The Long-Term Care Insurance Game

On Behalf of | Jun 13, 2024 | Firm News |

The following is based on real experiences by clients:

Long-Term Care Insurance: I have often advised my clients to obtain long-term care insurance. And while I still feel it is important to purchase it—Caveat Emptor! Buyer Beware! Like all insurance—you pay and pay, but when it comes time to make a claim, I have found the insurance companies to be rather obstructionist. One client who has LTCI came to me, asked me to read the policy and then asked me to activate the policy for the spouse. I declined this job because there was an immediate need, and I was leaving for vacation. I read and interpreted the policy and referred him to a person who is serves as an advocate (not an attorney) that assists those who are seeking to activate their own policy. So, you either pay me or an advocate to receive something that should rightfully be forthcoming. I find it appalling that clients need to hire me or anyone else to do this, but this advocacy is necessary. The insurance companies really don’t want to pay out even when they’ve collected from you for a long time.

Aside from the usual requirements showing need, they keep the approval moving at a snail’s pace. First there is the 14-page application to submit; then there is about a 10 day to two-week period before they get it into the system. This is followed by requests for medical data from doctors and extensive discharge notes from hospitals. If they don’t like what your doctor has submitted, that slows the process down. One company even REQUIRES all communication by FAX which is no longer used by most people. When questioned about this the client was told that if the Doc didn’t get the first fax, it would take them five days to produce another fax, and maybe 10 days to make the request to the doctor by mail. No emails. Then there is the tug of war with the doctor to have him or her produce the necessary letter. That process could take another 10 days. Should you choose to have someone represent you that person needs a HIPAA release from you. Another ½ month to get them to allow the HIPAA release. And it all goes on.

Experts tell me that it takes up to three months to activate a policy. In some policies there is a 10–30-day elimination period before the policy begins to pay out. Some policies will retroactively count the days from need to acceptance; others won’t.

It is only recently that clients have begun to bring me policies that were signed in the early 2000s. Some of these policies do not provide for at home or assisted living care. Part of the reason for that in Massachusetts may have to do with the fact that the Insurance Commissioner wanted to see more regulation in these areas that insurance companies offered benefits in certain areas. The clients don’t always understand why, for example, they are not covered at home or in assisted living. The explanation that the insurance commissioner was slow on the up take is a painful one to offer.

What is the best thing to do? Read your policy and what it offers now. Question your insurance agents about these requirements that may blindside you. There is not much else advice to offer. If you are amazingly rich, you could consider self-insuring, but remember that top notch care at home now could reach the $50,000 mark for around the clock care; and skilled nursing is between $18,000-$20,000. So, if some of these costs can be defrayed by your long-term care insurance, then go for it as soon as you can. Best advice: If you believe you will need to activate your long-term care insurance policy, contact your insurer BEFORE  you need it and ask them about the requirements and time frames so you are prepared.  If you are being “sold” a policy, ask about the activation of the policy NOW That is the best advice.