Genworth LTC strikes again

[samclem]

It is true that many of the older long-term care insurance policies have had large premium increases. Fortunately, insurance regulators do not allow new long-term care policies to use the old pricing methods.

To prevent rate increases, 41 states have enacted very strict pricing regulations for new policies.
. . . .
Since any new policy purchased today already includes all the prior rate increases, the likelihood of a large rate increase on a new policy purchased today is pretty low.

So, "it is different this time"? Insurance companies market their financial strength and actuarial acumen. Customers have been assured in the past that rate increases were very unlikely. And yet, the actual experiences customers have had have been very different. And it sounds like now the thing that is supposed to make customers comfortable is that the government has stepped in to force (what remains of) the industry to reform itself.

 

[Banned LTC Salesman]

So, "it is different this time"? Insurance companies market their financial strength and actuarial acumen. Customers have been assured in the past that rate increases were very unlikely. And yet, the actual experiences customers have had have been very different. And it sounds like now the thing that is supposed to make customers comfortable is that the government has stepped in to force (what remains of) the industry to reform itself.

If you want to pretend that long-term care insurance regulations are the same today that they were 20 years ago, that's your prerogative.

If you want to pretend that long-term care insurance policies are priced the same way today that they were 20 years ago, that's up to you.

Most things have improved over the past 20 years, even long-term care insurance. If you want to base your decisions on how things were 20 years ago, rather than how they are today, that's up to you. I can't stop you.

The regulations I'm talking about were not retroactive. They only apply to policies purchased AFTER the regulations took effect in your state.

Insurance regulations are like airbags. When the gov't mandated that airbags be installed in cars sold in the U.S. the airbags were not required to be installed in old cars, only new cars.

The same is true for long-term care insurance. The new regulations ("airbags") are in the newer long-term care policies, not the old ones.

 

[Scuba]

If you can buy good long-term care insurance for an annual premium that's less than one-half of one percent of your net worth, you're foolish not to own it.

Why do you think so, if it is affordable for some to self-insure? And how did you set the criteria of one-half of one percent of net worth for annual policy cost?

 

[athena53]

I've had an impossible time with Genworth trying to claim for my Dad when he was sick. Send us this, send us that, prove that he is off Medicare 100 days. You didn't send us what we asked for we're cancelling the claim. I have a folder a half inch thick. They won, they wore me down.

I will never buy anything from Genworth.

I've read Nords' story, too, and it's a long, sad one. Jim Cramer also went on a nasty rant once about the unnamed LTC carrier that he fought to the mat after his father had a stroke. He spent a lot of his own money getting independent medical and neurological exams to substantiate his claim that his father could no longer live independently. The insurance company eventually caved in but Cramer figured he barely broke even after the expenses of fighting the insurer.

 

[foxfirev5]

If you can buy good long-term care insurance for an annual premium that's less than one-half of one percent of your net worth, you're foolish not to own it.

Maybe it's a bit of analysis paralysis but I sure would like to see that "good" policy. Over the last few years I've only become more confused regarding this subject. I've never bought anything I didn't understand and I am finding this subject even more daunting than comprehending the annuities the nice man at the bank sold my DM.

As someone previously stated, how about some details?

 

[Nords]

I'm surprised Nords hasn't chimed in yet. He has a real story about getting an insurance company to pay up on LTC coverage.

I appreciate the tag, Aja. I search the forums every week or so for my name and the "military" keyword.

And in this case, I don't feel that I have much more to contribute beyond what I've already said. Dad passed away last November (end-stage Alzheimer's) and we finished settling his estate last month. I'll eventually write another post about that (everything worked out all right). However I don't see any reason to revisit the insurance debate until we have another decade of claims data to show that the insurance companies really did get it right this time.

