Ronald R. Hagelman

“The LTC claim Process may ultimately become a challenge to our cherished fiduciary responsibilities.”

The results of all our attempts to include future planning for quality care giving as an integral component of our practice could become moot. It is and has always been our projected mission. It was always somewhat of a visionary crusade detailing and expounding on what a more predictable, financially prepared quality future care would look like. Those remaining LTCI specialists rightfully continue to view their activities as a sacred trust. For over a quarter of a century we have been filling as many sandbags as circumstance would allow with reserve claim dollars. We were that proverbial diligent squirrel who packed as many nuts in his mouth as possible to put them back for that almost certain rainy day. We repeatedly outlined a complete care story beginning and end. A story that celebrates with an induction into the LTCI or Chronic Illness  policy ownership brigade. It then hopefully concludes with all our hard work performing as anticipated during what we always believed would be a period of quality, judicial, caring claim management. This is what we sold, and it is what we expect. Unfortunately, there are voices in the wind both from insureds and agents caught up in a claim adjudication “Process” suggesting that perhaps our expectations could be falling short. Please do not misunderstand, protecting the integrity and validity of all claim payments remains the primary focus of all those companies who have in the past or now continue to help us build those crucial insurance firewalls.  Fraudulent claims must continue to be exposed and discarded. Ultimately there are an abundance of moving parts in the life of an LTC/Chronic Illness policy and  as is often suggested the only variable susceptible to constant improvement is “Service.” As you might imagine this can represent a fairly sensitive conversation. Not unlike the social and cultural requirement of the father to daughter or mother to son conversation about the performance of the “birds and the bees.” This delicate and potential industry embarrassment may be perceived as a conversation reserved only for impolite company.  Therefore, let us begin with what we know:

• No one would deny that the shorter the claim duration the smaller the ultimate cost. That LTC claims are occurring in an accelerated mortality environment. We all understand that those now attempting to access their policy benefits are in urgent need of relief.
• No one would deny that 90+ percent of all existing LTCI stand-alone premium resides in a closed block of health premium that will inevitably be subject to rate spiral propensities. This is also occurring in an environment of historical premium that was innocently underpriced for much of its early history.
• Every one should understand that disability income and stand-alone long term care insurance are at the very least kissing cousins. We cannot ignore and we must acknowledge that the fair and judicial payment of DI claims has had a long and very unflattering history. In 2003 DI companies were fined $181.5 million in punitive damages.  Across America current plaintiff attorneys are loudly suggesting similar bad faith activities in the rapidly growing world of LTCI claim management.
• We must begin to acknowledge the size of the problem we are facing. It is currently projected that those 65 and older will outnumber our children in 2030. According to a 2024 survey of family caregivers conducted by seniorliving.org, 53 million family caregivers are currently assisting older relatives, spouses, friends or neighbors. One in five Americans are at this moment already plunged into the extraordinary demands of needed custodial care.
• The reality we must take to heart is that most of these circumstance recruited helpers are unpaid.  According to the AARP Public Policy Institute we incur $600 billion in unpaid labor costs from family caregivers. Unprepared and unfunded caregiving has proven to dramatically increase the caregivers personal financial cost, emotional stress, personal health and well-being. The overall parameters of the problem could not be clearer. Intentionally choosing a future of unpaid family care regardless of your financial circumstance should always be your last choice.
• Approximately two thirds of the cost of senior care is paid as a function of government sponsored social insurance both Medicaid and a growing dynamic attributed to HHC from Medicare. It’s the one third of care funding that is sourced from private pay dollars that defines our risk sharing universe. The inescapable truth remains, if you can afford to pay for your additional care you will either pay from current assets or you have carefully and strategically planned ahead by acquiring additional funding support from a variety of insurance options.
• Rest assured insurance funding for claims is in place. According to the  recent ATI Advisory, “Those who bought their policies in 1995, 2000, 2005 by 2020 there remained $28, $72, and $117 billion in benefit value for policy holders.” Determining over time if those carefully managed claim reserves prove entirely adequate as the generation of insured boomers approaches their most crucial caregiving years remains an industry mystery. According to The American Association for Long Term Care the industry paid out more than $14 billion in claims last year.

