Long Term Care Insurance - Anyone Have Experience With Having Care Paid For?

[eddielasvegas]

Hello All,

Any member(s) have experience with dealing with claims for a LT care policy?

I suspect this is a particularly difficult claim to actually get paid (LT company will find every reason in the policy to not pay, or at least pay as slowly as possible) given the large, recurring amounts, but wanted to see what the hive has to say.

Thanks,

Eddie

 

[Silveroddo]

Never known anyone that collected. My Grandmother paid on a policy for 20 years and the company went insolvent. She got the money back she’d paid in premiums but at that point basically couldn’t get another policy. My moms policy has tried to buy her out several times.
Dunno what the answer is, they seem to want to sell the coverage, but sustainability seems to be questionable.

 

[timekiller13]

I used to be a nurse manager/case manager and one the things I did was help people get placed in long term care.

From my experience, the vast majority of the LTC policies have so many hoops to jump through to get payment that they are not worth it. Many facilities won’t even take any of the policies (at least in my area). I never had a single patient who had a policy that paid out. And I placed dozens and dozens of people in facilities.

 

[Btaylor]

Used Dad's J. Hancock policy to keep him at home before he passed. No real issues with getting paid from the policy.

 

[wapitibob]

Mother in law had one and it worked fairly well from what I remember. She bought it waaay back so it was affordable.

 

[backyardbandit]

I used to be a nurse manager/case manager and one the things I did was help people get placed in long term care.

From my experience, the vast majority of the LTC policies have so many hoops to jump through to get payment that they are not worth it. Many facilities won’t even take any of the policies (at least in my area). I never had a single patient who had a policy that paid out. And I placed dozens and dozens of people in facilities.

I'm curious as to why these policies never paid out? It's not that difficult to get them to pay out, as long as the elimination(waiting) period has been satisfied, and a doctor confirms they can't perform 2 of the 6 activities of daily living.

LTC policies have obviously paid out a lot, because nearly every insurance company that sold them 10-20 years ago has sold off their LTC books to other companies because they're losing their asses on it from not charging enough premiums in a "new" industry without any actuarial history like they have with life insurance. And they are increasing premiums significantly on their existing policyholders to try to catch up.

Most LTC is sold as a rider on permanent life insurance policies now instead of standalone policies.

 

[timekiller13]

I'm curious as to why these policies never paid out? It's not that difficult to get them to pay out, as long as the elimination(waiting) period has been satisfied, and a doctor confirms they can't perform 2 of the 6 activities of daily living.

LTC policies have obviously paid out a lot, because nearly every insurance company that sold them 10-20 years ago has sold off their LTC books to other companies because they're losing their asses on it from not charging enough premiums in a "new" industry without any actuarial history like they have with life insurance. And they are increasing premiums significantly on their existing policyholders to try to catch up.

Most LTC is sold as a rider on permanent life insurance policies now instead of standalone policies.

You said it yourself. They have paid out so much in years past that now they will find any reason they can to NOT pay out.

Long term care insurance seemed like a great gamble for insurance companies 20-30 yrs ago. Most people weren’t living long enough to utilize it. That’s not the case anymore.

I can’t tell you how many times I’ve had a patient who “met” the criteria for pay out, yet insurance would deny them every time because they would dig and dig until they could find a reason to deny. And it’s not just the denials. It’s the fact that most of the LTC facilities in my area won’t accept LTC insurance. Why? Because the insurance pays 30-40% less than a private pay bed.

 

[eddielasvegas]

You said it yourself. They have paid out so much in years past that now they will find any reason they can to NOT pay out.

Long term care insurance seemed like a great gamble for insurance companies 20-30 yrs ago. Most people weren’t living long enough to utilize it. That’s not the case anymore.

I can’t tell you how many times I’ve had a patient who “met” the criteria for pay out, yet insurance would deny them every time because they would dig and dig until they could find a reason to deny. And it’s not just the denials. It’s the fact that most of the LTC facilities in my area won’t accept LTC insurance. Why? Because the insurance pays 30-40% less than a private pay bed.

Thanks for your direct experience comments @timekiller13 and pretty much what I expected to hear. Of course, there are those that did not have claim payment problems, but they just might be the exception.

LTC insurance has to pay better than Medicaid, right?


Eddie

 

[Shane]

Coverages and quality of service vary widely among insurance companies. You can't generalize either way. I've only had experience with reputable insurers with family members and clients (I'm a financial advisor). I've never had anyone denied coverage. There is a process to go through to get the claim going, but once everything is confirmed the payments flow. As backyardbandit said, they pay what they owe so well that they aren't selling new policies anymore. Doctors can keep folks alive a lot longer than before, but they can't keep us out of the nursing home. That gets very expensive.

 

[Mt Al]

I don't have details on who the companies were, but worked out for both of my parents. Yes, there were conditions like paying the first month out of pocket, max-per-month, etc., but neither of them complained about their policies. Point is: I've seen it work in these two cases.

 

[Rich M]

We were just talking about looking at the policies - getting older.

My BIL is paying on a policy and i asked him what the return would be and he said, it would pay out whatever he paid in. If that is the case - why bother?

 

[backyardbandit]

You said it yourself. They have paid out so much in years past that now they will find any reason they can to NOT pay out.

Long term care insurance seemed like a great gamble for insurance companies 20-30 yrs ago. Most people weren’t living long enough to utilize it. That’s not the case anymore.

I can’t tell you how many times I’ve had a patient who “met” the criteria for pay out, yet insurance would deny them every time because they would dig and dig until they could find a reason to deny. And it’s not just the denials. It’s the fact that most of the LTC facilities in my area won’t accept LTC insurance. Why? Because the insurance pays 30-40% less than a private pay bed.

