Mansell, Engel & Cole

Long term insurance care denials will continue to rise

Many people opted to purchase long term insurance benefits as a responsible choice to prevent becoming a burden on their families as they age. Unfortunately, they have discovered that premiums are rising dramatically and insurance claim denials are frequent occurrences.

If you are the holder of a long term insurance care policy, you have likely experienced premium cost spikes, contemplated dropping the plan altogether or reducing your benefit coverage. Particularly for those who purchased these plans in the 1990's thinking long term care was squared away, it is unsettling to discover that you cannot afford the payments when you are on the verge of needing it the most.

How did this happen?

Long term insurance providers underestimated the market when these plans were designed. People are living longer than predicted, and in need of care that costs much more than anticipated. Low interest rates have also made an impact, reducing profit margins for providers.

Furthermore, policies purchased in the 1990s contain a lot of vague language on the types of facilities and care covered. Elder care has changed dramatically since that time, with new forms of care that may not have existed when the policy coverage began or were uncommon at the time. These factors have created a playing field ripe for denials and disputes, as insurers struggle to pay claims that exceed their reserve pool.

Future Outlook

Some predict that the long term insurance market will stabilize due to the increase in premiums, but the number of people covered is steadily declining, making coverage harder for those in middle income brackets to sustain. Standalone long term insurance providers are decreasing in number, and hybrid plans that combine life insurance and annuity options are increasing.

If you continue to pay increasing premiums and plan to use your long term health insurance plan, you should know what the policy says and learn about their eligibility requirements. Most plans require for example, that the individual be incapable of performing daily living tasks such as eating, dressing, or bathing, which must be verified by a doctor.

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