It was never a secret that LTC claims, if preceded at the time of sale with clean health input, would not generate substantial claims initially. The corollary understanding is that when they did appear, if sold to our preferred mid 50’s buyer, proud residents of the boomer generation now approaching their 80’s would then appear in relative abundance exactly as projected. Therefore now stepping from the dark shadows of uninitiated LTC liabilities into the bright lights of anticipated claims will demand the full attention of all those who participated in LTCI sales past, present and future. We are all in this together. We have all come to realize the LTC claim “Process” may ultimately be a challenge to all our cherished fiduciary responsibilities. Frankly, without any real understanding of the Process we are often being asked by our most valuable clients to help as claims begin to occur more often. We are being forced outside our comfort zone to try to assist with the establishment of new claim acceptance and ultimately a successful claim payment.

To open the velvet, claim curtain and be met by timely and fair claim illumination requires, in my humble opinion, knowledgeable professional help. You will need help with an abundance of complicated paperwork. You will need advice concerning medical assistance for a satisfactory plan of care. You will need guidance to scan for cognitive complications. Most importantly you will need knowledgeable, experienced assistance recommending customized care specific and unique to the clients personal desires.

Our clients deserve the smooth insurance justice we promised at the beginning of this insurance journey. Frankly, dear friends, you need professional help. Please look now for a connection to an experienced senior care agency advisor. Someone available immediately to help your insureds plan extensively for the cost of care associated with emotional, physical and health issues.

Aging at home or helping to transition to higher levels of care can be more easily achieved with the assistance of quality well-trained care experts. Our claim service future is open and malleable. Boomers’ claims are coming.  Partnering with dedicated professionals who can help facilitate the peace of mind we set out to create 30 years ago can move us much closer to the fulfillment of the journey we promised.

Other than that I have no opinion on the subject.

There are simply those times where we just have to reflect internally. Stare off into the distance and wonder. This is particularly true for those true veterans of the LTCI wars, scared but never cynical, shell shocked but never bowed, and perpetually concerned about the well being of their clients. Sales still move slowly forward, there are still consumers who ask us about LTCI. Referrals are still a meaningful component of our practice. You continue to declare a permanent dedication to always ask some form of the most basic question, “What plans have you made for the LTCI risk?“ Those Boomers we spent the last 25 years trying to reach to put up some form of financial barricade to a clear and present danger are now entering those initially explained distant 20 or 30 year spans of time where we had carefully outlined the journey. The purpose of our policies would bear fruit, bringing joy, security and peace of mind. As we rapidly approach the end of that predicted trajectory however, claim adjudication does not yet appear to look anything like we had envisioned. Our very best clients, those better educated, fond and even knowledgeable about leveraging risk with insurance, and who have now achieved some level of financial success, seem less than satisfied with the actual performance at the time of greatest need.

Yes. Those customers who survived the brutality of LTCI underwriting, then faced abundant rate increases and may have already stepped down to a new benefit platform to hold down premium. Those customers who probably had some personal experience with the heavy burden of providing custodial care for a loved one have watched from the sidelines as their protection strategy evaporated. Now you get a phone call that either their claim has been denied or is tied up in some horrific bureaucratic knot and is not being paid. Merely handing out a toll free claim number for a care management service or a carrier no longer in the business that has probably farmed out claim adjudication responsibilities to a third party will wash back on you with unpleasant results.

We all understand that even though our policies have been structurally outlined by federal legislation with specific attributes clearly defined by the NAIC Model Regulations there will be significant differences based on individual state adoption and product approval. Our stand alone IRC Section 7702B LTCI health policies are frankly a proverbial plethora of heavily mined word/policy benefit definitions. You are entering a new universe of fine print. Suffice it to say if you wish to trigger benefits utilizing a IRC Section 101g combo rider, the differences in benefit access can be even more daunting. If you are working with an asset based option where benefits are potentially being paid with life and health benefit language my suspicions are this will not lead to transparency and efficiency.

Here is my short list of helpful hints:

• Find the policy. If you or the insured cannot locate it contact the carrier for a copy ASAP.
• This is potentially a war of words. Line up your ammunition and keep excellent records of all transactions.
• Perhaps most important is to establish a time certain of when the claim begins. This date is the center post that holds up the whole tent.
• Nine out of 10 will have a benefit deductible/elimination period. Perhaps the greatest obstacle to claim payment is establishing and mutually agreeing on the days standing in the way of needed relief. Memorize/internalize all benefit definitions. Approximately 25 percent of all filed claims are initially declined. Agreement on ADL definitions triggers is crucial. The classic example is what is meant by words like “severe.”
• The claim administrator will have published deadlines for response time, most often 30 days. The pitfall here is any change to the pending request may restart the 30 day delay.
• Be mentally prepared for a lengthy and potentially pitched paper battle. The better prepared the better the outcome. Many claim denials or payment disputes are ultimately resolved. The problem of course is that time is not on your side.

