During a new estate planning consultation, I will always ask my client whether they own a long-term care (LTC) insurance policy. Whether a client has funds set aside through such policy to offset their long-term care needs is an important part of creating an appropriate and sound estate plan. It is our practice to review any policies our clients have purchased to assure an accurate understanding of the benefits such policy will (and will not) provide.

By way of background, long-term care insurance is an insurance product that helps pay for the costs associated with long-term care. Long-term care insurance covers care generally not covered by health insurance, Medicare or supplemental health plans.  This coverage can include payment for assistance with activities of daily living (for example bathing, dressing, grooming) and can provide reimbursement for such care in a variety of care settings, including at home, in an assisted living facility or at a nursing home.

Though the long-term care policy is a valuable asset, it comes at a high price. Recent premium increases have placed financial burdens on policyholders as insurers struggle to keep up with the rising cost of care and policyholders who are living longer lives. Many of the biggest names in insurance coverage have stopped selling LTC policies altogether, with companies such as MetLife and Prudential getting out of the game.

If you hold a policy from a company that no longer sells a LTC product, your policy will remain in effect so long as you pay your premiums. Your coverage cannot be canceled. The insurance company is still required to meet the obligations of your policy. The insurance carrier maintains the right to increase premiums, within the boundaries required for state approval, but must maintain the benefits as contracted when the policy was purchased.

Though the insurance company is bound by law to provide all agreed-upon benefits, we often see a different side of the LTC reality. In recent years we have seen a troubling trend arise when clients initiate claims under policies they carry. First, it is important to know that the initiation of a claim under a LTC policy often requires an extensive evaluation process.  This may include the completion of various forms, doctor certifications and often also includes a full care assessment by a representative from the insurer. The insured will generally need to demonstrate that care is medically necessary at the time the claim is made. All insurers reserve the right to determine what care qualifies for coverage, and these terms should be listed in the initial policy declaration. Policy holders should be prepared to wait at least one month, often longer, before their benefits will begin to pay out.

Getting the policy benefits to pay out may be a burdensome process. We frequently assist clients with this process when the insurer unreasonably withholds payment or when the care assessment determines that a claim is not yet valid. A policyholder should always avail themselves of any right to appeal an adverse determination and should seek legal counsel with any questions about this process. Additionally, some insurers contract with third party care management companies to outsource the claims process. In our experience, the care management companies can be less responsive or less motivated to assist the insured and these delays can cause undue hardship. At Littman Krooks, we have experience working with LTC insurance companies to ensure that all benefits are paid appropriately to our clients and their loved ones. Should you have any questions or concerns regarding your long-term care insurance policy, please contact us to schedule a consultation.