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.
