Some swear by their long-term-care insurance policy. Others swear at it. There is no middle ground. That’s what I learned by reading the many responses to my request for readers to tell me about their experiences, positive and negative, with their policies.
Indeed, in this entirely unscientific sample, the positive letters were neck-and-neck with the negative letters. Here’s one of the positive letters:
“My husband has been in long-term memory care for 3½ years. We have long-term-care insurance and have had no problem. The paperwork that we needed was from his doctor saying that he needed care and proof that the facility was state licensed. They have been prompt with payments. The policy had a cost of living adjustment and a monetary cap. I am glad we had it because the care is very expensive.” — S.W., Dallas
This could make us wonder. Is it possible that the problems with claims payments are caused entirely by a few “bad apples” — companies with high volumes of public complaint? One indication is that Bankers Life and Penn Treaty were both mentioned by readers. Significantly, both companies were singled out in a 2007 New York Times article citing them for having at least 10 times as many complaints filed against them with insurance commissioners than larger and better-known long-term-care insurers such as Genworth.
It would be great if it were just a few companies. Our response would be easy: Blackball the bad guys. Go with the good guys. Unfortunately, it isn’t that easy. While I received letters praising Genworth, I also received letters cursing the company.
I believe the source of policy rage — and I use the word “rage” literally — is the vulnerability that policyholders feel when they need to make a claim. They dutifully make their payments, often for decades. Then, when they are worried and most vulnerable, the insurance company is slow to respond, reminds claimants of specific contractual requirements, and basically confronts them with the dot-your-i’s-and-cross-your-t’s brigade at the claims department. It doesn’t help that all this occurs amidst all the complexities of our grotesquely complicated health-care system.
Here’s what happened with a woman’s 94-year-old mother — B.W. in N.J.:
“We were able to select an excellent assisted-living facility where our mother gets the support that she requires. However, once we proceeded with processing a claim on her policy, we encountered one roadblock after another. The ‘service’ word doesn’t come to mind as I tried to meet the requirements of the claim process.
“Just when I thought I had jumped through all the hoops to get her benefits initiated, I was told that although she was qualified due to her physical needs, she wasn’t eligible because the policy dictates 24-hours-a-day of nursing services from an RN or LPN. Her assisted-living facility has RN or LPN services on site six days a week and ‘on call’ Sundays. Certified caregivers are present at all times (24/7) to perform the physical services she requires. We were told that these services don’t meet the terms of the policy.”
Fortunately, readers who have been through it are also happy to make good suggestions. Austin, Texas, reader C.B. says:
“Understand that you have to have enough money to fulfill the requirements of the elimination period.” (The elimination period is 90 days of paid care, during which the insurance company is not responsible for expenses.) “Understand exactly what you have to do during the elimination period and confirm that in writing.”
Chatsworth, Calif., reader P.B. adds: “We thought this meant days where she would have been eligible for service. Nope, it meant a day that we paid another [approved] provider to care for [my mother].”
Understand that family members are usually excluded as approved providers. Equally important, the provider may have to have a particular degree of certification, and the higher the certification, the higher the expense you will bear during the elimination period.
Be prepared. “Make a copy of your policy for your family members ahead of time and explain to them exactly what the policy terms mean.” (Also P.B.)
Reader L.B. concluded: “If the average person knew what hoops have to be jumped through in order to qualify they would be shocked. It seems you really have to be practically on your deathbed, unable to move, in order for them to approve payment — although when you sign up they promise you the moon.”
Reader B.W. observed: “The insurance companies know they have time on their side when dealing with the elderly. They also know that many of the elderly aren’t able to advocate for themselves and may have no one to advocate for them.”
I think it is fair to say that while long-term-care insurance is a wonderful idea, the actual product has been oversold and underserviced.
Questions about personal finance and investments may be sent by email to email@example.com.