John Hancock is poorly run (or even hyperagressive about claims) and Genworth is one of the major factors sucking the cash out of GE.
GE's surprise $15 billion shortfall was 14 years in the making - Chicago Tribune

Note that the only major insurer left in the Federal Long-Term Care Insurance Program is... John Hancock. One reason is because the FLTCIP is still allowed to raise premiums (subject to an approval process), unlike many of the state-regulated programs.

Even USAA won't sell long-term care insurance policies. Or rather, they refer members to... John Hancock.

For those who haven't seen our family's story yet, this is why we're self-insuring for long-term care. Note that my father spent over six years in a care facility, his father spent nearly 14 years in a facility, and I've had my genome analyzed by 23andMe... so this self-insurance choice was not made lightly.
http://the-military-guide.com/wont-buy-long-term-care-insurance/

Filing a long-term care insurance claim can be very difficult. That's why when my MIL needed to file a claim for her LTCi policy, I didn't do it. We contacted one of the national home care agencies and they handled it for us. This particular home care agency processes thousands of long-term care insurance claims every year. All we had to do was sign a couple of HIPAA forms and they took care of the rest. Her claim was approved in about three weeks.

They handled the claim for free. It makes sense. The home care agencies get paid by the long-term care insurance companies. They have a financial incentive to set up a system to speedily process long-term care insurance claims.

I agree that it reduces caregiver stress when you have someone else file the claim. One of the main reasons we've chosen to self-insure is precisely to avoid making life even harder on the caregivers. The "free money" (or what's left after paying premiums and the cost of filing the claim) isn't worth the cost.

However there's also the monthly stress of processing the receipts for reimbursement, dealing with the insurance company's antiquated procedures, and then tracking the payout in case they try to shortchange the insured-- as mentioned in that blog post. I went through over three years of that misery, but insurer incompetence is not illegal (even when it's profitable).

 

[Banned LTC Salesman]

Why do you think so, if it is affordable for some to self-insure? And how did you set the criteria of one-half of one percent of net worth for annual policy cost?

Maybe it's a bit of analysis paralysis but I sure would like to see that "good" policy. Over the last few years I've only become more confused regarding this subject. I've never bought anything I didn't understand and I am finding this subject even more daunting than comprehending the annuities the nice man at the bank sold my DM.

As someone previously stated, how about some details?

Here's an example:

We have a 65-year old couple. The husband receives $2,000 per month from social security. He also has a pension of $2,500 per month, with a COLA. His wife will continue to receive the entire pension when he dies. His wife also receives $1,000 per month from social security.

Their house is paid for. They have two million of invest-able assets. One million is in a Traditional IRA with a 50/50 stocks/bonds mix. They re-invest all those earnings. The other million is non-qualified money. It's in a Vanguard fund with a 35/65 mix. They take about $30,000 per year from this Vanguard fund to cover regular living expenses. For bigger purchases, like vacations, they'll dip into this account also.

The husband is not happy with the overall return of the Vanguard fund. He wants to earn more. He learns about a dividend-paying stock that could earn him 0.6% (six-tenths of one percent) more than what he's averaged from the Vanguard fund. But the stock could also lose value. The husband doesn't think the stock will go to zero. He thinks the likelihood of the stock losing half of its value is slim. Even if it loses only a quarter million, that wouldn't be too bad. So the husband decides to invest the entire million into this stock.

Was that a smart decision?

 

[athena53]

The husband doesn't think the stock will go to zero. He thinks the likelihood of the stock losing half of its value is slim. Even if it loses only a quarter million, that wouldn't be too bad. So the husband decides to invest the entire million into this stock.

Was that a smart decision?

Not exactly sure how this relates to LTC, other than the fact that many people who invested a substantial chunk of their net worth into LTC premiums over the years ended up taking at least a 25% haircut on benefit levels in order to eliminate or moderate rate increases.

But- to answer your question- no, it wasn't a smart decision.

