LTC Snafu

[chinaco]

Some families with long-term-care insurance policies—under fire recently for steep premium increases—are encountering claims denials that can prevent or delay the collection of benefits. But there are ways policyholders can avoid such problems.
policyholders can avoid preventions or delays in the collection of benefits for long-term-care policies.


About 8 million Americans own long-term-care insurance, which helps cover the cost of in-home care or nursing homes and assisted-living facilities.


The reasons for claims denials vary. When compared with modern-day coverage, some policies issued 20 years ago have tougher requirements, such as mandatory hospital stays, before benefits are paid out. As a result, even those with severe disabilities, including Alzheimer's patients, may have trouble filing claims...

Of course, insurance companies could offer policy owners modified terms that better fit their needs (for a fee of course). It is a business... but when will they learn that not meeting customer's needs (in a reasonable way) only leads to outrage.

Mandatory hospital stay for late stage Alzheimers... Well the doctor will put them in the hospital for the qualifying time period which will be charged to medicare (all of us) a fortune and then they will go to the nursing home.

Family Value: When Insurers Deny Claims - WSJ.com

In one case listed... the insurance company looks like it was taken over by the state of PA.

SHIP - About SHIP


Senior Health Insurance Company of Pennsylvania: Private Company Information - BusinessWeek

Looks like Senior Health Insurance Co. of Pennsylvania was a Conseco subsidiary

Hey look... they changed their name...

CNO Financial Group, Inc. (NYSE: CNO) Posts Large Volume Increase, Hits $6.72 – American Banking News

 

[73ss454]

What do you guys think of taking 2 LI term policies instead of LTC policies. At least the rates would be locked in. When one spouse dies after an extended stay the other can recoup the $ loss with the policy.

Does anyone think this may be cheaper and make more sense?

 

[East Texas]

We have long term care to mitigate the risk of one of us have extended care needs (not being able to perform two of the six daily activities). We could easily afford a year's worth of care; however, insurance (whether it be homeowners, auto, Umbrella, or LTC) is all about the risk.

We're solving two potential problems with LTC. The first is always the potential of extended care for either one of us. The second problem is making sure the last surviving spouse is financially taken care of in a way s/he wants to spend her final days.

Both of these only happen if there is money to cover the services needed to be kept safe and comfortable. That's the biggest difference between LTC and LI. LI pays after death, which may be years after the inception of need. LTC pays as you go so the service providers get paid in a timely manner. There simply can't be that many assisted living facilities, health care providers, nursing homes, etc. who would patiently wait until after the person's death to be paid. Especially if it's several months or even years into their care.

Having LTC puts a buffer between our children's finances and our (possible) need to have extended care - either in the home or in a facility. Our children know we're probably not going to leave them any inheritance; however, we're not going to cost them anything. They're happy with that.

Read some of the posts of people with elderly relatives with little or no options except family care or nursing home. You don't even have to be elderly to need LTC. Young people have strokes, brain trauma, and other injuries that require constant care.

It's simply a risk we choose not to take.

We also have LTC with John Hancock (brokered through USAA). We have a financially stable company providing our policy and that makes all the difference in the world.

 

[East Texas]

Chinaco, I completely agree with your assessment on the older LTC policies. While some companies offer a modification clause, it appears most do not.

 

[dgoldenz]

Alzheimer's is an automatic trigger for LTC policies now. LTC policies from the 1980's are very different than what's out there today.

 

[samclem]

When I saw the title of this thread I thought "Hey, I was assigned with that guy!"

What do you guys think of taking 2 LI term policies instead of LTC policies. At least the rates would be locked in. When one spouse dies after an extended stay the other can recoup the $ loss with the policy.

Does anyone think this may be cheaper and make more sense?

I think Rich in Tampa mentioned this idea a while back. It might work, but there are certainly risks:
- The individual could remain in LTC longer than the couple could remain solvent. Most folks don't stay in LTC for more than a few years, but a significant minority do.
- You'd have to buy LI for a long way down the road, and get inflation protection on the coverage. That's not going to be cheap (or at least not as cheap as a term policy for a younger person purchased for the normal reasons--pay for kid's education, get the spouse cash to make up for lost earnings, etc)
- Most states give favorable treatment to LTC policies--the premiums are sometimes tax exempt, and many states allow people to qualify for Medicaid coverage of LTC expenses even if they/their spouses have a lot of assets--if the person bought LTC insurance. You wouldn't get those benefits by going with a LI policy.

On the flip side: LI policies have a better history of stability WRT their premiums. And there's comparatively little haggling over payouts--dead is kinda black-and-white.

 

[73ss454]

Thanks Sam, I was just sorta thinking outloud with the LI. Since I don't have LTC at this point I'm still holding my Whole Life Policy that I was sold/swindled into years ago. DW does not have LI so I was thinking that a term policy might help, just in case....

 

[dgoldenz]

Thanks Sam, I was just sorta thinking outloud with the LI. Since I don't have LTC at this point I'm still holding my Whole Life Policy that I was sold/swindled into years ago. DW does not have LI so I was thinking that a term policy might help, just in case....

A term policy will only help if death occurs during the term period, obviously....what if she outlives the term? Most term policies have a maximum conversion age of 65, 70, or 75, so if you buy a term policy guaranteed to let's say...age 83, and the term runs out, she will not have any options and there is no death benefit left. If the conversion option lasted until age 75 and she started needing LTC services at 74, you could always convert to a permanent policy. Or you could buy a permanent policy from the beginning as the conversion price at an older age will be incredibly expensive. A guaranteed UL policy will have the lowest cost for your objective if she lives past the term period, otherwise you are just gambling on what age she might need the services.