 1, a digital electrical 
computer apparatus including a digital computer having a processor, the 
processor electrically connected to an input device, for receiving input 
data and for converting the input data into input electrical signals, and 
to a printer, for converting the output electrical signals into printed 
documentation; wherein the step of providing includes programming the 
processor to produce a programmed processor controlling the digital 
electrical computer apparatus and changing the input electrical signals 
into the output electrical signals in accordance with the method. 
Step 2 includes receiving, as part of the input data, actuarial assumptions 
defining a first insurance policy for a first risk having a claims cost 
reflecting: a concurrent second insurance policy for a second risk, the 
second risk being different from the first risk; the policies being for 
the same insured; and the second policy affecting a claims cost of the 
first policy. 
Step 3 includes carrying out the changing of the input electrical signals 
into the output electrical signals, by utilizing an appropriate 
computational filter, so as to include a computed financial attribute for 
the first insurance policy. 
Step 4 includes generating printed insurance documentation, including the 
computed financial attribute, at said printer. 
Turning now to FIG. 3, there are 8 steps involved in providing a 
computation of the reduction (savings) in a claims cost of a first 
insurance policy that is attributable to the presence of a concurrent 
second insurance policy. 
Step 1. Provide, as described in FIG. 1, a digital electrical computer 
apparatus including a digital computer having a processor, the processor 
electrically connected to an input device, for receiving input data and 
for converting the input data into input electrical signals, and to a 
printer, for converting the output electrical signals into printed 
documentation; wherein the step of providing includes programming the 
processor to produce a programmed processor controlling the digital 
electrical computer apparatus and changing the input electrical signals 
into the output electrical signals in accordance with the method. 
Step 2. Input actuarial assumptions defining a first insurance policy for a 
first risk having a claims cost reflecting: a concurrent second insurance 
policy for a second risk, the second risk being different from the first 
risk; the policies being for the same insured; and the second policy 
affecting a claims cost of the first policy. 
Step 3. Carry out the changing of the input electrical signals into the 
output electrical signals, by utilizing an appropriate computational 
filter, so as to include a computed claims cost for the first insurance 
policy. 
Step 4. Input revised actuarial assumptions defining a first insurance 
policy for a first risk having a claims cost that does not reflect: a 
concurrent second insurance policy for a second risk, the second risk 
being different from the first risk; the policies being for the same 
insured; and the second policy otherwise affecting a claims cost of the 
first policy. 
Step 5. Carry out the changing of the input electrical signals into the 
output electrical signals, by utilizing an appropriate computational 
filter, so as to include a computed revised claims cost for the first 
insurance policy. 
Step 6. Compute the reduction (savings) in the claims cost of the first 
insurance policy by subtracting the claims cost determined in Step 3 above 
from the revised claims cost determined in Step 5 above. 
Step 7. Apply the savings determined in Step 6 above, by utilizing an other 
appropriate computational filter, to provide additional benefits and/or 
benefit enhancements for a person insured under, and/or to increase the 
profitability for the insurer of, the first insurance policy. 
Step 8. Generate printed insurance documentation, including the computed 
additional benefits, benefit enhancements and/or profitability increase, 
at said printer. 
Once again, it is important to note that steps 2 through 5 can be 
rearranged without affecting the results of this embodiment of the 
invention provided that: the claims cost described in Step 3 is always 
based on the actuarial assumptions described in Step 2; the revised claims 
cost described in Step 5 is always based on the revised actuarial 
assumptions described in Step 4; and the claims cost is always subtracted 
from the revised claims cost. 
FIGS. 4 and 5 are illustrations of the type of insurance documentation that 
can be produced through the application of this invention as illustrated 
in the FIG. 3 flowchart to a first insurance policy providing benefits for 
nursing home patients under an arrangement based on the aforementioned 
related patent application in conjunction with a second insurance policy 
providing benefits for home health care patients under an arrangement 
based on Wilson's aforementioned system. FIG. 4 illustrates step 6 above 
wherein the reduction (savings) in the first insurance policy's claims 
cost is computed. FIG. 5 illustrates step 7 above wherein the savings 
computed in FIG. 4 have been applied, by computer means, to provide a 
benefit enhancement in the form of reducing the policy's elimination 
period (the initial period of nursing home confinement for which no 
benefits are payable) from 100 days to 0 days. 