 

[Banned LTC Salesman]

Not exactly sure how this relates to LTC, other than the fact that many people who invested a substantial chunk of their net worth into LTC premiums over the years ended up taking at least a 25% haircut on benefit levels in order to eliminate or moderate rate increases.

But- to answer your question- no, it wasn't a smart decision.

You're right.
It was NOT a smart decision.
Why would someone alter their portfolio's investment mix in such a way as to gain only an extra 30 basis points each year, if they might lose hundreds of thousands of dollars of principal?
Not very smart, is it?



(Since this couple has $2M of invest-able assets, the extra 60 basis points they would earn by investing $1M in this stock increased their overall portfolio return by only 30 basis points.)


If a couple like this decided to "self-insure" for long-term care, they would gain less than 30 basis points each year, and they would be putting hundreds of thousands of dollars at risk.

 

[mf15]

Speaking of difficulties, I have tried twice to get a document from Genworth. Will send out
within 10 days. Never got it yet. Oh yea this was a year ago.
I guess I will have to call again.
oldmike

 

[Banned LTC Salesman]

Speaking of difficulties, I have tried twice to get a document from Genworth. Will send out
within 10 days. Never got it yet. Oh yea this was a year ago.
I guess I will have to call again.
oldmike

Have you logged into your account on their website.
You can download just about anything you need from their website.

https://www.genworth.com/login.html

 

[Banned LTC Salesman]

I appreciate the tag, Aja. I search the forums every week or so for my name and the "military" keyword.

And in this case, I don't feel that I have much more to contribute beyond what I've already said. Dad passed away last November (end-stage Alzheimer's) and we finished settling his estate last month. I'll eventually write another post about that (everything worked out all right). However I don't see any reason to revisit the insurance debate until we have another decade of claims data to show that the insurance companies really did get it right this time.

John Hancock is poorly run (or even hyperagressive about claims) and Genworth is one of the major factors sucking the cash out of GE.
GE's surprise $15 billion shortfall was 14 years in the making - Chicago Tribune

Note that the only major insurer left in the Federal Long-Term Care Insurance Program is... John Hancock. One reason is because the FLTCIP is still allowed to raise premiums (subject to an approval process), unlike many of the state-regulated programs.

Even USAA won't sell long-term care insurance policies. Or rather, they refer members to... John Hancock.

For those who haven't seen our family's story yet, this is why we're self-insuring for long-term care. Note that my father spent over six years in a care facility, his father spent nearly 14 years in a facility, and I've had my genome analyzed by 23andMe... so this self-insurance choice was not made lightly.
http://the-military-guide.com/wont-buy-long-term-care-insurance/


I agree that it reduces caregiver stress when you have someone else file the claim. One of the main reasons we've chosen to self-insure is precisely to avoid making life even harder on the caregivers. The "free money" (or what's left after paying premiums and the cost of filing the claim) isn't worth the cost.

However there's also the monthly stress of processing the receipts for reimbursement, dealing with the insurance company's antiquated procedures, and then tracking the payout in case they try to shortchange the insured-- as mentioned in that blog post. I went through over three years of that misery, but insurer incompetence is not illegal (even when it's profitable).

Does it make sense to take investment advice from someone who's had "below average" investment results? Obviously, it only makes sense to take investment advice from someone who's had "above average" investment results.

Similarly, does it make sense to take advice about filing long-term care insurance claims from someone who has had poor results filing a claim?

Doesn't it make more sense to take advice about filing long-term care insurance claims from someone who has had "above average" results?

My MIL's long-term care policy is with....

John Hancock (cue the Darth Vader theme)

It took only three weeks for her claim to be approved. All she did was sign two HIPAA forms and the home care agency took care of the rest. The national home care chains have built systems for quickly and easily processing long-term care insurance claims.

Each month my wife receives the itemized bill. She checks it for anomalies, saves a copy on her computer, and faxes it to the insurance company. Total time spent: less than 15 minutes.

A few days later the money magically appears in my MIL's USAA account.

