The push for long-term care insurance is tremendous as baby boomers worry about the finances of old age and sickness. In the wake of AIG, we're reading reassurances from the insurance industry about how in the unlikely event your insurer goes bankrupt, State guaranty agencies through State insurance departments will help cover you under your policy, with other insurance companies hopefully picking up the tab for amounts that exceed state liability levels.
But we're missing the point. How many of us are surprised at the low reimbursement rates, twists and turns of exclusions, co-pays and disqualifications in our current insurance policies when push comes to shove and we need to use the coverage we thought we had? Many of us. We simply don't have the necessary tools or advocates to help us navigate the ins and outs of insurance policies that are designed to limit, restrict or deny payment for premium contributions because that's how insurance companies stay PROFITABLE.
Without changes in regulation of insurance companies, the dialogue remains the same, get "some" insurance coverage for as cheap an amount as we can. But does this model work with long term care?
The problems with current insurance policies are expanded and compounded when it comes to long term care. This is because a) actual experience with the insurance policies is put off until individuals who bought the coverage are facing a real and serious medical event b) the time period for which we're buying "coverage" is in the non-immediate future c) we are scrambling for coverage that reflects our current understanding based on marketing of these policies by insurers and legislation that enables the insurance companies to sell these policies to individuals d) we assume that we are protected from the cost of obtaining "care" whether it's in a nursing home or using health aides.
What is covered? Insurance company contracts are virtually unavailable and unread by those relying on them: Insurance company agreements are some of the most under-read documents because of their complexity and length. This problem is further complicated by the fact that those who obtain employer-sponsored benefits are not contractual parties and therefore, they are not parties to the contract. This twist has created an expectation and acceptance that we really don't know what any of our specific insurance coverage covers. We all have a blurb or two, a piece of nomenclature or three, but what exactly is covered? If you've never had an unpleasant surprise in terms of your coverage, you are the exception to this fact. Long-term care, and other insurances, however, are more and more becoming private contracts and as parties to these contracts, individuals MUST read more than the glossy page blurbs about what the contract says, they must read the contracts. However, who can or wants to do that? We rely on the glossy pamphlet or the insurance salesman, neither of which is a way out of a bad contract. Long term care contracts are also susceptible to the SAME problems that exist with traditional insurance regarding adding RIDERS, amendments to the contract.
Who is administering the benefits under long term care contracts? Who are the providers? What are the limitations?
The long time frame works to the benefit of insurers who tell potential customers they must lock in a specific rate, however, such lock in rates do little to control what is covered, what changes in the law insurers will comply with or use to their own advantage, or what nursing home care will be and will cost in the future. Predicting a need for help in paying for health services is not enough to justify paying premiums in the hope that what you buy today will be sufficient for tomorrow. Insurance contracts leave themselves wiggle room for amendments, RIDERS, and any and all changes in laws they manage to get passed for their own benefit through their lobbyists.
Bankruptcy: We are reading about State guaranty departments for insurance company policies for companies that go bankrupt. And when companies are sold to other companies? While seamless transition is not ever promised, the delays in receiving reimbursements from long term care and the limits on recoveries are NOT given due attention. Cashflow is a CHRONIC problem with insurance coverage in the case of ongoing medical expenses, without new provisions for reimbursements plus interest, including penalties or some other financial incentive to make insurance companies process and pay, this problem is only enlarged in the case of long term care.
Long term care presents a great opportunity for clarifying and addressing insurance industry issues for consumers, but as in all things, the first issue is recognizing we have a problem.