That's just simply not correct. You must be getting mixed up with people trying to get their stay covered by Medicare(original Medicare or Medicare Advantage Plan) or Medicaid. Different rules and likely room rates for that situation.

LTC facilities LOVE it when people have private standalone LTC insurance. It ensures they get paid.
LTC insurance policies are either indemnity or reimbursement plans.

Reimbursement plans reimburse(in your example) the LTC facility for what's owed that month, up to the limit on the insurance.
For example, the nursing home charges 7k/month for a room. Your LTC policy pays up to $3000/month for up to 5 years. Your policy would pay the nursing home 3k that month, and you would be billed the other 4k. There are no discounted room rates by using insurance, it just saves the insured the burden of paying 7k/month and wrecking their surviving spouses assets.

An indemnity plan pays a fixed amount per day/month as long as you are under care. If your nursing home charges 7k/month and your policy states 8k/month for 5 years, you'll profit 1k/month. The insurance policy will pay you directly, and then you will pay the nursing home.

Side note, 75-80% of LTC payout dollars are going to home care these days, not facilities. Everyone wants to stay home and have a nurse come as long as they can before going to a facility.

 

[backyardbandit]

We were just talking about looking at the policies - getting older.

My BIL is paying on a policy and i asked him what the return would be and he said, it would pay out whatever he paid in. If that is the case - why bother?

It's very unlikely that a policy would max out at premiums paid in. I've never seen anything like that. I don't even see the state insurance department approving a policy like that to be sold.
It's usually very much the opposite. If you use it for more than a handful of months you're usually coming out way ahead.
There's also asset based LTC that you can clearly see what your dollar turns into. Or return of premium options if you don't use it.
Lots of variables being generalized here.

 

[ODB]

Great and timely post. Watching with keen interest.

 

[timekiller13]

That's just simply not correct. You must be getting mixed up with people trying to get their stay covered by Medicare(original Medicare or Medicare Advantage Plan) or Medicaid. Different rules and likely room rates for that situation.

LTC facilities LOVE it when people have private standalone LTC insurance. It ensures they get paid.
LTC insurance policies are either indemnity or reimbursement plans.

Reimbursement plans reimburse(in your example) the LTC facility for what's owed that month, up to the limit on the insurance.
For example, the nursing home charges 7k/month for a room. Your LTC policy pays up to $3000/month for up to 5 years. Your policy would pay the nursing home 3k that month, and you would be billed the other 4k. There are no discounted room rates by using insurance, it just saves the insured the burden of paying 7k/month and wrecking their surviving spouses assets.

An indemnity plan pays a fixed amount per day/month as long as you are under care. If your nursing home charges 7k/month and your policy states 8k/month for 5 years, you'll profit 1k/month. The insurance policy will pay you directly, and then you will pay the nursing home.

Side note, 75-80% of LTC payout dollars are going to home care these days, not facilities. Everyone wants to stay home and have a nurse come as long as they can before going to a facility.

I’m just telling you my experience as a case manager in my area and with my patients.

And I’m talking about long term nursing facilities, not short term rehab beds. Medicare doesn’t pay for long term care in any capacity. Medicare and managed Medicare pay for STR stays. Those are easy to get approved. And I can get most private insurances to pay for a STR bed without a battle.

Long term care has been a whole different ball game. It’s one of the reasons I left my role as a case manager. The frustration of trying to get people placed was driving me insane.

And don’t get me started on Medicaid.

And your area sounds different than my area. No one wants to stay at home in my area. Facilities have waiting lists that are hundreds of patients long hoping to get a bed. You even broach the subject of home care with my clientele and you would think I was asking them to row a boat to the moon. I was usually able to convince people to keep their loved ones at home for a short period of time (usually a couple weeks) and then after that it was “we can’t do it, send them to a facility.”

 

[Rich M]

My aunt pays >$5,000/month for assisted. Somehow she has enough $$$.

 

[Br@ssMonkey]

My aunt pays >$5,000/month for assisted. Somehow she has enough $$$.

 

[Forestryguy]

So what is the best action to take to ensure that care will be paid for both ST and LTC in facilities?

We have no kids to go live with when we get to that point. My personal main concern is that I am pretty sure that I will have to end up in a memory care facility. Every male on my mothers side has passed from Alzheimer's, most everyone is diagnosed with dementia. Some family members have passed at younger ages from early onset and others are still alive into their 90's.

Not to be a downer... At 43 it seems like between putting money in for retirement, insurances of most overtype, and living expenses there is not much left to do anything else with during younger years while planning for latter in life.

 

[MallardSX2]

After reading this I prefer the Indian method for my own demise.

They simply gave you one days' worth of food and just pointed at the woods.

 

[Fitzwho]

My MIL had a stroke last year (18 months ago), and was already struggling with Alzheimer's at the time. She has been in a LTC facility since then. There have been lots of issues with the LTC insurance, mainly because my FIL signed her up for a separate insurance plan that would pay for physical therapy, but that somehow kicked the LTC insurance out because she wasn't on Medicare anymore, or something of this sort. Has been a sh-show to say the least. Keep telling my wife she should figure out how to start a business that helps people navigate this crap. The LTC Insurance won't pay the facility directly, so FIL has to pay out of pocket and then the LTC insurance is supposed to reimburse him. They, of course, are slow paying him, I want to say they're something like 3-4 months behind, so he was $20k+ out of pocket before they sent him the first payment.