We were all instrumental in creating the reserves committed to paying claims. Our expectation is that those dollars we helped create will be dispensed promptly and efficiently. We can all appreciate that protecting all concerned from fraud is critical to success. We can all understand that the claim pot is transitioning from simmer to boil. We all clearly understand that any and all delays may provide (unintentional) structural financial benefit to the Administrator. Now It is imperative we acknowledge and appreciate that there is already a small army of claim administrators and adjusters trying valiantly every day to avoid all of the issues outlined briefly above. Maybe we didn’t think all this through. Maybe the vessel we inadvertently created is not exactly what any of us had in mind. This is that moment of truth where we recognize obvious pitfalls and serve those we set out to protect with as much dedication and commitment as they deserve. Fines involving claim payment delay and denial are growing if you dare to google. And the list of national law firms willing to work on contingency for bad faith or punitive damages is still expanding. Surely we can do better before this too is our legacy.

Other than that I have no opinion on the subject.

Alright, got your attention. Maybe it’s only a global catastrophic risk. Everyone will of course reach a conclusion to life’s finite journey, our industry is built along the certainty of that occurring on a virtually unpredictable timeline.

Perhaps it’s time once again to take stock. I believe we have earned the right to reflect. It’s just too easy to lament the worn out cliché concerning history repeating itself. Fashion may be cyclical on skirt length but we should not expect the return of dayglo ties or pet rocks. The insurance challenge of increasing length of life and the necessity of senior care is a worldwide problem. You must hold this one thought front and center in your mind that the cost of caregiving is indeed poised to wreak havoc with global economies. The reality that this overwhelming threat of financial and subsequent emotional distress will simply not go away. It must hold a permanent place in all your sales planning.

No one would choose institutional care as their first option. It would have to be the last choice or the only one available. In 2024 the estimated cost of home care is $61,000 annually, yet those providing that mandatory assistance have the most underpaid job in the world. I’m not sure you are thinking this through when estimating the size of the problem. To my knowledge none of existing reimbursement or indemnity policies with the rare exception of pure cash policies with no strings attached allow for non-certified assistance. The administration overhead for qualified caregivers basically doubles the labor cost. Because the actual net pay to the caregiver is so low the national employee turnover rate is 60 percent. Now imagine every industrialized nation on earth struggling with their current problem and trying to plan for a bleak future. A future where robots and AI are only putting fingers in a dam which may breach at any moment. To put a fine point on it, in 2026 the senior global health care cost is estimated at $213.9 billion.

Current sales behavior is valiant and greatly appreciated by all the down line family members that may now have care financing options when they are most in need. Truthfully carrier retreat from the market, onerous rate increases and structural delays in claim payments have made what has been historically a very difficult sale into one that is virtually impossible. I remain one of those old guys that prefers a direct approach to any insurance conundrum. I am also one of those who admires those who can load up the sales and benefits boat before its launch. Forgive me for reminding those loyal sailors to the cause that riders only dramatically add a counter balance to the scales of benefit justice. Morbidity and mortality risk will never come out equal when artificially bound together with one finite outcome. What deserves consideration is that maybe that’s OK. Now this is the exact place where my concern for our future perception by consumers comes into play. None of us should care where the source of the funding for care giving resides but will those benefits be paid in a timely and caring manner.

I know it’s now time to pass this struggle on to the next generation of sales professionals. I know that product alternatives may be at an all-time low. However, I also wish to extend my most heartfelt thanks to the carriers who continue to stand each day with the anticipation of explaining what I have outlined.

• The risk is real. It is growing exponentially.
• The quality of care that the great and vast majority of our consumer market will receive will be paid out of personal reserves and/or some level of managed insurance.
• The Long Term Care Conundrum has not gone away; it is bigger and more menacing than ever.

Other than that I have no opinion on the subject.

