Long Term Health Insurance: Holding Up the Works…

Washington, DCIn politics, it's known as the filibuster: argue a point incessantly and in circles, and in so doing delaying passage of legislation. In the world of long-term care insurance, such tactics are hardly surprising given the overall reluctance of the industry to play claims.There have been documented cases of long term care health insurance providers dragging their heels in an effort to either avoid, or delay the payment of long term care insurance benefits to elderly policyholders.

In some cases, the policyholders die, while waiting for their benefits to kick in. So what is that? An unfortunate coincidence? Or a morally reprehensible strategy.

It's happening often enough that Congress has the industry under a microscope, and given the platforms of the presidential candidates prior to the present distraction over the nation's economy, health care and long-term health care will most assuredly be near the top of the agenda for the first 100 days of office for whomever wins the prize of governance.

The number of Americans in need of long-term health care today numbers 10 million—and that figure is only expected to grow as the largest wave of baby boomers progress through retirement into the demographic at greatest exposure to the need for long-term care (LTC). Congressional leaders are worried enough about the ability for Medicaid to fund the wave of LTC recipients who have no health insurance.

However, as events have proven, the acquisition of an LTC policy is no guarantee that you will receive LTC benefits. At least, in a timely manner.

As an elderly citizen in your twilight years, you don't have time on your side.

It was just a year ago, amidst news reports that profiled the upper-most members of the Baby Boomers hitting retirement age of 65, that reports began to surface with regard to the policies and practices of certain LTC policy providers that appeared to unnecessarily delay the payment and provision of funds through various tactics that even conservative critics have called excessive.

Industry advocates maintain that overall; the insurance industry is responsible and conducts itself responsibly. However, the alleged actions of two companies in particular raised the ire of Congressional leaders. Conseco and Penn Treaty American Corporation have been accused of employing delay tactics in their interactions with policyholders—everything from sending the wrong forms for claimants to fill out, to insisting that even in this age of instant communication, that everything be handled by post mail.

It is also alleged that claims were rejected due to the failure of claimants to submit unimportant documents, or that facilities were deemed inappropriate in spite of being properly licensed by State regulators.

In other words, a filibuster.

"We have two companies that seem to be engaging in questionable practices, and we have every reason to think we will turn up other companies engaged in questionable practices," said Representative John Dingell, Democrat of Michigan who is chairman of the House Committee on Energy and Commerce, speaking in 2007. "Now that we're aware this is occurring, we're going to shine a light on it that won't be extinguished."
In a New York Times report last year, spokespersons for Penn Treaty and Conseco denied any wrongdoing and promised to co-operate fully with Congressional authority.

It should be noted that LTC policies were the fastest-growing product in the insurance sector in the 1990s as aging Baby Boomers realized that Medicaid would not be in a position to provide the quality of care sought by most. The protection of assets for later bequeathment to children, rather than liquidating them to fund long-term care proved another motivator that drove the market for LTC protection. The business was so competitive, companies were undercutting their premium rates just to get business on the books.

Now, with the average stay in an LTC facility having risen to 2.5 years from 18 months, many policyholders are facing stiff rate increases. Such increases, together with the reluctance of some insurance companies to pay, are giving some people pause about the wisdom of going the insurance route in the first place. Some have actually advocated self-insurance—paying into a relatively safe product such as a GIC or bond, and growing the LTC pot themselves. That way they know the money will be there when needed, without any resistance when the time comes. And, if LTC isn't needed at all, then the money is there for other purposes, or for heirs.

While that might not be fiscally prudent, it does illustrate the dismay and disgust a growing number of Americans harbor for the insurance industry—one that is painted as greedy and untrustworthy. If it is, indeed true that only a few bad apples are ruining the whole orchard, then the keepers of the orchard have to do a better job of rooting out the bad apples.

Until then, the gall of making some 80-year-old LTC policyholder (in good standing) wait while enduring what some claim are obvious stalling tactics, is beyond comprehension.

Thankfully, it's not beyond litigation.