Nobody processes their own medical insurance claims. You let your doctor's office process your medical insurance claims. Why would someone think they should process their own long-term care insurance claim? Let the home care agency handle it or the assisted-living facility or the nursing home. They have experience doing it. Over 300,000 different policyholders will have their long-term care insurance claims approved this year. Why not let the professionals process the claim for you? They know how to do it.

 

[Hermit]

Long-term care insurance is "reserve-priced". Reserves are set aside 10, 20, even 30 years in advance of expected claims thereby protecting the younger policyholders from a death spiral even after all the older policyholders have passed away.

Other types of insurance like medical, auto or home insurance base their pricing on the prior year's claims. That's not how long-term care insurance is priced because it has a long-term horizon.

Do you work in the insurance industry or are you retired from it?

Hey [Banned LTC Salesman], I don't think I ever saw an answer to this question. I'm still waiting.

 

[MichaelB]

Similarly, does it make sense to take advice about filing long-term care insurance claims from someone who has had poor results filing a claim?
./.

When it comes to financial matters, I find it helpful to look for advice from people that do not benefit directly and financially from the "advice" they are giving.

Few members here have more credibility than Nords. He shared the details of his story in real time, and the challenges he faced showed no signs of being the result of novice mishandling of a policy. On the contrary, the obstacles gave every indication of a deliberate and orchestrated effort to obfuscate and delay, avoiding the payout that was contractually required.

 

[RobbieB]

Pops died before he racked up a lot of bills and shortly there after Genworth sent back a prorated premium refund. Amazing they knew he died so quick eh? Yeah, that's good news for them.

Never Genworth, never. I tell this tale every time this topic comes up so I hope I cost them more dough than they cost me. Yeah, I probably ate 10 grand, so if just a few people avoid them that should do it.

 

[Banned LTC Salesman]

When it comes to financial matters, I find it helpful to look for advice from people that do not benefit directly and financially from the "advice" they are giving.

Few members here have more credibility than Nords. He shared the details of his story in real time, and the challenges he faced showed no signs of being the result of novice mishandling of a policy. On the contrary, the obstacles gave every indication of a deliberate and orchestrated effort to obfuscate and delay, avoiding the payout that was contractually required.

What was it about Nords story that lead you to believe it was "orchestrated obfuscation" instead of his mishandling of the claim?


P.S. are you under the impression that Nords does not benefit from the advice he gives?

 

[Banned LTC Salesman]

Pops died before he racked up a lot of bills and shortly there after Genworth sent back a prorated premium refund. Amazing they knew he died so quick eh? Yeah, that's good news for them.

Never Genworth, never. I tell this tale every time this topic comes up so I hope I cost them more dough than they cost me. Yeah, I probably ate 10 grand, so if just a few people avoid them that should do it.

Sending a prorated refund quickly seems like a good thing to me.
What did Genworth do that was bad?

 

[RunningBum]

Quote:
Originally Posted by Banned LTC Salesman
Long-term care insurance is "reserve-priced". Reserves are set aside 10, 20, even 30 years in advance of expected claims thereby protecting the younger policyholders from a death spiral even after all the older policyholders have passed away.

Other types of insurance like medical, auto or home insurance base their pricing on the prior year's claims. That's not how long-term care insurance is priced because it has a long-term horizon.

Quote:
Originally Posted by aja8888
Do you work in the insurance industry or are you retired from it?



Hey Scott, I don't think I ever saw an answer to this question. I'm still waiting.

DING! DING! DING! We have a winner!

Simple Google search of the name and location shows [Banned LTC Salesman] is a "Long-Term Care Insurance Specialist".

While it can be helpful to have information from an "expert", it's also good to have disclosure that one is in the industry. Especially when directly asked. Especially when every single post from the user is about LTC, and strongly advocating for it.

 

[athena53]

DING! DING! DING! We have a winner!

