Congress Investigating Long Term Care Insurance Market

The Congressional House Committee on Energy and Commerce has said that it has begun investigating the insurance industry’s handling of long term care claims. The Government Accountability Office (GAO) has said that it will do a separate investigation into the matter.

The long term care insurance market has been under scrutiny lately as more and more insurers are denying claims or being non-responsive to policyholders’ requests for claim processing – leaving many consumers with unpaid bills for care that should be covered under their policies. Long term care insurance has been around for nearly 30 years, but became a staple in insurers’ portfolios in the 1990’s. At that time, underwriters grossly underestimated the costs of long term care such as nursing homes, in home health care and adult day care. They also underestimated how much longer the average American is living.

Penn Treaty American Corporation and Conseco targeted

Countless numbers of insurers have been accused of not honoring their policies, and with nearly eight million long term care policyholders in today’s market, these practices are affecting a significant number of the population. The Congressional committee has asked two of the largest long term care insurers, Penn Treaty American Corporation American Corporation and Conseco, to provide them with documentation of how each marketed policies to consumers and how they manage their claims for long term care insurance. Experts have said that these companies aggressively sold long term care insurance in the 1990’s by pricing their policies far below the rates of their competitors. Many now say that their anxiousness to gain market shares 15 years ago may have been a hasty move.

Presidential candidates seek answers

The GAO’s investigation has been brought into the spotlight after several senators, including presidential candidates Barack Obama and Hillary Clinton, asked the GAO to conduct an investigation into the insurance industry’s practices. According to reports, insurers are denying policyholders’ long term care claims at record numbers and are using any excuse to deny those claims. In fact, the state of California reported that nearly one in four long term care claims was denied in 2005. Insurers have been denying claims due to forms that were filled out incorrectly or claiming that the type of care or facilities that policyholders chose were not covered. In many cases, policyholders have reported that they did follow the rules, but that their insurers simply denied claims for any reason at all – leaving them to an endless bureaucratic cycle that let their bills pile up or denied them the care they needed.