One missed payment led to their long-term care insurance being canceled

Jodi Daynard and Peter Hogan, in their Newton home, had their long-term care insurance canceled after they missed one payment.Suzanne Kreiter/Globe Staff

Five years ago, Jodi Daynard and Peter Hogan, a married couple, submitted detailed medical records to Mutual of Omaha as applicants for long-term care insurance.

When insurance companies sell long-term care insurance, they are essentially betting they will collect more in premiums than they will pay in claims. That’s why they scrutinize medical records so closely: It gives them the opportunity to decline anyone they deem likely to soon get sick and make an expensive claim.

In 2017, Mutual of Omaha, one of the country’s largest insurers, apparently concluded Daynard and Hogan were healthy enough to be insured. Each purchased a policy for a combined annual premium of about $3,700.

At the time, Daynard was 59 and Hogan 61. Under the terms of the policies, the company could not simply drop them as they got older and their health became more precarious. They were locked in.

But earlier this year Daynard made a serious mistake. She missed a quarterly payment. She told me she always paid by check after the bill arrived. But she and Hogan were traveling a lot at the time and she lost track of the bill. Still, it was her responsibility and she blew it.

“I dropped the ball,” she said. “Big time.”

But Mutual of Omaha didn’t simply impose a hefty late fee, like a credit card company would. It terminated their coverage, but said the couple could apply for reinstatement.

Consideration of reinstatement, however, would require Daynard and Hogan to submit their most recent medical records. Daynard, now 65, and Hogan, 67, are in relatively good health. Certainly there have been no big changes in their health since they first got approved for coverage.

Daynard submitted the couple’s medical records, as instructed, but was shocked when both were quickly rejected — Daynard because of “memory changes” she was supposedly experiencing, and Hogan because of “chronic kidney disease,” although he had no such condition.

“We were dumbfounded,” Daynard told me. “I have no memory issues and Peter certainly does not have chronic kidney disease. It was totally bogus.”

Losing their coverage would have serious financial consequences for the couple, both retired teachers. At their age, buying new policies would be more expensive, compared to their current policies, into which they had already paid nearly $20,000 in premiums.

In 2017, Mutual of Omaha, one of the country’s largest insurers, apparently concluded Daynard and Hogan were healthy enough to be insured.Mutual of Omaha

In recent years, billions of dollars in losses have plunged the long-term care insurance industry into financial crisis, prompting some of the largest insurers to cease writing individual policies.

The couple told Mutual of Omaha it appeared to be “seeking any pretext” to cancel their coverage. They implored the company to reverse its denial of reinstatement, but that appeal was denied, too.

Daynard then contacted me, asking for help. She shared with me voluminous medical records and correspondence with the insurer.

I wrote on behalf of the couple to the insurer: “It seems to me [Mutual of Omaha] canceled both policies [without] evidence of actual medical condition, instead relying on a few words in their medical records, words that Daynard and Hogan seem to have adequately demonstrated indicate no actual medical condition.”

It is true that a summary of a medical exam Hogan had earlier this year lists “chronic kidney disease,” but it is listed as a “resolved problem.”

And a letter from Hogan’s nurse practitioner at Newton-Wellesley Hospital to the insurer seems to plainly refute any notion of a chronic condition: “It is my medical opinion that Peter Hogan does not have chronic kidney disease. He had a transient change in kidney function that self resolved. This does not reflect a chronic condition.”

Hogan also provided a copy of a letter he received from his physician. That letter was written a week after a routine urine test showed an elevated level in one category linked to his kidney. The doctor had ordered a second test and the letter provided the results: “I am pleased to report that your kidney function is back to normal and your urinalysis is normal. No further action is needed but to stay well hydrated.”

Hogan told Mutual of Omaha that the previous elevated level was due, according to his doctor, to “dehydration on the day of the test.”

The company also cited Hogan’s “current physical therapy” in its denial. But that seems even more questionable than its citation of chronic kidney disease. Hogan had reported pain in his shoulder in a medical visit and obtained a referral for physical therapy. But nothing came of it.

“His arm pain was minor and also self resolving and does not reflect a chronic health condition,” the nurse practitioner wrote to Mutual of Omaha. Hogan had no physical therapy.

The company seemed to change its rationale for denying Hogan reinstatement in its final communication: “A new onset of kidney disease or impaired renal function requires a stability period prior to consideration to ensure there is no further progression. Our underwriting guidelines required at least 12 months of stable renal function prior to consideration.”

Jodi Daynard and Peter Hogan in their Newton home.Suzanne Kreiter/Globe Staff

For her part, Daynard concedes that “memory changes” is listed in a five-page summary of her annual physical in 2021, which Mutual of Omaha cited to justify dropping her policy.

But the first reference to “memory changes” comes under the heading “past medical history” and is not listed under “active problems.” The second mention is grouped with other possible “neurological” issues — headaches, loss of balance, vertigo — all of which were designated as nonexistent. The third is listed with other possible issues, such as asthma and back strain, apparently cited as part of an innocuous checklist, and is followed by the words “not progressive.”

Daynard told me the only time she may have initiated a conversation with a medical provider about anything close to memory issues came when she was treated for breast cancer with chemotherapy 21 years ago. Once introduced decades ago, such a description apparently kept getting carried forward in her past medical history, she said.

“I might have complained that I was feeling ‘foggy’ after an infusion [of chemotherapy], but that was entirely transitory,” she wrote to Mutual of Omaha.

That apparently wasn’t convincing enough for the company. In the letter denying Daynard’s appeal for reinstatement, the insurer wrote: “Notations of cognitive concerns found in medical records represent an uninsurable risk for our long-term care product.”

“Based on our claims data, cognitive concerns are the number one reason for claims frequency and duration,” the letter continued. “The notation in your medical records of ‘memory changes,’ even if qualified as not progressive, exceeds our risk tolerance.”

In other words, Mutual of Omaha pays more claims for dementia than for any other kind.

Mutual of Omaha obviously has a right to look out for its financial interest. It’s in business to make a profit. And the fine print in its contracts with Daynard and Hogan undoubtedly gives it broad latitude to jettison policyholders for various causes.

But is one errant urinalysis enough to drop a policy? Is any mention of “memory changes,” no matter the context, enough to deny reinstatement? I think not.

After I sent Mutual of Omaha detailed questions, one of its executives reached out to Daynard. He said he would reinstate Daynard and Hogan, although he didn’t take responsibility for what the company had done (and had not done).

I’m not sure an offer of reinstatement would have happened without my involvement. When are big insurers and others going to truly listen to ordinary folks?