Red tape, fine print make obtaining long-term care benefits tough

Getting insurers to pay can be daunting, says Bonnie Burns, of California Health Advocates.
Getting insurers to pay can be daunting, says Bonnie Burns, of California Health Advocates.(Peter DaSilva/New York Times)

One big reason people buy long-term care insurance is to avoid burdening a spouse or grown children when they can no longer care for themselves.

But some family members are shouldering another type of burden: one that involves piles of paperwork and repeated phone calls as they navigate a labyrinth of requirements to collect benefits the insured spent years paying for.

“There is no possible way an elderly person who is ill and needs help can possibly do this work,” said Fiona Havlish, who coordinated her father’s home care in Pottstown, Pa., before he died at 90. “It took six to eight weeks to get the insurance into place, and this was working on it every single day.”


Havlish, a former nurse who now works as a life coach in Boulder, Colo., said she first had to find a home care agency that was not only covered by the long-term care policy but one that she felt comfortable entrusting with her father’s care. Later, she had to follow up continually with aides and doctors to make sure they were filing the proper paperwork so the insurer would pay. “Three months after he was gone,” she added, “I was still fighting with them over paper.”

At least the bill was eventually paid. In other cases, families have had to fight to overturn denials and have gone as far as suing.

Many Americans in their 80s and 90s who are collecting benefits — or trying to — bought their policies decades ago, when the policies were more restrictive than now.

And many insurers have since left the business after mispricing the policies and failing to judge the economics of the industry, which has made collecting payments even more difficult.

“Everything is not rosy,” said Jesse Slome, director of the American Association for Long Term Care Insurance. “When insurers stop selling or exit the business, many of them hire these third-party administrators to adjudicate claims, and that is where interpretations don’t seem to be as liberal.”


Insurance agents who have specialized in long-term care policies for a couple of decades, however, said most top-rated insurers pay claims without issue. An estimated 264,000 people got long-term care benefits at the end of 2012, Slome said, and $6.6 billion in benefits were paid that year.

Still, “the process can be pretty daunting for people,” said Bonnie Burns, a policy specialist at California Health Advocates.

It helps to know why claims are denied and where filers tend to get tripped up. Here’s what I gathered from longtime brokers, consumer advocates, and lawyers:

■  Deductibles: In the long-term care world, they work a bit differently. The policies have waiting periods, or elimination periods, typically measured in days: 30, 60, 90, or 100. If your policy covers $150 a day for in-home care and you have a 60-day waiting period, you will typically owe the first $9,000 — 60 times $150 a day — before the policy kicks in.

But the way the waiting periods are counted is critical, too. “If a person is getting home care a few days a week, and the company only counts those days of care toward the waiting period, the total time needed to satisfy the waiting period will be much longer than 60 days,” Burns said. “So it isn’t just the $9,000, but the total time that has to be satisfied.”


With certain older policies, the insured must also spend three days in the hospital before the policy will pay any benefits. “Some of these older policies have requirements that most states don’t allow today,” Burns said.

■  Eligibility: To be eligible for benefits, patients must be expected to need “substantial assistance” for at least 90 days, either because they are suffering from a form of dementia, for instance, or can’t perform two basic daily activities from a list of six, including items like bathing, getting dressed, and eating. (This applies to certain policies written after 1997.)

“What we are finding today is that when people are getting assessed, they fire on eight or 10 cylinders on some days and they will trick people,” said Brian I. Gordon, president of MAGA, a long-term care insurance agency in Riverwoods, Ill. “They want to become Superman the day the assessor comes out. And then the insurer may deny the claims.”

Glenn R. Kantor, a lawyer in California, said he represented a woman, blind from macular degeneration, who was receiving benefits for home care. But when the insurer’s representative asked her if she could bathe by herself, the woman told the company she could as long as her aide led her into the shower and gave her soap and a washcloth. Shortly thereafter, the insurer cut off her payments.

Then, “they sent her to collections to get the money back,” Kantor said, because the caregiver was not within arm’s length but left the bathroom to go into the next room while the woman bathed. The insurer settled, but the terms were confidential.


■  Unlicensed caregiver: Depending on where a patient lives and the type of policy, a licensed caregiver for home care services will probably have to be hired (though some policies, known as cash plans, will let you spend the money with fewer restrictions and pay a grandchild or a neighbor for care, for instance). But that’s not the case everywhere. In California, for instance, the state prohibits insurers from imposing this requirement.

■  Assisted living: Many policies were written before assisted-living facilities came into vogue, experts said. So some families will find out that only a “skilled nursing facility” is covered.

“Then you have the daughter wandering around the state with the contract trying to find a place that meets the policy’s requirements,” Burns added.

Gordon said many carriers could still pay for assisted-living facilities as long as they met certain conditions, including being licensed by the state, providing care by a licensed doctor, and 24-hour nursing services, among other items. Ultimately, however, it “may or may not be covered after the claim is submitted,” he added.

Even once you think you have found the right type of facility, be sure to read the fine print. Some policies will require that a facility have a nurse on duty 24 hours a day. “But some of them will have a nurse there for 12 hours and on call for 12 hours,” Gordon said. And if that’s the case, the coverage may be denied.


■  Documentation: For Havlish, the Pennsylvania woman who handled her father’s claims, documentation was one of the most frustrating parts of the process.

“Every time the agency billed the insurance company, it would get sent back as not paid because they did not chart properly,” she said, referring to the documentation kept by caregivers.

And some insurers have been known to deny claims on that basis.

Harvey Rosenfield, a lawyer and founder of Consumer Watchdog, represented Dr. William Hall, a man who filed suit against Senior Health Insurance Co. of Pennsylvania (formerly Conseco Senior Health Insurance Co.) for failing to pay long-term care benefits for eight months. The insurer required an inordinate amount of forms and documents that were not referred to in or required by the policy, according to the lawsuit. The two parties reached a settlement last month.

“With all of the hurdles, trying to get a claim paid can be like an Olympic event,” Rosenfield said.

“The bottom line is that practices vary widely from company to company and state to state. And whether you can trust the company depends on regulation in that state — and most states have limited regulation.”