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When Long Term Care Insurance…Isn't

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Des Moines, IA In a state that has served as somewhat of a poster child for complaints surrounding long-term health care, Iowa at the beginning of November announced the appointment of a consumer ombudsman, employed by the state, whose job is to advocate on behalf of Iowans having had difficulty collecting from their long-term care insurers.

Some may well argue that every state should have one, and a federal ombudsman too.

Long-term care insurance has served as a lightning rod for what is wrong with the world over the last few years, after numerous seniors—or families who look out for them—have been experiencing difficulty collecting on long-term care policies. Policy holders have complained of being shortchanged, or even denied coverage completely—even after paying into a policy for decades.

The fact Iowa has appointed a State Advocate takes us back to the story of Marge Bode, an Iowa farm wife who was profiled in a series of articles published in the Des Moines Register in 2007. The New York Times, and other national media eventually picked up her story and it left Americans shaking their heads.

A refresher: Marge Bode bought long-term care insurance to help pay the bills from nursing home care, in the event she ever became disabled and needed it.

Mrs. Bode helped raise five children, while also helping to run the family farm. As most know, farming is a hard life and not the most lucrative of careers. And yet, Mrs. Bode somehow managed to provide a college education for each one of her five kids. Sensible to her very core, Mrs. Bode knew that the day might come when her husband would no longer be around, and she would no longer be in a position to care for herself.

So she did the sensible thing. She bought long-term care insurance. She and her husband paid more than $71,000 in premiums for the privilege of having it.

Sure enough, as she aged time took its toll. The 89-year-old woman, now on her own, was diagnosed with dementia and the narrowing of the arteries that supply blood to the brain. Her memory adversely affected, Mrs. Bode was no longer able to prepare her own food, do her own laundry—even towel off her own body after a shower.

In sum, she needed help, and the long-term care policy through Conseco appeared to be a fortuitous decision. Thus, when she moved into an assisted-living facility, she and her family fully expected Conseco to help pay the bills.

But Conseco didn't. As it was, her premiums were increased from $354 per month, to $442. But still, Conseco reportedly refused to pay what amounted to $50 per day, or about $1500 per month—the limits on her policy. Mrs. Bode's assisted-living care actually cost $2300 per month, so the $1500 from her long-term care policy would have done much to offset that cost.

But the insurer refused to believe that Mrs. Bode qualified for assisted-living, in spite of numerous interventions by her children, and various doctors who took the insurer to task.

It wasn't until the newspaper published Marge Bode's sorry plight, that the insurer relented, albeit only partially.

And Marge Bode isn't the only one experiencing problems. While the Des Moines Register was researching the Bode story last year and had a photographer in to snap some pictures at her assisted-living facility, another resident confided to the newspaper that his long-term care provider was refusing to pay, too. Still another resident in the same building complained that his premiums had risen 32 percent (it was not indicated whether, or not he was receiving any benefits).

It is stories like these that cause Iowans to pause for hope that the new insurance advocate employed by the state will bring results, albeit with reserved optimism. As for the rest of the country, who knows what the short-term future will bring?

Discreditable Conduct

Americans are aging, and the largest segment of the population—the infamous baby boomer—is beginning to retire. Together with the concern that there may not be enough money in the social assistance kitty to look after such a large sector in its old age, is the realization that even paying for a long-term care policy is no guarantee of benefits when it comes time to collect.

Mrs. Bode is just one policyholder, and Conseco is just one company providing long-term care policies. But the story is telling, especially when one considers the pressure that was brought to bear on behalf of one woman who was genuinely in need. One of Mrs. Bode doctors wrote, in part: "It has come to my understanding that you do not believe she would qualify to be in [assisted living] that you do not think she is cognitively impaired. I vehemently disagree with that."

The doctor's considered opinion, along with those of other practitioners conversant with the case, was collectively ignored. A niece of Mrs. Bode, who practiced law in California, wrote to Conseco and stated, I have spent more than two decades defending insurance companies in bad faith cases. In my career, I have never seen such bad claims-handling practices."

Once Mrs. Bode's plight hit the airwaves and the newsprint, her insurer paid the family $5600.00 to cover some of Mrs. Bode's assisted-living expenses, and refunded five months worth of premiums. And even though the policy guaranteed benefits for a lifetime, Conseco attempted to limit the benefits only to one year.

A resulting bad-faith insurance lawsuit outlined some of the alleged behavior on the part of the insurer, including the refusal to pay the valid insurance claim, and the refusal to return the family's phone calls. It was also alleged that Conseco placed family members on hold for so long that they finally hung up, and sent form letters instead of answering specific questions. It was also alleged that Conseco refused to send correspondence to family members even though Mrs. Bode suffered from dementia and was incapable of understanding the letters herself.

If this keeps up, the long-term care insurance industry will keep lawyers busy for a very long time…

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