NATIONAL LONG-TERM CARE INSURANCE CLAIMS DECISION STUDY

[REWahoo]

As the owner of a LTC policy I've had an ongoing concern about the ability to actually receive benefits should the need arise. There have been many anecdotal [-]horror stories[/-] reports of major difficulty in collecting on these policies, but nothing authoritative on the industry as a whole. Then I found this:

NATIONAL LONG-TERM CARE INSURANCE CLAIMS DECISION STUDY conducted by the U.S. Department of Health and Human Services in 2010.

The purpose of the study:

...to conduct a thorough scientific review of an industry-wide sample of private LTCI claims decision made in 2007 and 2008 in order to determine and quantify the extent to which those decisions were appropriate. More specifically, we focused on answering two broad questions:

1. Is the denial of benefits to policyholders making claims on their policy
appropriate? and;

2. Is the approval of benefits to policyholders making claims on their policy
appropriate?

Methodology and LTCi carriers in the study:

We reviewed a sample of claims from seven of the largest LTCI carriers in the United States in order to determine if the decisions made for those claims are appropriate. The following carriers provided a sample of their claims decisions:

− Bankers Life and Casualty
− Genworth Financial
− John Hancock
− Long Term Care Partners
− Medamerica
− Metropolitan Life
− Prudential

These companies represent major carriers that are currently selling policies in the individual and group markets, with significant claims numbers for analysis. Together these companies comprise more than 70% of the in-force claims

A key finding:

Regarding denial decisions, we found that in all cases, there was no evidence to suggest that the individual met the tax-qualified criteria for benefit eligibility in their policy. This would suggest that companies are consistently applying their clinical contract language to their claims decisions.

The (surprising to me) Conclusion:

The detailed review of more than 1200 claims decisions suggests that when a third party independent audit is conducted, clinical benefit eligibility decisions are in line with the supporting documentation in the files and the contract provisions of the policy. The data suggests that when disagreements were present between the audit team and the insurance company adjudicators, they were more likely to be about approval decisions rather than denial decisions. Put another way, insurance companies tend to err slightly on the side of approving claims that may not meet policy contract benefit eligibility.

My read on this is "the devil is in the details" when it comes to the documentation required to successfully file a claim. That's why enlisting the services of a company specializing in filing LTC insurance claims may be well worth the money, especially to file the initial claims to get benefits started.

 

[RetireeRobert]

^

Thanks for posting the above study. I think the insurance company claim departments get a lot of bad buzz unfairly on LTC. Perhaps LTC owners-buyers need to be better educated on criteria for when LTC pays, better educated on expectations---something other than "Oh, dad is sick, when is that darned LTC going to pay off?" Your suggestion on utilizing specialist LTC claims filing services is a good one, especially when someone is first in need, to get the process rolling, and the specific case situation better defined.

 

[JRon]

I don’t have LTC, but dealt with my Mom’s LTC about 5 years ago. It was pretty simple I thought - she was in the nursing home so they paid out and that was basically what happened.

After a couple years though, they sent a person to the nursing home to evaluate Mom’s need. I happen to be visiting when that person showed up to interview Mom. Mom had dementia, but unbelievably she answered about 8 of the 10 questions asked to her correctly. I couldn’t believe it. I thought for sure her payments would be cancelled, but they kept paying until the policy ran out.

 

[Peter]

The study is interesting, but it was done in 2010. Not sure the conclusions would hold today.

 

[Sunset]

Who picked the claims to be examined, would be my key question. It would be extremely easy for a company to cherry pick what to show, and to ensure the employee only handed over "good" cases.

edit -> I have not read the report.

 

[RetireeRobert]

Who picked the claims to be examined, would be my key question. It would be extremely easy for a company to cherry pick what to show, and to ensure the employee only handed over "good" cases.

edit -> I have not read the report.

To believe that every single one of the companies of the many included "cherry picked" claims to hand over as a sample implies you should not buy any kind of insurance. Your level of skepticism indicates your belief the entire insurance industry is corrupt and colluding.

And how do you know the independent third party did not go to each company and pick its own sample of claims?

 

[Sunset]

To believe that every single one of the companies of the many included "cherry picked" claims to hand over as a sample implies you should not buy any kind of insurance. Your level of skepticism indicates your belief the entire insurance industry is corrupt and colluding.

And how do you know the independent third party did not go to each company and pick its own sample of claims?

