“Carriers Don’t Pay LTC Costs” – Dig Deeper

“Arlene Hull stopped receiving reimbursement of her assisted living costs when nurse’s assessment said Hull could be considered independent and that Hull had been “rehabilitated”.   Hull was diagnosed with dementia in 2007 and had experienced strokes. She purchased the long term care policy in the 1980s.”

Critics of the LTC insurance industry are quick to site headlines and scanned readings of articles such as this.  As an insurance professional, you need to be prepared to make intelligent and knowledgeable responses to such accusations and poorly written articles.

First, this policy was sold in the 80s, before HIPAA (1997) and the National Association of Insurance Commissioners got involved in badly designed LTC insurance policies.  Policies after 1998 were issued with guidance from those two sources and much better designed.

Second, a “nurse” cannot make the kind of determination indicated in the statement.  A certified elder-care professional or MD is the only one that can do that.

Third, check out the financials and ratings of the carrier involved.  In this case, the insurance company is Ability Insurance Co., organized in 1967, and is currently rated “B+” by AM Best and “D” by Weiss (no other agencies rated the carrier).  Total admitted assets in 2011 were $213,113,000 with total liabilities of $181,150,000.  Their net operating earnings last year were -$8,708,000.  Obviously, Ability Insurance Co lacks the “ability” to be a major player in the LTCi marketplace.

Fourth, be sure that you have all the facts.  Google the article title, author, or primary name in the article and read as much about it as you can.  The final paragraph of this article included:

“The company was found in violation of Montana’s unfair trade practices law and in breach of contract.  The Omaha, Nebraska-based insurance company has been ordered to pay a 90-year-old woman living in an assisted living facility in Montana $34.2 million for suspending her dementia care payments.”

This will probably be appealed, but the patient is once again getting her reimbursement checks sent to the provider.

Many people – including advising professionals, such as attorneys, CPAs, financial planners, and even elder-care doctors and nurses – often don’t know very much about long-term care insurance and the importance that insurance can play in planning for the high probability of needing care before one dies.  Be sure you know the facts so that you can help these people be properly informed.