Conseco Update: Is Your Long-Term Care Insurance Assured?

Carmel, INLong-term health insurance is a growing industry given the aging of the Baby Boomer, and Conseco Insurance Company is just one of many suppliers providing long-term health coverage. However, a reputation for alleged delaying tactics when it comes to paying out claims continues to dog Conseco—and now comes word that the company is threatened in the midst of the current economic climate.

It's not the first time that the company has been in difficulty. The Indiana-based insurer emerged from bankruptcy protection in 2003, and over the years grew to the point where stock was valued at $25 in 2006.

Not so now. Earlier this month Conseco stock plunged to just 62 cents a share. Preliminary fourth-quarter losses were pegged at $406.8 million or $2.20 a share, up from fourth quarter losses of $71.5 million or 38 cents a share a year earlier.

What impact this latest challenge to the health and viability of the company will have on Conseco's ability, or willingness to pay out claims remains to be seen. Conseco had been vilified by policyholders for alleged stalling tactics and the outright refusal to pay claims back when the company was on a more sound financial footing and before the current economic morass that is gripping the country, emerged.

How will things be now, with the present concern over liquidity and debt covenant margins?

Various lawsuits have emerged as the result of policyholders experiencing difficulty with collecting payment and claims on policies that are in force, in good standing and for which premiums have been duly and consistently paid.

The recent popularity of long-term care insurance is understandable given the shift in retirement funding. Gone are life-long tenures with one company and the accompanying company-funded pension that often went along with it. Jobs are more nomadic now and the traditional means of funding a retirement pension are no longer valid. Thus the standard, old-style pension has given way to the 401(k) and other self-directed plans that depend a great deal on the stock market and other market forces.

Little wonder that baby boomers have been turning to long-term care insurance in droves.

Medicare does not cover professional in-home and nursing home care. Thus, the need to take out insurance in an effort to guarantee that the care will be there, and the money available to fund it.

In too many cases, however, the opposite is true and the prudent planning of responsible citizens not wishing to become a burden on the taxpayer (not to mention wanting to enjoy some degree of comfort in their twilight years), is met with resistance on the part of an insurance provider.

Conseco has been hammered with a collection of class-action lawsuits, as well as individual claims based on the unreasonable denial of benefits, the misleading of policyholders with regard to the rate stability of long-term health insurance, and unsupportable delays in the issuance of benefits.

The horror stories are legion. Various stalling tactics are alleged to have been brought into play in an apparent effort to avoid, or at the very least delay the payment of benefits. Various schemes have been allegedly used, including but not limited to, asking for information that was not required for the claim, sending the wrong forms, or turning down a facility that was properly licensed by state regulators. Various other practices have been alleged, serving to delay a claim that may not be paid out at all if the policyholder, in advancing years, dies of old age while waiting for resolution.

Critics of long-term care insurance providers such as Conseco allege that the unjust and unnecessary delay in processing a claim serves the hope that a policyholder will die over the interim, making the payout unnecessary.

And now, according to a report, Conseco is not in the best of health. Will this lead to even more examples of bad faith in the payment, or lack thereof, of long-term care insurance benefits? In the midst of the current economic climate, any policyholder of long-term insurance with Conseco Insurance Company in the midst of making a claim would be well advised to have an attorney on speed dial, just in case…