Simple Google search of the name and location shows [Banned LTC Salesman] is a "Long-Term Care Insurance Specialist".

I'd found that, too, but wasn't sure of policy here; some Boards don't allow "outing" of other members, although he enabled it by posting (probably) under his real name.

To get back to that example of Mom and Pop and their foolish $1 million preferred stock investment- I THINK I get what he's saying.

First, as noted earlier, my possible scenarios don't include the scary version with one spouse in the home and the other in LTC.

He may be saying that I'm putting a large amount of money (the potential cost of LTC) at risk by not forking over a piddly percentage of my net worth to buy LTC insurance. That's one way to look at it- but-

1. I'm not off the hook anyway- most policies cover only for a finite number of years and any excess cost over the face amount of the policy, even in the years I'm covered, is on me.
2. Anecdotal evidence exists to show that when I actually need the coverage, my family and I might have to fight tooth and nail to get it.
3. The premiums could go up or the coverage could be reduced. Certainly now that companies have more extensive LTC experience data they can price it better, but they're still pricing for things that could happen 20-30 years down the road. There will be errors and it will likely be underpriced, not overpriced.
4. If I don't go into LTC and, like my dear mother or my dear husband, die quietly at home in hospice care of untreatable cancer, the LTC company wins.
5. Worst case- I don't buy insurance, I get Alzheimer's like my Uncle, and all my assets go to pay for quality LTC. That's a risk I'm willing to take. My son, my only heir, agrees.

 

[foxfirev5]

I'd found that, too, but wasn't sure of policy here; some Boards don't allow "outing" of other members, although he enabled it by posting (probably) under his real name.

To get back to that example of Mom and Pop and their foolish $1 million preferred stock investment- I THINK I get what he's saying.

First, as noted earlier, my possible scenarios don't include the scary version with one spouse in the home and the other in LTC.

He may be saying that I'm putting a large amount of money (the potential cost of LTC) at risk by not forking over a piddly percentage of my net worth to buy LTC insurance. That's one way to look at it- but-

1. I'm not off the hook anyway- most policies cover only for a finite number of years and any excess cost over the face amount of the policy, even in the years I'm covered, is on me.
2. Anecdotal evidence exists to show that when I actually need the coverage, my family and I might have to fight tooth and nail to get it.
3. The premiums could go up or the coverage could be reduced. Certainly now that companies have more extensive LTC experience data they can price it better, but they're still pricing for things that could happen 20-30 years down the road. There will be errors and it will likely be underpriced, not overpriced.
4. If I don't go into LTC and, like my dear mother or my dear husband, die quietly at home in hospice care of untreatable cancer, the LTC company wins.
5. Worst case- I don't buy insurance, I get Alzheimer's like my Uncle, and all my assets go to pay for quality LTC. That's a risk I'm willing to take. My son, my only heir, agrees.

Nice summary. I concur with your observations and will put this on the backburner.

 

[RobbieB]

Me too. I decided to be "self insured" after my Genworth experience.

 

[Banned LTC Salesman]

Me too. I decided to be "self insured" after my Genworth experience.

What did Genworth do that was bad?

 

[RobbieB]

Made it impossible for me to file a claim. They would ask for stuff and I would send it. They said that was the wrong stuff, send some other stuff. I got more stuff from the doctors and the nursing home and sent that in. Back and forth. Calls on the tele, lots of calls. Finally they cancelled the claim.

It was like talking to a brick.

 

[Marita40]

What’s the status on Genworth’s sale to the Chinese company? I thought it was supposed to be resolved by now. Can’t find news online about it.

 

[Hermit]

...
3. The premiums could go up or the coverage could be reduced. Certainly now that companies have more extensive LTC experience data they can price it better, but they're still pricing for things that could happen 20-30 years down the road. There will be errors and it will likely be underpriced, not overpriced.
...

Or maybe the LTC insurance companies have to underprice what they suspect will be a realistic price to sell any policies.