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Long Term Care Insurance Cases

Long term care insurance is not a retirement issue only. Approximately 60% of people will need a period of long term care before they reach the age of 65 with one in four requiring a year or more in a nursing home. As with disability, the need for long term care is due to indiscriminate causes whether by accident or illness which can strike anyone at any time at any age. In fact, 40% of the people who receive long term care are working adults.

Long term care insurance covers the care you will require if you are unable to perform “activities of daily living” by yourself. The term “activities of daily living” or “ADL’s” is a term of art which will be covered in full below. This type of care differs from the care you receive in a hospital or a doctor’s office which, for the most part, is rendered to effect a recovery from a state of illness. Long term care is recuperative or maintenance care necessitated by surgery, injury, or a chronic illness.

Long term care policies are very specific to how much care is covered. Most plans will allow you to choose the amount of coverage you want and many include choices as to how and where you want to use these benefits. A comprehensive plan will include benefits for all levels of care, from custodial to skilled.

The care covered by a long term care insurance policy can be rendered in a variety of settings including your home, assisted living facilities, adult day care centers, rehabilitation hospitals, or hospice facilities. Greater than 80% of people receiving long term care receive assistance outside of a nursing home. This care is very expensive. Home health care at only $18/hour will cost in excess of $20,000.00 each year. Nursing home care costs far more, ranging $40,000.00 to $100,000.00 per year depending on location and level of care. And, as you are well aware, health care costs are increasing tremendously so the future costs will be dramatically more for long term care. Such costs are not affordable to most people without making extreme economic sacrifices. These costs are not covered by health plans or disability insurance. Medicare pays only very limited amounts for skilled care following a hospital stay, but will not provide payment for custodial (nursing home) care. Medicaid is available only to persons with minimal assets and will require people to “spend down” their accumulated assets to nearly nothing before reaching a point of qualification. For this reason, long term care policies are sold with the promise that they will provide “asset protection.” This is true as long as the insurer pays benefits as promised when claimed.

The mechanics of long term care policies involve the determination that you are unable to perform your “activities of daily living,” generally described as activities that people accomplish independently on an everyday basis. There is a specific set of activities long term policies refer to for this purpose which typically include:

  • Eating
  • Bathing
  • Dressing
  • Moving about (mobility)
  • Transferring (i.e., from a bed to chair)
  • Using the toilet, and maintaining bladder and bowel continence

These are activities which most of us take for granted each day. Obviously, should any of us reach a state of inability to perform these functions, we would be terribly concerned. The last thing anyone needs at this point is a hassle from an insurer who refuses to provide coverage on a long term care policy. But, as you will find out, insurers are induced by a profit incentive. And, what better way of making a profit than by denying claims for which premiums have already been paid, especially when paid year after year with no benefit payout.

Remember, the burden is on the policyholder to demonstrate entitlement to benefits under the policy provisions, not the company’s duty to demonstrate otherwise. If you do not produce a full and accurate life care plan assessment for this purpose, it is likely that you will not be able to obtain the coverage you are seeking. Factors to be addressed in a life care plan assessment may include:

  • Medical needs
  • Housing situation
  • Housing and neighborhood safety
  • Health status
  • Nutriton
  • Current services received
  • Caregivers living in household
  • Available of assistance from outside family or friends
  • Languages spoken, etc.

There are several common denial strategies that insurers will employ for the purpose of avoiding the liability of policy payment which include:

  • Contesting whether you are able to perform your “Activities of Daily Living” by contradicting your claim with their “independent” physicians
  • Contesting the level of care you require
  • Contesting whether you have provided sufficient ongoing verification of care needs
  • Policy time limits for giving notice or filing suit
  • Pre-existing condition present exclusion - contesting whether you suffered from a medical condition before the effective date of policy coverage
  • Mental illness exclusion
  • Intentionally inflicted injury exclusion
  • Alcoholism or drug addiction exclusion
  • Injuries caused by war
  • Care in government nursing homes
  • Coverage outside the United States and its territories

Your entitlement to benefits will be determined by an insurer “gatekeeper” who is charged with the duty of assessing your claim. Given the fact that this person is paid by the insurer and may be receiving incentives for savings created, you must be careful before placing your claim in these people’s hands.

These reasons should prompt you to consider retaining legal representation to assist you in gaining these important benefits. Without knowledgeable and experienced help with complex legal and medical terminology as well as an understanding of insurance industry expectations for qualification to benefits, you will be placed at a considerable disadvantage when seeking long term care benefits. Remember, these benefits can result in significant payout by an insurer. You better believe that the insurance company has a large staff of attorneys who are retained for the purpose of defeating otherwise meritworthy claims in order to preserve the bottom line of creating savings for the company.

Given the current corporate climate designed to produce profits rather than creating goodwill, you should take active measures to make sure that you will receive benefits from this important source of insurance. The prospect of caring for an ill loved one is daunting enough without having to battle a large corporation to prevent your own financial disaster.

As you will find out, your state insurance commissioner may be of little help. Further, many states do not have bad faith statutes by which to sue companies for punitive damages.

Our firm offers free, no obligation consultations as well as various payment arrangements to assist in your time of need.

Statistical Sources

Life Insurance Selling, 12/92
Census Bureau
American Association of Homes for the Aging, 1989
HIAA, “Long Term Care - Needs, Costs and Financing (1992)
Leimberg, SR. “Think About It,” 7/91
U.S. Administration on Aging, 7/91
USA Today, 7/19/94
Wall Street Journal, 7/19/95, 3/31/99
Kemper, P. & Martaugh, CM. Lifetime use of nursing home care. The New England Journal of Medicine. 1991; 324(9): 595 - 600.

Long term care policies are very specific to how much care is covered. Most plans will allow you to choose the amount of coverage you want and many include choices as to how and where you want to use these benefits. A comprehensive plan will include benefits for all levels of care, from custodial to skilled.

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