I grew up in the business and have voluntarily donated my professional career to the cause of building leveraged firewalls or strategic contingency reserves for the inevitable need for custodial care. My father’s considerable sales skills were directed at me from an early age to convince me to enlist in the ongoing insurance sales conflict. His message was straight forward and balanced. Insurance shall always remain needed and beneficial, but by no means has its history or any current trajectory achieved a claim to perfection. We have witnessed some dark chapters or perhaps lapses in perceptual judgment both in terms of potential sales and benefit performance in our evolution. Yet we have maintained the bulk of our independence and the ability to manage and self correct our own affairs primarily at the state level. We all clearly understand that the most important magic/fuel in our chosen profession is the mystery of mortality.

Forgive my desire to reminisce through the tumultuous 35 years of our valiant industry crusade, as well as reflect on my own meaning meanderings in this column. In the beginning (1970s-1980s) there was only the perception of a market without consistent form or substance. The growing recognition of insurance need and potential market development created early attempts to expand the supplemental disability nature of the risk. The product response looked for familiar conceptual design and eventually began to look a lot like Med-Supplement or limited indemnity offers similar to comprehensive accident or critical illness offerings. My suspicion would be that the limited nature and lack of adequate consumer protections did not require pricing emphasis to be placed on mortality concerns. The market at that time was diverse, frankly consumer flawed and product chaotic.

The federal government in its traditional role as referee in an open and free market began to establish guidelines and parameters to bring form, similarity, consumer protection, tax incentives and consumer fairness beginning with the first real attempt at law and order in the market place. Title 26 IRC Section 7702(b) in 1986. Ten Years later HIPAA institutionalizing comprehensive benefit, tax qualified and tax incentivized long term care insurance.

Regulation as we know it is measured by the industry’s state by state conformity to the promulgated guidelines of the NAIC Model Act and Model Regulation. This then becomes the universal armature to build and monitor the performance of current product development.

Now how did we manage, with clear blueprints for product appearance and performance, manage to drive this bus off a cliff? We were frankly like Diogenes with his lamp searching in the darkness for truth. We innocently guessed without anywhere near sufficient historical claims experience. There is no room to point fingers or look for intentional complicity. We did not know how hard it would be to sell to such an obvious risk. Our potential clients could recognize the certainty of their mortality but simply refused to acknowledge the care needed prior to that eventuality. We did not know that once sold they would only be lapsed by mortality. We did not account for mortality amelioration created by extra care options like Assisted Living. We stabilized pricing under the “Rate Stability Rules” and drastically reduced future industry price increases. Our attempts at worksite marketing withered under the heat of abbreviated underwriting and inadequate pricing for morbidity and mortality. Interest rates, the bedrock of insurance pricing, collapsed over a black hole event horizon and disappeared.

New premiums rose, and underwriting calcified. The reserve demand to satisfy stable rates caused a carrier stampede for the door creating an inventory of closed blocks of premium with festering conditions of claim duration and intensity. We have become an industry of claim management controlled by a very small handful of third party LTC administrators.

I must express my extreme concern that, without the promise of substantial new premium, the very flaws we just spent 25 years addressing concerning morbidity and mortality may inadvertently become condensed and exposed by the necessity of efficient and profitable claim management.

We have survived our early lack of experience. We have adjusted to an aggressive regulatory environment. We have lived down the shame of onerous rate adjustments. We must find the voice and the determination to ensure that the potential billions of risk dollars we built around our best clients with care and tenacity cannot in any way be diminished by the future decades of qualification for eligible benefits we have given our careers to establish.

“All the birds of the air
Fell a-sighing and a-sobbing
When they heard the bell toll
For poor Cock Robin.”

Other than that I have no opinion on the subject.

Please consider this month’s edition to Long Term Care Insurance’s free speech as an open mic. Your stories of perceived intentional delay, bureaucratic malaise, rigid interpretation of terms, inadequately disclosed benefit restrictions, arbitrary interpretations of benefit qualification thresholds. At this point my growing concerns about LTC claim management are only anecdotal. I would greatly appreciate hearing from the troops on the front line. Many of us have given the bulk of our insurance careers in putting what coverage we can on the books. We believed we were establishing a claims reserve for those smart enough to plan ahead. The client inventory we set out to build 25 to 30 years ago was composed exclusively of our best and brightest consumers. We were able to successfully explain that the claims would come in the future and wanted those we loved and cared about to be prepared. The Boomers we spent a generation selling to are now the generation entering the world of LTCI claim management. The overwhelming majority of those we convinced are now languishing in closed blocks of premium. Those fragile and now calcified risk pools are subject by definition to the inevitable pressures of rate spiral setting on top of initial rate structures that have proven to be unsustainable. I am becoming very concerned about how those billions of claims dollars we worked so hard to establish and push ahead of the financial and emotional calamity will be handled. Please email or text me your most difficult claim battles. Perhaps together we can try to make sense of our claim management legacy.