More particularly, an approach to implementing an embodiment of the present 
invention, utilizing the steps shown in FIG. 3, is to illustrate, as shown 
in FIG. 4, how the claims cost of a first insurance policy that provides 
benefits for care in nursing homes and other group living facilities under 
an arrangement based on the aforementioned related patent application can 
be reduced by the presence of a concurrent second insurance policy that 
provides benefits for home health care under an arrangement based on 
Wilson's aforementioned system, with the resultant reduction (savings) 
then being applied, as shown in FIG. 5, to the provision of additional 
benefits, benefit enhancements and/or increased profitability. 
Step 1. Provide the Computer System 1 described in FIG. 1. 
Provide, as described in FIG. 1, a digital electrical computer apparatus 
including a digital computer having a processor, the processor 
electrically connected to an input device, for receiving input data and 
for converting the input data into input electrical signals, and to a 
printer, for converting the output electrical signals into printed 
documentation; wherein the step of providing includes programming the 
processor to produce a programmed processor controlling the digital 
electrical computer apparatus and changing the input electrical signals 
into the output electrical signals in accordance with the method. 
Step 2. Input "Revised" Actuarial Assumptions. 
(To facilitate the construction of FIG. 4, the inventors herein have 
rearranged the steps shown in FIG. 3, in accordance with the notation four 
paragraphs above. Thus, this step is shown as Step 4 in FIG. 3; Step 3 
below is shown as Step 5 in FIG. 3; Step 4 below is shown as Step 2 in 
FIG. 3; and Step 5 below is shown as Step 3 in FIG. 3.) 
Input the "revised" actuarial assumptions defining a first insurance policy 
for a first risk having a claims cost that does not reflect: a concurrent 
second insurance policy for a second risk, the second risk being different 
from the first risk; the policies being for the same insured; and the 
second policy otherwise affecting a claims cost of the first policy. As 
shown in the first section of FIG. 4, columns A through H, the following 
"revised" actuarial assumptions were inputted for the first insurance 
policy providing benefits for care in nursing homes and other group living 
facilities under an arrangement based on the aforementioned related patent 
application: 
Column A. Patient Category. (This column also applies, without change, to 
the actuarial assumptions to be inputted in Step 4 below.) 
Column B. ADL Range (This column also applies, without change, to the 
actuarial assumptions to be inputted in Step 4 below. In the ensuing 
description, the term "Patient Category" includes ADL Range unless 
otherwise indicated.) 
Column C. Distribution of Nursing Home Patients by Patient Category. (This 
column is also the basis for computations to be made in Step 4 below.) 
Column D. Daily Nursing Home Benefit by Patient Category. (This column also 
applies, without change, to the actuarial assumptions to be inputted in 
Step 4 below.) 
Column E. Duration, in Months, of Average Nursing Home Confinement by 
Patient Category. (This column is also the basis for computations to be 
made in Step 4 below.) 
Column F. Months of Paid Nursing Home Benefits by Patient Category. The 
inventors herein determined that the inputted "revised" actuarial 
assumptions should include an imbedded computational filter to calculate 
the number of months for which an insurer will pay benefits after 
application of the first policy's elimination period. This is accomplished 
by first dividing the number of days in Elimination Period #1, as 
indicated above these 8 columns, by the quotient resulting from dividing 
the average number of days in a year (365.25) by 12. The resultant second 
mathematical quotient is then subtracted from the value in column E for 
each Patient Category to determine the value to be entered in this column. 
If a remainder resulting from application of this computational filter is 
a negative number, zero is entered as the value in this column for that 
Patient Category. 
Column G. Weighted Monthly Benefit by Patient Category. For the purpose of 
this FIG. 4, because the distribution of nursing home patients varies 
widely by Patient Category, the inventors herein determined that the 
inputted "revised" actuarial assumptions should include a second imbedded 
computational filter to calculate a Weighted Monthly Benefit for each 
Patient Category. Said computational filter multiplies the value in column 
C for each Patient Category by the value in column D for that Patient 
Category to produce a mathematical product, then multiplies that product 
by the average number of days in a year (365.25) divided by 12. The 
resultant value represents an insurer's maximum monthly benefit exposure 
prior to the application of the policy's elimination period (the initial 
period of nursing home confinement for which no benefits are payable) and 
the number of months for which benefits will be paid. 
