However, perhaps Congress should put equal effort into addressing some of the long-term problems of long-term care insurance. As the baby boom ages, and more people are requiring long-term care, heartbreaking stories have been surfacing with regard to sudden, and unpredictable problems with collecting on long-term care polices.
Many of those policies, held by extremely forward-thinking Americans, have been held for the long term. And now that the long term has evolved to the short term for them, surprises are in store.It has been noted that the National Association of Insurance Commissioners (NAIC) conducted a survey of individual States to determine the extent of problems pertaining to denied claims. While there is some dispute reported with regard to the volume, and the actual number of denied claims between State regulators and the insurance industry, an individual claim denied often reveals an issue not addresses in State law, or the NAIC models which govern its supervision of the industry.
Assisted living, for example. While long-term care insurance is quite popular now and is being embraced as the baby boomers age, some policies have been around for decades and were adopted by a smaller number of forward-thinking policyholders decades ago. However, older policies may lack provisions for levels of care that are now beginning to emerge as commonplace. Such as assisted living, which has emerged as an alternative to nursing homes.
However few, if any long-term care policies included a benefit for assisted living prior to the mid 1990s. As well, the regulations for assisted living vary from State to State. Thus, even if a long-term care policy includes benefits for assisted living, insurance companies can, and have denied claims by challenging the status, the design, the staffing or services available.
If a long-term care policy was issued in one State, then used in another, such an attempt at transference could also be seen as a problem.
And there can be other bugaboos, too—such as home care. It has been found that many long-term care insurance companies define 'home' narrowly, and will often refuse to pay for benefits when care is given in any facility other than the individual's single-family residence.
The alternative is the allowance for care, so long as it is provided in another person's home (such as an adult child, or a good friend), or in some form of congregate living arrangement where around-the-clock care is clearly not provided.
Obviously, Mrs. "M" was looking long-term when she purchased long-term care insurance through Pioneer, which is now Conseco. She bought her policy in 1990, and also had the foresight to purchase an 8 percent compounded inflation protection benefit. However, she must have also been fully expecting to remain in her home, as the benefits offered by the policy were for home care only. No other benefits were included.
Now, Mrs. M is living in an assisted living facility licensed by the State of California. The home is also licensed to provide specialized services for dementia, which Mrs. M, at 84, clearly has.
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However, in spite of her prudent planning Mrs. M. has been denied benefits by her insurer, because even though the facility in which she currently resides is not licensed to provide skilled nursing care, and as such is not a skilled nursing facility, the insurer takes the view that it is. Thus her claim has been denied, she receives no benefits with zero return on her substantial, and hard-won investment. It has been reported that nowhere in Mrs. M's policy is a person's home defined, nor is there any kind of definition as to where policy benefits will be paid.
Conseco stood its ground. And an 84-year-old woman is out of luck.
Such is the murky world of long-term care insurance.
Hope everyone had a nice long-term care awareness month in November.