I am not pointing fingers or suggesting negative intent. The carriers and reinsurers have a virtually sacred obligation to protect against fraud. Our industry pays its legitimate claims. It is our absolute faith in that truth that brought us all here in the first place. Do not misunderstand. It is also my understanding that even those official claim denials are ultimately frequently successfully approved. What I do believe is that we have unintentionally built a structure that is not withstanding the test of time and circumstance.

We have not only allowed the fox to have free psychological access to the hen house. We gave him an unquestionable badge of authority. Positioned him with layers of concertina wire at the entrance and then let him dare anyone questioning his hegemony to stand down or be permanently cut down.

The insidious truth that seems to intrude into every action of claim administration is that: Every day of delay is a day closer to the day the claim will end.

• Human and corporate nature make it impossible that this truth does not infect performance.
• Every claim denied reduces the mechanism for risk dollars that can inevitably end up on the companies and or reinsurers plate.
• Words like “severe” reek of normative values like truth and justice and who ultimately decides the meaning.
• Interpretations of benefit triggers like stand by assistance. When a claim actually begins, agreement of elimination days validity, although outlined by TQ status, are managed by corporate and policy perceptions of those parameters.

So dear friends here is the bottom line: “Bad Faith” is not that hard to recognize in this interpretative environment. Send me your stories. Unfortunately an amorphous blob makes a good target.

Other than that we should all have an opinion on this subject.

When it comes to some of the important stuff, we just don’t seem to pay sufficient attention to the critical details. It’s not that we are intentionally allowing some issues or concerns to be swept under the carpet. There are a few however that continue to haunt the back streets of my slowly fading mind. If you haven’t noticed, this column is a form of therapy for an aging curmudgeon that has tried to loudly applaud any and every forward motion to protect more Americans. There has also been an enthusiastic attempt to expose and question market directions that may not have proven to be helpful.

During a recent social dinner conversation I was given my favorite opportunity to answer questions about the necessity of doing something, frankly anything, to blunt the effects of a long term care event. As would be expected, the interested consumer began with his knowledge that there had been an overall industry retreat from thIs genre of insurance options. It became immediately apparent that explaining the overused and abused infamous seven percent market penetration statistic would have to be where we began. The truth is our history has become a burden, not a blessing. This is perhaps our most misunderstood statistic as it refers to the total population. Again I had to begin with a standard defense explaining that those with very limited assets and income would need to look to government support and those with more than sufficient assets and income would be able to pay their own way. We have clearly done a much better job over the last 25 years of identifying and helping those in between these financial extremes, therefore exposing the most exposed financial weakness with the most to lose.

Perhaps it would be best to begin with a much wider lens. First I would ask you to google “LTC Market Size” both U.S. and global:

• According to the Congressional Budget Office the cost of long term care in America was 30 billion in 2000 and 215 billion in 2015, compounding at 15 percent per year.
• The size of the market for long term care services was 490.6 billion in 2022 and 517 billion in 2023.
• CAGR is projected to boom forward at a compounding of over six percent through 2030.

Covid deaths dramatically shifted the service market away from facility solutions with an all out assault on better answers for quality care at home. According to recent consumer research from Grand View, the home care market was valued at 142.9 billion in 2022 with an expected CAGR of 7.46 percent between 2023 and 2030. Technology is playing a major role in this market expansion. The stampede to HHC may be driven by the continuing increase in mortality. Successful management of a care claim is best defined by the number of contacts between the caregiver and the care recipient. Artificial Intelligence soon to be arriving on the wings of the next Zoom call. We are learning that more chronic care situations have become “manageable.” Care may begin in a hospital but it then fans out everywhere. This market (our market) will continue to grow rapidly. The current care service industry is having serious staffing problems. Assisted Living by definition is the perfect laboratory for experimentation with expanding technology support.

The bottom line is that patterns in our thinking need to be revised. We have done a much better job than our public persona might suggest. Clearly there is widespread growth of the care support industry and finding creative ways to finance that growth remains our game on our field.