Column H. Weighted Present Value of All Nursing Home Benefit Payments 
("Revised" Claims Cost) by Patient Category. The inventors herein have 
included a third computational filter as part of the inputted "revised" 
actuarial assumptions, the purpose of which is to calculate a present 
value of all benefits to be paid, after application of the policy's 
elimination period, in each Patient Category. This is accomplished by 
multiplying the value in column G for a Patient Category by the value in 
column F for that category, then multiplying that mathematical product by 
an appropriate computational filter to calculate the present value of a 
future benefit. Such present value computational filters are well known 
and understood by anyone having a modicum of skill in the arts of 
actuarial science. For the purpose of this present value calculation, the 
inventors used an Assumed Annual Interest Rate of 6.00%, as indicated 
above these 8 columns of "revised" actuarial assumptions, and assumed that 
benefits are paid once a month at the end of the month to which they 
apply. 
Step 3. Compute a Revised Claims Cost. 
This is accomplished by adding together all of the values computed in 
column H, "Weighted Present Value of Total Nursing Home Benefit Payments 
("Revised" Claims Cost) for each Patient Category." The resultant sum 
($22,581.21) appears at the bottom of column H. 
Step 4. Input Actuarial Assumptions. 
Input the actuarial assumptions defining a first insurance policy for a 
first risk having a claims cost that does reflect: a concurrent second 
insurance policy for a second risk, the second risk being different from 
the first risk; the policies being for the same insured; and the second 
policy affecting a claims cost of the first policy. As shown in the second 
section of FIG. 4, columns J through T, the following actuarial 
assumptions were inputted for the first insurance policy. (Notes: Columns 
J through P apply to patients who, it is assumed, will receive benefits 
not only from the first insurance policy, but also from a concurrent 
second insurance policy having a benefit arrangement based on Wilson's 
aforementioned system. Columns Q through S apply to patients who, it is 
assumed, will receive benefits only from the first insurance policy. 
Column T sums values derived from columns J through P and columns Q 
through S.) 
Column J. Patient Qualifies for Medicare's Nursing Home Benefits?For the 
purpose of FIG. 4, the inventors herein assumed that patients in the first 
four broad Patient Categories, "Extensive Services," Rehabilitation, 
"Special Care," and "Clinically Complex," will qualify for Medicare's 
Nursing Home (Skilled Nursing Facility) Benefits, whereas patients in the 
last two Patient Categories, "Cognitive & Behavior" and "Reduced Physical 
Functions," will not qualify for said benefits. 
Column K. Percent of Patients with both policies who receive Care at Home. 
This is the percentage of the patients indicated in column C who the 
inventors herein have assumed will receive insurance benefits for care at 
home because they are also insured under the concurrent second insurance 
policy. 
Column L. Patient Distribution eligible for both Nursing Home and Home Care 
Insurance Benefits. The values in this column, to be used in ensuing 
computations, are the mathematical product resulting from multiplying, for 
each Patient Category, the value in column K by the value in column C. 
Column M. Months of Care at Home and for which Benefits are Available under 
the concurrent second insurance policy. For patients who are eligible for 
Medicare's Skilled Nursing Facility Benefits, and are recovering from the 
most severe medical conditions after a period of hospitalization, the 
inventors herein have assumed that they will be sent to a Medicare Skilled 
Nursing Facility for their initial stage of recovery, and then sent home 
to complete their recovery earlier than would otherwise be the case 
because of the presence of the concurrent second insurance policy. 
For the following Patient-ADL Categories, for patients insured by both 
policies, the inventors herein have assumed the indicated periods of 
initial confinement in a Medicare Skilled Nursing Facility: 
______________________________________ 
Patient Category 
ADL Range Duration, in Months 
______________________________________ 
Extensive Services 
3+ Types 7-18 1.5 
2 Types 7-18 1.0 
Special Care 17-18 1.0 
14-16 0.5 
Clinically Complex 
17-18 1.5 
______________________________________ 
For all other patients in the first four broad Patient Categories, 
"Extensive Services," Rehabilitation, "Special Care," and "Clinically 
Complex," it was assumed that they will not be sent to a Medicare Skilled 
Nursing Facility to recover because of the availability of sufficient 
benefits under the concurrent second insurance policy to pay for the cost 
of their recovery at home. 