How do you know the insurance companies didn't tell their employee looking for promotion, to pick out claims to show , and "by the way if we don't look good, you can kiss goodbye to the yearly bonuses."

I don't think the companies colluded, I think it's natural for each one to put their best foot forward, rather than show their dirty laundry to the researchers.

No collusion is needed for all of them to show good cases.

I can be somewhat skeptical of insurance companies, but still use their services and invest in them.

Remember LTC insurance is special, like life insurance because just when you need it the most is when you will be incapable of fighting your own insurance company to pay out.

I worked with a person who used to be employed by a life insurance company. She told me how they were encouraged and rewarded by bonuses to delay/deny claims. One special case was they delayed so long, that the surviving spouse died!, Unfortunately for them the children of the parents took up the fight for the payment.


My friends father died of a heart attack , and the life insurance policy he had been paying on for 25 yrs, turned around and denied his claim.
They said he had lied on the original application since he died of a heart attack 25 yrs later.
Only with the use of a lawyer did his widow get 1/2 of the policy amount, otherwise it would have been years in court.

Here is a news item of insurance companies being bad:
"In a little-known series of settlements, 25 of the nation's biggest life insurance companies have agreed to pay more than $7.5 billion in back-death benefits. However, about 35 insurance companies have not settled and remain under investigation for not paying when the beneficiary is unaware there was a policy, something that is not at all uncommon."
https://www.cbsnews.com/news/60-minutes-life-insurance-investigation-lesley-stahl/

 

[RetireeRobert]

I worked with a person who used to be employed by a life insurance company. She told me how they were encouraged and rewarded by bonuses to delay/deny claims. One special case was they delayed so long, that the surviving spouse died!, Unfortunately for them the children of the parents took up the fight for the payment.


My friends father died of a heart attack , and the life insurance policy he had been paying on for 25 yrs, turned around and denied his claim.
They said he had lied on the original application since he died of a heart attack 25 yrs later.
Only with the use of a lawyer did his widow get 1/2 of the policy amount, otherwise it would have been years in court.

Here is a news item of insurance companies being bad:
"In a little-known series of settlements, 25 of the nation's biggest life insurance companies have agreed to pay more than $7.5 billion in back-death benefits. However, about 35 insurance companies have not settled and remain under investigation for not paying when the beneficiary is unaware there was a policy, something that is not at all uncommon."
https://www.cbsnews.com/news/60-minutes-life-insurance-investigation-lesley-stahl/

And yet you persist in using insurance company services and products.

 

[LARS]

My experience in managing my parents LTC policy for them, albeit seven years or so out of date, is that LTC (MetLife) did exactly what it was supposed to do.

No arguments. Just paid every month like clock work.

That said, DW and I are in the self-insure camp.

 

[bolt]

And yet you persist in using insurance company services and products.

I do not. I never have.
I specifically recall hearing from a family of insurance provider's that near 80% of LI/LTC/Annuity products rarely pay out 100%.
The client either stops paying, or is somehow otherwise denied payment. Granted this was a odd 40/50yrs ago.

How else do you think major insurance carriers could afford skyscrapers all over the USA? With their wizards investing the capital? Unlikely imo.

I've family who sold insurance.
They influenced my opinion on insurance sales commisioned products
Just like auto sales individuals. They're salespersonel paid to sell, nothing more.

Ever hear:"It is difficult to get a man to understand something when his salary depends upon his not understanding it".
This adage comes to mind*.

I was always advised:
"If you can, ..self-insure".

Good luck & Best wishes...

 

[skyking1]

Washington state is starting an LTC program, funded from employee's wages.
You have to be in the program 10 years to collect on it.
They will tax at 0.58% to start with, it can be increased later.
The salespeople are all over this, it is an opportunity like no other here. If you are in a private LTC plan you are exempt from the tax.

So DW and I have to weigh it. Buy private LTC so we get "something" for our money?
We would pay out >$1000 in the time we would be taxed before retirement.
I think our answer will be to just let it be. Sales people like it when you are forced into a decision, it makes sales much easier
We had decided to self-insure originally.

 

[Ready]

MIL has Genworth LTC and after a lengthy process is now collecting on the policy and living in an assisted living facility. She had to demonstrate needing support on at least two out of five basic living requirements. They asked her questions like “can you go to the bathroom without assistance”. Obviously the correct answer if you want the claim approved is no.

