Many people purchased long term care insurance in the 1980’s and 1990’s to cover expenses for adult day care, in home health care and stays in nursing homes in the future. At that time, it was a fairly new product for insurers and they were scrambling to bring in new business. Two insurers in particular, Penn Treaty American Corporation and Conseco, have been accused of under pricing their policies to gain market share during that time. Unfortunately, they didn’t fully recognize how much health care costs would increase over the years and have been denying claims at record numbers.

These insurers, and others, have been accused of denying claims for a variety of reasons including forms being filled out incorrectly by insurers and that the type of care or facility chosen for care is not covered under the policy. Time and time again, policyholders have proven that they were covered under the policy and that insurers were using any reason for denying the claim in the hopes that the policyholder would give up before bringing a lawsuit against them. Unfortunately, many long term care policyholders are older and don’t fight the system because they don’t understand it or just don’t have the energy for a bureaucratic battle. So, unless they have someone to act on their behalf, many of the claims simply go away.

Investigations have become political

Insurers are required to act in good faith and deal fairly with their policyholders. If they don’t, they can be sued for bad faith practices – something that has been occurring in the long term care insurance market in droves. The Congressional investigation now being done by the House Committee on Energy and Commerce seeks to find just how Penn Treaty American Corporation and Conseco marketed their policies and what they are doing about the related claims. The issue has also gotten the attention of presidential hopefuls Hillary Clinton and Barack Obama who asked the GAO to investigate the matter separately.

Also at issue is federal versus state regulation. The insurance industry is not federally regulated. Each state has rules for how insurers can sell policies and what they must when claims are submitted. Unfortunately for consumers, state’s insurance departments often don’t have the staff to investigate every insurer – especially some of the larger insurers who operate in virtually every state. The investigations are leading many to believe that the states just can’t oversee the process and think that the federal government should step in to resolve these issues.

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