Patients in the last two Patient Categories, "Cognitive & Behavior" and 
"Reduced Physical Functions," will not qualify for Medicare's Skilled 
Nursing Facility Benefits. Thus, the inventors herein have assumed that 
they will be able to delay admission into a nursing home for the indicated 
number of months because of the availability of benefits under the 
concurrent second insurance policy. 
Column N. Months of Paid Nursing Home Benefits. The inventors herein have 
assumed that the first insurance policy's benefits are fully coordinated 
with Medicare. That is, they do not pay for any care in a Skilled Nursing 
Facility that is covered by Medicare, or that would have been covered by 
Medicare except for Medicare's coinsurance and deductible requirements. 
Thus, for those few patients in the aforementioned first four broad 
Patient Categories who are sent to Medicare's Skilled Nursing Facilities 
for their initial stages of recovery, no benefits are payable under the 
first insurance policy because: (1) Medicare covers the first 100 days of 
Skilled Nursing Facility care; and (2) their periods of confinement, as 
indicated above in the description of column M, will be shorter than 100 
days (3.29 months). 
Patients in the aforementioned last two Patient Categories, despite the 
fact that the concurrent second insurance policy will pay benefits for 
care at home, will not be eligible to receive benefits under the first 
insurance policy for any days of care in a nursing home during the first 
policy's elimination period. Thus, the inventors determined that the 
inputted actuarial assumptions should include a fourth imbedded 
computational filter to calculate the number of months of care in a 
nursing home for which an insurer will pay benefits after: (1) the 
indicated period of care in a patient's home has been provided, and (2) 
application of the first policy's elimination period. This is accomplished 
by first subtracting the months of care at home (column M) from the total 
months of care required (column E), thereby producing a first mathematical 
remainder. Then, the number of days in Elimination Period #2, as indicated 
above these columns, is divided by the quotient resulting from dividing 
the average number of days in a year (365.25) by 12. The resultant second 
mathematical quotient is then subtracted from the first mathematical 
remainder for each Patient Category to determine the value (the second 
mathematical remainder) to be entered in this column. If the second 
remainder resulting from application of this computational filter is a 
negative number, zero is entered as the value in this column for that 
Patient Category. 
Column O. Weighted Monthly Nursing Home Benefit by Patient Category. The 
inventors herein determined that the inputted actuarial assumptions should 
include a fifth imbedded computational filter to calculate a Weighted 
Monthly Nursing Home Benefit for each Patient Category. Said computational 
filter multiplies the value in column L for each Patient Category by the 
value in column D for that Patient Category to produce a mathematical 
product, then multiplies that product by the average number of days in a 
year (365.25) divided by 12. The resultant value represents an insurer's 
maximum monthly benefit exposure prior to the application of the first 
insurance policy's elimination period and the number of months for which 
benefits will be paid. 
Column P. Weighted Present Value of All Nursing Home Benefit Payments 
(Claims Cost) by Patient Category. The inventors herein have included a 
sixth computational filter as part of the inputted actuarial assumptions, 
the purpose of which is to calculate a present value of all benefits to be 
paid, after application of the policy's elimination period, in each 
Patient Category. This is accomplished by multiplying the value in column 
O for a Patient Category by the value in column N for that category, then 
multiplying that mathematical product by an appropriate computational 
filter to calculate the present value of a future benefit. Once again, 
such present value computational filters are well known and understood by 
anyone having a modicum of skill in the arts of actuarial science. For the 
purpose of this present value calculation, the inventors used the same 
Assumed Annual Interest Rate of 6.00% used for column H and likewise 
assumed that benefits are paid once a month at the end of the month to 
which they apply. 
Column Q. Patient Distribution eligible for only Nursing Home Insurance 
Benefits. This is the percentage of the patients indicated in column C who 
the inventors herein have assumed will receive benefits only under the 
first insurance policy for care in a nursing home even though they are 
also insured under the concurrent second insurance policy. The values in 
this column, to be used in ensuing computations, are the mathematical 
remainder resulting from subtracting, for each Patient Category, the value 
in column L from the value in column C. 
Column R. Weighted Monthly Nursing Home Benefit by Patient Category. The 
inventors herein determined that the inputted actuarial assumptions should 
include a seventh imbedded computational filter to calculate a Weighted 
Monthly Nursing Home Benefit for each Patient Category. Said computational 
filter multiplies the value in column Q for each Patient Category by the 
value in column D for that Patient Category to produce a mathematical 
product, then multiplies that product by the average number of days in a 
year (365.25) divided by 12. The resultant value represents an insurer's 
maximum monthly benefit exposure prior to the application of the first 
insurance policy's elimination period and the number of months for which 
benefits will be paid. 
