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John Bisnar
John Bisnar
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Denial of payment by "long term care" insurance companies

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Will your insurance company pay when the tiime comes?

According to a recent article in the New York Times , 64-year-old Mary Rose Derks, believed in long term care insurance (LTC). She faithfully paid Conseco Insuranace Company a $100 a month for a long-term care policy. Mary Derks was determined she would not be a burden on her family.

After Mary had been hospitalized numerous times for chronic hypertension and diabetes, Mary tearfully gave up her home and her children helped her move to a nursing home near their home.

Mary and her family have been fighting with Conseco for over 4 years and Conseco still has not paid a penny. First they said Mary’s choice of a nursing home was not an approved facility, even though it is state-licensed. Then said Mary was not sufficiently infirm and unable to care of herself to need a nursing home. This was Conseco’s answer to Mary’s paid-up policy, even though Mary was in an early-stage of dementia which required her to take 37 pills a day. So far, Mary’s family has paid every penny of the $70,000 in nursing home and other senior care necessary to keep Mary alive and comfortable.

According to Mary Beth Senkewicz, a former senior executive with the National Association of Insurance Commissioners, “The bottom line is that insurance companies make money when they don’t pay claims. They’ll do anything to avoid paying, because if they wait long enough, they know the policyholder will die.” Betty Hobel, a former Banker’s Life agent said that Conseco and Banker’s Life, a Conseco affiliate, “Made it so hard to make a claim that people either died or gave up.”

Current and former employees at Conseco and Banker’s life testified in interviews and depositions that it was a common business practice to delay or deny policyholder’s claims for the most trivial reasons. They were instructed not to even call a policyholder to advise them that their claim was abandoned and would not be paid.

Unfortunately, it seems that these business practices are growing in popularity with some insurance companies and many times seniors are being denied help at an undeniably critical stage in life-when they are least able to help themselves. And, for those who do not have family, friends, or the resources to hire help, what will come of them?

According to Consumer Reports, LTC insurance policies are a lousy deal, but that right now they are about the ‘only game in town’ to prepare for those senior years. Private rooms in a nursing home cost $181 a day now ($66,000/yr), and by 2021, when today’s 60 year-olds need care it is projected that costs will be in the neighborhood of $480 a day ($175,200/yr.) .

Consumer Reports also stated that it is understandable how and why people are confused when trying to choose a long term care policy, because the policies and the language are so complicated for the layperson. Additional concerns stated included problems with buying from a company who may not be around in the long haul. Insurance companies, just like any company, can have shaky finances, which is the problem Conseco had when between 1991-1999. Conseco and other insurance companies benefited from strong LTC sales to people with poor health, at rates that were too low for the risks involved. The insurance companies had underestimated how long people would live after entering nursing homes, because of the costs of treating Alzheimer’s, Parkinson’s and diabetes. By 2002, Conseco’s long-term-care payouts exceeded their revenue, forcing them to go into and out of a 10-month bankruptcy proceeding..

Fortunately, for those of us who live in California there exists a “Partnership Plan“, which will help to protect some or all of a person’s assets from being depleted, like what happened with the family of Mary Rose Derks . Also, the AARP site indicates that California Advocates for Nursing Home Reform [CANHR], a nonprofit organization, offers a Nursing Home Guide. The guide provides information from the state department on 1,400 nursing homes, including inspection and complaint information.

In 2005, California nearly 1 in 4 Long Term Care policy claims were denied.

If you have been denied benefits you feel you are entitled to, contact me for a consultation and a review of your policy.