Claims adjudication needs to become our new poster child for action and investment of time and resources. Out of sight and out of mind has become an inevitable result of an industry that automatically profits from time delay. To put a fine point on it, every day of delay is one day closer to when the claim ends. Acceptance of the validity of days of counted and approved elimination days should not look like a concertina fence. This can easily turn into an adversarial relationship. In my humble opinion there are simply too many minor opportunities to delay or deny a claim from bad documentation, vague policy definitions, facility or caregiver credentials, ADL approval and intentional excess paperwork. All I can say here is that the personal injury attorneys appear to be feeding happily on winning punitive damages for acts of “bad faith.”

The background financial rationalization market opportunity is bigger than ever. Unfortunately those sometimes five-fold past rate increases have also been gifted to our field force to wear like the Scarlet Letter “A.” The temptation of current claim management to delay payment may continue to lurk in the shadows and a sales history not well served by any of the above is simply not helpful.

Other than that I have no opinion on the subject.

The Intercompany Long Term Care Insurance Conference Association’s (ILTCI) vision is to create an environment for aging in America that includes thoughtful, informed planning that takes into account the most effective and efficient use of resources in addressing the risks and costs of long term care for all levels of American society. It is the desire of the ILTCI to recognize people and organizations that have made significant, long term contributions in attaining the ILTCI vision. This year the Association bestowed great friend and monthly Broker World commenter Ron Hagelman with their Recognition Award. To be eligible for this award, candidates must be engaged in the long term care field, such as a long term care service provider or financier, as a regulator or legislator involved in governance of long term care or these entities, or as a research or policy expert in long term care issues, and exhibit an extraordinary commitment to the industry through ingenuity, length of service and dedication. Following is Ron’s acceptance speech.

First, my most humble and heartfelt appreciation to the ILTCI. Thank You for this auspicious honor and prestigious peer recognition. I apologize for not being physically present where I know I have so many friends but, as I attempt every month in my column, I will try earnestly to make good use of the opportunity to momentarily hold your attention. I must begin by thanking my life partners. My wife Margaret who has had the courage and grace of putting up with me on a daily basis. No one in my humble opinion succeeds without the love and support of family and close friends. My business partner Barry Fisher has always been some amalgam of those roles. We have been tilting at windmills together for over 20 years. There is an ongoing cocktail conversation as to who represents Don Quixote and who is Sancho Panza. My response is “No Comment.”

I need to recognize my family legacy. My father, the creator of America’s first impaired risk life insurance company, Guardsman Life, in 1962, and my brother Curt, who served valiantly for over 20 years as CMO for Hannover Reinsurance, repeatedly helped me understand that insurance is always the best answer.

And this would all be moot without the freedom of speech provided by our industry’s premier independently owned magazine, Broker World. When the publisher, Steve Howard, discussed a possible LTCI column as I retired from State Life in 2004, I agreed if I owned my own words and an opinion column would not be subject to editing. Steve kept his word and I have not been able to walk away from that privilege.

This is now only the second meeting I have missed. I was here at the beginning. The first ILTCI cocktail party in Miami of a primarily actuarial persuasion and the pregnant conversation among each knot of participants expressing a furtive lament concerning our lack of claims experience. Careful what you wish for.

Ok, If you have ever suffered through one of my monthly rants you are painfully aware that I am a hopeless Pollyanna optimist. I know that mankind staggers forward over time. The good girls and guys always ultimately prevail.

Those valiant troops are in this room right now:

• The Veterans who never lost faith or left a client behind.
• The bright and shiny faces of each new crop of marketing and actuarial activists who continue to step forward to lend a hand.
• The company executives in this room and across this free country that know and admit publicly or privately that the sales opportunity of America’s largest unprotected risk does counterbalance the marketing and administration of the perceived risk.
• The folks in this room understand that yes, we all need to win—company, reinsurer, administrator, distributor, front line sales specialists and, please God, those American consumers most in need of our help!
• We have to be closer to an answer. The Long Term Care Conundrum fiercely fought for so many years must have yielded better direction. There has to be a better understanding of earlier planning, entrenched claims experience, consumer resistance and a balanced justice of thought as to where the responsibility of the cost of this risk must reside.

We may know more about what causes the problem and how to fix it than we are willing to admit.