If you answer the questions correctly they may send someone out to interview you in person. But in the end they can’t prove whether you need assistance preparing meals, getting dressed, etc. So as long as you answer the questions correctly the policy should approve coverage. You may also need a doctor’s note, but that should not be hard to get.

 

[Dash man]

MIL has Genworth LTC and after a lengthy process is now collecting on the policy and living in an assisted living facility. She had to demonstrate needing support on at least two out of five basic living requirements. They asked her questions like “can you go to the bathroom without assistance”. Obviously the correct answer if you want the claim approved is no.

If you answer the questions correctly they may send someone out to interview you in person. But in the end they can’t prove whether you need assistance preparing meals, getting dressed, etc. So as long as you answer the questions correctly the policy should approve coverage. You may also need a doctor’s note, but that should not be hard to get.

The problem is many people who need help refuse to admit they need help. They don’t want to be put into assisted living or nursing care, so they lie during the interview. It’s hard to help those who refuse to be helped.

 

[Ready]

The problem is many people who need help refuse to admit they need help. They don’t want to be put into assisted living or nursing care, so they lie during the interview. It’s hard to help those who refuse to be helped.

Yup, that’s exactly what happened the first time around. She was living in an independent living facility but was struggling with basic daily tasks. But when she was interviewed she insisted that she could handle independent living so the claim was denied. We told her that she had to be honest with them and not let her pride get in the way, and the second time around she responded correctly.

 

[W2R]

I will never get LTCI.

John Hancock turned down my mother's perfectly legitimate claim, bullying her repeatedly over the phone about it. My mother was unusually intelligent and articulate, with no dementia at all. This wasn't just a little old lady whining at them.

After months and months of struggling with John Hancock, she told my brother, who couldn't get anywhere with them either so he told her grandson (a big time NYC lawyer), who called them once. Boom!!! "Yes Sir, yes Sir!!!" They accepted her claim immediately and started paying her right away.

Regarding denial decisions, we found that in all cases, there was no evidence to suggest that the individual met the tax-qualified criteria for benefit eligibility in their policy.

I suppose that in my Mom's case, they wouldn't regard it as a denial since ultimately under threat of imminent lawsuit by a top attorney, they changed their minds and reversed course ASAP.

My take-away is that unless you have an advocate and/or lawyer on your side, if you are an older woman trying to make a claim on LTCI or you might as well forget about it. I did not read that study cited by REWahoo but after my mother's experience, I tend to think it's sheer and utter baloney (with all due respect!). I suppose there's a slight possibility that insurance companies have extremely powerful lobbyists in DC that might have some possible influence on the opinions expressed in that study conducted by/for the US Department of Health and Human Services? Or not, who knows. But anyway, if my mom couldn't get her LTCI claim in place by herself, there is no chance in H*** that I could ever make an LTCI claim successfully under the same circumstances. I'm sorry but she was far more intelligent, knowledgeable, and articulate than I am.

I will never, never, EVER spend a dime on LTCI myself and will never change my mind about that, even for the most saintly of insurance companies. Call me nuts but that's where I stand.

I suppose that for CYA I should add that all of the above is just my opinion based on hearsay from what other family members all told me and this is just another anecdote, and at present is not a lawsuit in the making with proof and evidence lined up. Make up your own mind. I know my family members' credibility and their honesty quite well and have done the same.

 

[Walt34]

I will never get LTCI.

John Hancock turned down my mother's perfectly legitimate claim, bullying her repeatedly over the phone about it. My mother was unusually intelligent and articulate, with no dementia at all. This wasn't just a little old lady whining at them.

If you recall, member Nords here had a similar experience (no lawyer though) with John Hancock. He wrote extensively here on the issues and difficulty he had in getting John Hancock to simply honor the contract. That company employed about every single stereotype about insurance companies in their efforts to deny the claim. They are really contemptible.

 

[Major Tom]

The experiences W2R's mother, and Nords, had with John Hancock are the reason I don't plan on getting LTCI. I will self-insure. If I ever need to go into some kind of long-term care, I imagine I won't be spending much outside of the monthly fee to the home, and my portfolio will happily cover it.

I don't have kids, so if my entire portfolio is eaten up by LTC costs at the end of my life, that is fine with me. I quite like the idea of having my own little room, with meals provided, as long as they let me have a cat. I'll think of it as having an extended vacation

 

[RetMD21]

Part of the problem getting payments on my mother's policy involved doing it long distance. The doctors were not helpful, mom was hiding the degree of her dementia, We paid a psychologist to write a letter but instead of addressing the actual criteria she gave irrelevant advice. The insurer sent a nurse who apparently accepted my mother's assurances that she was fine. She ended upcoming out even after we moved her and got action out of the doctors. Didn't need to get an attorney involved.

