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Honored Advisor

LTC insurance failures

CBS is showing stories of long term care insurance companies refusing to pay claims this morning.  Some companies are stalling seriously on paying their clients, literally counting on them dying before they can provide documentation of their needs.

 

I had always thought this was a real possibility.  Are we going to see an insurance bubble burst, too?>

11 Replies
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Senior Advisor

Re: LTC insurance failures

If most of us will need long term care, why do we try to insure it?  Self-insure.  Society is always trying to get someone else to pay for what we want.

I do not doubt that we could see an insurance bubble.  It's kind of like playing the lotto and assuming you must win. 

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Senior Advisor

Re: LTC insurance failures

I am not trying to get someone else to pay for my long term care. I am trying to share risk with other policy holders that are trying to do the same. It is my profound hope that I never need a dollar to pay for my long term care needs.

 

As to long term care insurance failures, we have to trust somebody as most contracts require faith in their ability to perform. Our intent is to preserve assets for our heirs. My mother is age 96 and a resident of LTC for a decade. Good thing she had LTC insurance and income from a small farm to subsidize it.

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Senior Contributor

Re: LTC insurance failures

Make certain you know what it will take to qualify for benefits.   My in-laws have a policiy.   Many years ago they took it out as "nursing home insurance".    Then the state of Illinois said that LTC  policies should cover home health care and assisted living.   In-laws moved to assisted living in August.   We knew it might be close for one of them  but neither qualified.  There are 5 daily living tasks and they have to need ASSISTANCE with 3 to qualify.   They are bathing,  dressing,   transferring,  toiletry,  eating,  or have a diagnosis of Altzihimers. Needing help keeping house does not count,   needing help shopping does not qualify,  needing meals prepared does not count. trouble walking does not count, needing transportation does not count, needing help keeping track of medications does not count.    After being regected  we are going to have the MIL  tested for the reason behind her extreme short term memory problems.    MIL and FIL   have both resisted having the test done and in fact have refused to discuss it.   But,... now that not having a diagnosis could be costing them  $1,500/month they are now ready to consider it.    Luckily, affording assisted living is not a burden for them.     But,  the LTC  policy is not going to kick in until one is in a nursing home   or almost ready to be transferred to one. 

The paperwork is no breeze either.   1 form for the Doctor's office,  1 form for the assisted living facility,  1 form for the family or person.   

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Honored Advisor

Re: LTC insurance failures

I have only stated what the news on TV this morning ( CBS Morning News) reported about the problem. I have also had a CPA Iknow fairly well tell me something similar about her own MIL. Suey's account is based upon an assessment of loss of performance of Activities of Daily Living, which is is the key element of need for an assisted living arrangement. I have a 97-year-old MIL, who can still d them all, and have had relatives in their forties who could do none of them. Life s a crapshoot. LTC insurance worries me...and evidently, some of those worries are warranted. Glad it is working for your family, but it is seriously failing many others.
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Advisor

Re: LTC insurance failures

Though I'm not big on regulations, this area is one of those places that needs more oversight.  These executives in charge of companies that manipulate and change terms at will and delay payment for claims ought to face serious fines and criminal charges.

 

In answer to your question; count on it getting worse before it gets better.

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Veteran Contributor

Re: LTC insurance failures

A nursing home stay can drain assets at an enormous rate. The last farm I bought in 2008 was because the family needed to sell their grandmothers farm because her savings were all used up. I'm 56 and have a policy just to protect my assets. Its a deductible expense to my corporation and I chalk it up as a cost of doing business. As far as LTC policies go like most insurance they are only as good as your agent. Your local nursing home administrator can give you an idea of what companies are more friendly.

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Honored Advisor

Re: LTC insurance failures

This story was about one company in Kansas in particular.  An elderly gentleman and his family trying to gain his benefits, having inch-think packages of documentation go MIA at the insurance company. 

 

Analysis of the situation showed they had not enough assets on hand to pay claims, so played a shell game and tried to out-wait people, on the odds that they would die before collecting.  Unconscionable behavior, but I fear it is the tip of an industry iceberg.  I will bet you a dollar to a doughnut that the company officials still got their fat salaries. 

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Veteran Advisor

Re: LTC insurance failures

Its not just insurance companies.  My brother hit a deer, and it somehow knocked him on the head, cracking his skull in 3 places, and resulting in permanent, irreversable brain damage.  He spent 8 weeks in a coma, and it took close to a year before he could stand up.  Now, 27 months later, he can't walk across a room without help, has trouble speaking, and has more or less zero short term memory.  Yesterday, I got notice from Social Security, that he now qualifies as being 'disabled'.

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Senior Advisor

Re: LTC insurance failures

That is exactly why we shouldn't have tort reform. Without outrageous punitive awards there is no punishment for that type of behavior. Who are the styrongest supporters for tort reform? Insurance companies.

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