• We know who should buy and why.
• We know that even a smaller amount of prevention balm can help dramatically.
• We know that the carriers, God Bless them, can do a much better job of working together loudly and publicly to help us emphasize just one concept—the risk is real!
• The game has moved home publicly and privately. Creativity and accommodation with this new reality are mandatory.
• We understand we got some past pricing assumptions wrong. It remains an innocent mistake. This must stop being an excuse for retreat but instead a fantastic opportunity to advance.
• Combo life policies are not a panacea. Claims will never be equal between the life and health risk.
• Experiments in Social Insurance will always require insurance support.
• And, finally, I must admonish all those who care. We may have struggled with sales. However, past experience with disability issues mandates that we must not struggle with the efficient and timely paying of claims.

As a proud long time member of the SOA Long Term Care Section Council and a frequent speaker at this Conference, and a lifetime believer in “The Cause,” I most humbly thank you. And I would like to confirm that your generous gift of a thousand dollars will go to the Episcopal Church of the Annunciation in Luling, TX, where we feed the poor, serving over 250 dinners mostly to seniors every Wednesday night for the last 8 years. Now wait for it…

“Other than that I have no opinion on the subject.“

My sons grew up on a farm. They learned responsibility early. The land and the animals demanded constant responsible intimate care and service. That requirement fell squarely on those who created the obligation from the moment we stepped onto that ground. There is no finger pointing on a farm. If you have ever sold or facilitated the purchase of an insured chronic illness or long term care financial instrument you are directly and permanently responsible for the exercise of that leveraged risk obligation. Renewals and service are merely a friendly reminder of what is a permanent obligation. For the last twenty years we have lived in a rapidly shrinking universe of dwindling sales particularly for stand alone LTCI health policies.

In relation to new sales vs growing claims adjudication, we long ago became a negative growth industry.

Although no one wants to discuss or loudly admit it, we are in the midst of what may ultimately prove to be an extended and truly unpleasant rate spiral. All but a handful of carriers still have an open for new business sign on the front door. We are an industry of claim management. Closed blocks of premium dominate our activities including corporate priorities and expenditures. Cries in a wasteland of needed premium growth appear to be dominated by managed care strategies and a plethora of claim management vendors. We are paying claims. Last numbers I saw were in excess of 12 billion. Our sales may not ever have been what we would have preferred but it is absolutely true that we have placed on the books trillions of potential claims dollars now waiting for us just over the horizon. Our industry has no choice but to be focused on the rear-view mirror hoping the police never catch up and prove that we were speeding ahead to avoid the inevitable.

The strength and freedom of thought provided by this magazine now allow me to knock the hornets’ nest out of the tree and run. I would ask you to take a moment and review the case study complaints concerning LTCI claims readily available at your State Board of Insurance or the Better Business Bureau. In my humble opinion they are not dominated as might be expected by rate increase concerns. They are drowning in complaints about confusing policy terms and poor service. Shame on us. We should all be extremely proud of those agent advisors and brokerage centers providing advice and counseling to those already caught up in the struggle to get claims paid. Many are already actively responding to the cries for help to understand how a claim is adjudicated and ultimately paid. Simply providing a toll free number in response to the very point in time in which every financial and emotional risk we were intent on leveraging against is, in my humble opinion, morally and ethically insufficient. There is too much here to complete in one column therefore lets just begin with a few shots across the bow of an industry doing it’s best to respond to current realities:

• Claims are already in the hands of a very limited number of seasoned claim adjudication administrators. Virtually all closed blocks of premium are not administering their own claims, they have been relocated to an experienced service vendor.
• The majority of those blocks had some reinsurance in place. Structurally, claim growth ultimately would end up as their responsibility. It is fair and reasonable to believe they would take actions to insure that claims are paid only on a valid demand for payment.
• There is a wide universe of benefits configurations that were sold. There is simply an endless opportunity to misunderstand, misconstrue, and misrepresent what the consumer thought was purchased or the agent thought was sold.
• A standardized “Warning” of what to expect when you begin a claim journey is a good place to start. It is often a slow process. There is an abundance of required paperwork prerequisites. It is almost certainly going to involve a face-to-face evaluation by a certified and approved health care professional. Although live computer technologies are also growing. There will be a cognitive evaluation component to the interview.
• Unfortunately, the devil will be in the details and fine print. Is it payment reimbursement, indemnity or cash? What are the definition nuances of the greatest major hurdle, the dreaded Elimination Period? How those days are totaled and then approved will be a major source of contention.
• There will ultimately be a required Plan of Care. How that becomes established is critical. How will the ongoing proof that a claim is continuing be handled? How and under what circumstances will the carrier allow an assignment of benefits?