 

[aja8888]

I will never get LTCI.

I will never, never, EVER spend a dime on LTCI myself and will never change my mind about that, even for the most saintly of insurance companies. Call me nuts but that's where I stand.

That's where we are. And there are no "saintly" insurance companies.

They are all in business to deny as many claims as they can get away with (woops! I meant to say "in business to make money").

 

[RetMD21]

I don't have kids, so if my entire portfolio is eaten up by LTC costs at the end of my life, that is fine with me. I quite like the idea of having my own little room, with meals provided, as long as they let me have a cat. I'll think of it as having an extended vacation

I think LTCI mainly benefits the children of the purchaser (and the insurance company)

 

[easysurfer]

The experiences W2R's mother, and Nords, had with John Hancock are the reason I don't plan on getting LTCI. I will self-insure. If I ever need to go into some kind of long-term care, I imagine I won't be spending much outside of the monthly fee to the home, and my portfolio will happily cover it.

I don't have kids, so if my entire portfolio is eaten up by LTC costs at the end of my life, that is fine with me. I quite like the idea of having my own little room, with meals provided, as long as they let me have a cat. I'll think of it as having an extended vacation

But what if you end up sharing a room with someone who constantly snores?

 

[zippy2020]

Frankly, as someone who worked in both insurance and financial services for decades, Major Tom is a classic example of someone who has no need of LTCi.

However, as a couple - and both of us have definite 'warning signs' in our genetic family histories - our situation is different. We assessed the risk to one spouse, and it was considerable. Make it both spouses - which situations I have personally seen - and the risk rises to an unacceptable level. Thus, we have LTCi with no regrets.

And the issue of developing dementia but denying one is impaired? Yeah, personal experience with that, too. MIL would not have gone into a facility if I had not insisted. She was sending my spouse's BP through the roof (stroke at 50, as I mentioned before).

"I'll go when I'm ready. I'll know when it's time."

After two years of listening her deny to my spouse that she had any problems, I finally walked in and spoke to both of them.

", No, you DON'T know when it's time - because the time is NOW."

 

[Koolau]

My mom was on that "knife edge" of needing care. I stopped by her house at least once a day and threw away her left-over meals-on-wheels she had forgotten in the oven. I'd check her meds dispenser and refill it and/or give her the meds that day. I helped her do her breathing treatments, etc., etc.

Then she got a UTI. She got pneumonia in the hospital. That was it. She could NOT return home. They found her a bed in a dementia ward and the LTCi company paid like clockwork until her specified time limit was met. I think it was a couple of letters from Docs to get her approved. YMMV

 

[Closet_Gamer]

I have such strong opinions on this stuff.

As a rule, I subscribe to Reagan's maxim that the scariest words in the English language are "I'm from the government and I'm here to help."

But I think the relationship between health/LTC insurance providers and customers -- particularly elderly customers -- is a place where we need the big, big hand of the government to come down.

Insurance providers have every financial incentive to deny claims and tie up customers. Doing this to elderly folks who may lack the will, the ability, or an engaged relative to really chase the process and get the claims paid must have a very high return on their effort. They send a denial form and it can result in tens or hundreds of hours to get it paid. People just give up. DW invests a shocking amount of time chasing our health insurance claims.

I would love to know the percentage of insurance company profits that come from people giving up chasing claims.

I could easily get behind legislation that said the penalty for falsely denying a claim or forcing someone to refile the claim multiple times is $10 for every $1 of claim value, paid to the policy holder. If the holder is over 65 and you jerk them around, make it $1000 to $1.

Won't get fixed until you fix the math.

While the insurance companies would go down swinging with threats of "everyone's policies will go up", I think this would be an easy political cause. Everyone hates these companies.

 

[Dtail]

My experience in managing my parents LTC policy for them, albeit seven years or so out of date, is that LTC (MetLife) did exactly what it was supposed to do.

No arguments. Just paid every month like clock work.

That said, DW and I are in the self-insure camp.

Same here with my father currently receiving home care. No issues with the initial claims or ongoing payments, which are filed weekly.
However, if the care provider makes a mistake in the weekly claim, the LTC insurance company will not pay until corrected. So I need to be on top of the filings and the reimbursements all the time.