Column S. Weighted Present Value of All Nursing Home Benefit Payments 
(Claims Cost) by Patient Category. The inventors herein have included an 
eighth computational filter as part of the inputted actuarial assumptions, 
the purpose of which is to calculate a present value of all benefits to be 
paid, after application of the policy's elimination period, in each 
Patient Category. This is accomplished by multiplying the value in column 
R for a Patient Category by the value in column Q for that category, then 
multiplying that mathematical product by an appropriate computational 
filter to calculate the present value of a future benefit. Once again, the 
inventors used the same Assumed Annual Interest Rate of 6.00% used for 
column H and likewise assumed that benefits are paid once a month at the 
end of the month to which they apply. 
Column T. Total Weighted Present Value of All Nursing Home Benefit Payments 
(Claims Cost) by Patient Category. For insureds having both the first 
insurance policy and the concurrent second insurance policy, this is the 
sum of: (1) an insurer's Weighted Present Value of All Nursing Home 
Benefits for patients who are eligible to receive both Nursing Home and 
Home Recovery Care benefits (column P), and (2) the insurer's Weighted 
Present Value of All Nursing Home Benefits for patients who receive 
benefits only under the first insurance policy (column S). 
Step 5. Compute a Claims Cost. 
This is accomplished by adding together all of the values computed in 
column T, "Total Weighted Present Value of Total Nursing Home Benefit 
Payments (Claims Cost) for each Patient Category." The resultant sum 
($18,755.29) appears near the bottom of column T. 
Step 6. Compute Savings in Claims Cost. 
This is accomplished by subtracting the Claims Cost determined in Step 5 
above from the Revised Claims Cost determined in Step 3 above. The result 
($3,825.92) appears at the bottom of column T. 
Turn now to FIG. 5 to continue the steps shown in FIG. 3. 
Step 7. Apply Savings. 
The inventors herein constructed the computational spreadsheet shown as 
FIG. 4 so as to include a number of computational filters not previously 
described so as to allow adjustment of certain financial attributes of the 
first policy to calculate the effects thereon by the application of the 
Savings in Claims Cost determined in Step 6 above. The selected adjustable 
financial attributes appear in the first 3 rows under columns A through H, 
and the first 2 rows under columns K through S. They include: 
1. Maximum Daily (Nursing Home) Benefit; 
2. Home Recovery Care Policy Maximum Benefit; and 
3. Elimination Period #2. 
FIG. 5 represents an illustration of how the value of one of these selected 
financial attributes (Elimination Period #2) can be calculated. By 
applying $2,636.31 of the $3,825.92 Savings in Claims Cost calculated in 
FIG. 4, it was found that Elimination Period #2 can be reduced from the 
100 days shown in FIG. 4 to 0 days, as shown near the top of columns K 
through O of FIG. 5, with $1,189.61 of remaining Savings to be applied to 
the provision of other additional benefits and/or benefit enhancements for 
consumers, and/or as increased profitability for an insurer, without 
changing the premium charged to the consumer. 
Step 8. Generate Insurance Documentation. 
FIGS. 4 and 5 are representative examples of insurance documentation that 
can be generated by this invention. Other examples of such insurance 
documentation include insurance policies and the schedules therefor, rate 
tables, and benefit descriptions. 
Thus, it can be seen that this invention is a valuable tool that allows an 
insurer to precisely calculate the value of a financial attribute of a 
first insurance policy attributable to the presence of a concurrent second 
insurance policy with insured contingencies, risks and/or perils that are 
different from those of the first policy. Thus, the insurer can, for the 
first insurance policy: reduce its premiums, add additional benefits 
and/or benefit enhancements, and/or increase its profits, without 
increasing the insurer's financial risk. As a result, this invention can 
give an insurer a significant advantage over its competitors. 
While the above description contains many specificities, these should not 
be construed as limitations on the scope of the invention, but rather as 
an exemplification of one preferred embodiment thereof. Many other 
variations are possible such as, but not limited to, those described in 
the Objects and Advantages section above. Thus, the scope of the invention 
should be determined by the appended claims and their legal equivalents, 
rather than by the principal embodiment and other examples described 
above.