The American consumer remains exposed to the wear and tear of an extended need for custodial assistance. We created and continue to market a complicated insurance leveraging of that risk. The obligations we install with those policies will demand our attention with hands on and standby assistance. We cannot ignore the reality of an adversarial relationship between marketing and claim adjudication that may have always been inevitable. Paperwork is after all just paperwork. I’m sure attempts at fraudulent claim acceptance are also quite real. I am also absolutely certain that we are perhaps inadvertently complicit in building a consumer black eye that may be very slow in healing. We can be better prepared to help navigate choppy water. We can acknowledge that these claims are extremely time sensitive. The need for care is most often immediate and intense. Our involvement and assistance in helping to facilitate expedited claim justice is mandatory.

Other than that I have no opinion on the subject.

We all find irony and humor in the strangest places. Like many my age I have suffered or strategically coexisted with arthritis for many years. Surgery and pain management have recycled me through a number of physical and occupational rehabilitation scenarios. For some strange reason television screens seem to inevitably decorate the walls to provide distraction to the exercise task at play. What strikes me as a little disconcerting is who gets to choose the viewing channels in this strange environment. Generic content seems to range between cooking and stupid video clips. In other words, reality programming. This therefore stands in stark contrast to why you are trapped for an hour trying to make sense of the necessity of rehabilitation in the first place. All of this to explain why one of those self inflicted wounds anthologies brought me involuntarily to this column. Remember when you were young with still unformed internal limitations having someone help you spin around and around until you were impossibly dizzy and then turning you loose allowing your internal compass to go haywire before your head stops spinning and you can reorient yourself to a stable and upright position? I found myself recently walking fast on a treadmill and watching a parade of theoretically grown men on a TV screen repeatedly performing this same childhood game with the same predictable results. I immediately thought of the history of long term care sales and this column.

Where is our learning curve? Are we simply doomed to keep getting back in line to be spun around to lose our equilibrium yet again? Each time, before we step forward again for that heavy spin, could we all just stop and remember the basic truths about the long term care insurance conundrum we should have learned the hard way over the last twenty five years?

• 25 Years ago we spent 20 percent out of every Medicaid dollar on home based care. Today it’s more like 60 percent. COVID just put a finite point on a mass shift to basic consumer and therefore what was already a publicly mandated claims focus.
• We understand we got initial pricing assumptions very wrong. Lapse assumptions wrong, duration wrong, utilization wrong, mortality wrong, longevity wrong, investments/inflation wrong. Whatever pricing issue I missed was also wrong. It was not intentional. It was an honest mistake or best guess based on previous experience and an economy based on polar extremes.
• We now clearly understand the risk was simply bigger, broader and deeper than we thought. We now have the necessary history to recognize who and what becomes a claim. Through 2022 we have paid over 13 billion in claims to 345,000 unable to do two or more ADL’s.
• Average claims now over six figures should be considered catastrophic by definition. We have also learned that a moderate amount of insurance can make all the difference and that the promise of $50,000 of initial protection can force state-wide mandatory social insurance that can possibly provide relief to state run Medicaid money hemorrhaging.
• The LTCI industry is no longer about establishing and leveraging future benefit dollars. We long ago stopped managing new sales and shifted to managing claims. And we seem to only admit privately that, as the flow of new water reduces to a trickle, the overly efficient recognition of claim adjudication may be the last black eye we can sustain without complete collapse. It may be more than a rumor that we are systematically tightening our claims belt. This is I suspect more than a matter of carrier default from a regulatory perspective or anticipated reserve restraints. In other words there may be a method to the madness but those who participate are still certifiable.
• Combo sales cannot just represent our new panacea flavor. They can only provide expanded options and a rock solid back up plan. Benefits are still paid with a tilted scale of justice highlighting one or the other—life or health—not completely even intentionally accomplishing both.

Now return in your mind’s eye to that short Video showing multiple slapstick crash and burns. The set up is the same based on a clear and certain knowledge of exactly what will certainly occur by spinning yourself around and around until barely able to stand and then abruptly letting go to implode into the ground or the nearest solid wall. Hold that thought in your head and you will understand with extremely vivid clarity why this column can legitimately appear to repeat itself.

Other than that I have no opinion on the subject.