Analysis of Long Term Care Insurance Complaints to the WA Office of the Insurance Commissioner, 2015 – 2021
Summary of Findings
Washingtonians filed nearly 800 complaints against long term care insurance companies in the last 6 years. According to publicly disclosed information from the Washington State Office of the Insurance Commissioner (OIC), more than half (53%) of complaints involved insurers denying or delaying claims, 39% complaints involved unexpectedly large premium increases. Another 16% of complaints involved long term insurance policy cancellations or refusal of coverage. The data in these OIC complaints display distinct patterns of complaints for about 50 different long term care insurance companies. There are hundreds of examples highlighting insurance companies’ unexpectedly high rate increases, confusing policy language, inaccurate and inadequate communication from insurance providers, unsatisfactory refunds, inflexibility when it comes to care setting, and overly complicated bureaucratic processes that keep people from receiving the care they, or their family members, paid for. Satisfactory resolution of complaints about long term insurance companies, even after involvement with the OIC, seems rare.
Analysis
This report analyzes hundreds of complaints obtained through public disclosure requests to the Washington State Office of the Insurance Commissioner (OIC).
Washingtonians’ complaints about long term insurance coverage fall into three primary groups.
- Claim handling: Denial of benefits or long delays in benefits
- Premium hike/policyholder services: Unexpected rise in cost for insurance coverage
- Coverage cancellations or denials/underwriting: Unexpected or unexplained cancellation of insurance, or denial of coverage for a pre-existing condition or other reason
Claim Handling: Delays and Denials of Benefits
More than half (53%) of the complaints analyzed (435 of 795) involved a long term care insurance provider refusing to provide benefits or cover needed treatment.
In analyzing complaints filed with the OIC, many of the benefits denied (also seen with premium increases and underwriting) are due to word choices and loopholes difficult for the public to fully understand, i.e. assisted living facility vs. nursing home, as well as using a restrictive list of activities of daily living (ADLs) to disqualify a patient from coverage. Often the policyholder is left without care or treatment, or is forced to pay for expensive care out of pocket, for months or even for years.
Examples of delay and denial complaints against long term care insurance companies:
Father with dementia denied benefits
The insured’s son explained his father’s dementia and serious need for long term care. “I was notified by Thrivent that a review of his needs had concluded that he didn’t qualify for benefits. I couldn’t fathom that decision, because he now needs staff assistance daily with bathing, toileting, hygiene, and dressing. All of those daily activities are listed on Thrivent’s claim form, implying that they ought to count in assessing benefits. But Thrivent staff have told me by phone that bathing was not an activity specified in my parents’ original contract, so his need for assistance in bathing doesn’t count in assessing whether he merits benefits.” (Complaint 1541554)
Father in skilled nursing facility denied coverage after waiting 5 months for decision
“After close to five months on February 20, 2020, Mutual of Omaha finally said they had enough documentation. However, although they acknowledged that his cognitive issues made him eligible for the benefit, Cedar Creek was not designated as a Skilled Nursing Facility by the state of Washington but an ‘Assistive Living Facility.’ This seems odd considering Cedar Creek has 24/7 onsite nursing and the facility is a locked facility… I would like an independent review of the facility and the policy to confirm it is not covered. As I requested, after five months we are owed a written statement on the decision on coverage and the process for appealing.” (Complaint 1620731)
Mother-in-law with dementia, diabetes, impaired vision denied benefits
The insured woman’s daughter-in-law filed the complaint because their family was told that her policy was no longer valid since she stopped making payments after being denied twice, “so not only were they going to deny her coverage…but they also wanted more money.” The woman who was denied coverage by Bankers Life has diabetes, dementia, and minimal vision and was urged to move into an assisted living facility by her doctor, yet Bankers Life said she was able to live independently and did not qualify when they first applied for coverage. (Complaint 1468604)
Son of man in nursing home forced to pay thousands without reimbursement
The insured man’s son paid more than $30,000 dollars for his father’s long term care due to Brighthouse Financial’s delayed responses and payment. The complaint file shows the extensive documentation and follow-ups provided by the insured’s family and the nursing home facility, even while Brighthouse showed “a continuing pattern of non payment and delayed payment.” This complaint was filed in March of 2021 while claims were unpaid dating as far back as June 2020. (Complaint 1637388)
Policyholder Services: Unexpected Premium Hikes
More than a third (39%) of complaints (311) filed by Washingtonians with the OIC concerned unexpected hikes in premium costs for long term care insurance.
Premium increase of 179% – 300%
A Washingtonian received a letter from Genworth warning of rate increases: “over the next 3-6 years we are planning to seek additional rate increases of up to 300.520% for lifetime benefits and up to 179.060% for limited benefits…” According to the customer, this came after they had just raised it by almost 100% less than 6 months ago. “They are pricing people out of policies. We have had our policy for 20 years and the coverage they are trying to reduce it to is ridiculous.” (Complaint 1638064)
Premium increase beyond maximum
The client was told the maximum increase in premiums was 20%, then was informed of a 35% increase after having the policy for ten years. State Farm explained to the client that the increase was due to higher than anticipated loss experience. The complaint states “I always thought insurance underwriters were supposed to assess the risk and base the premiums on that loss assumption. Essentially, because of this premium increase, State Farm is essentially able to sell this policy risk-free…” (Complaint 1444895)
Premium almost doubled
“I obtained my Long term care policy in 2006. Premium was $195. In 2014 the premium was increased to $270. Now in Sept. 2020, the premium will increase 30% to $351.” (Complaint 1622773)
Underwriting: Policy Cancellation or Denial
Another 129 complaints (16%) concerned long term care insurance companies canceling long-held policies without notice or explanation, or denying policies for pre-existing conditions.
Examples of policy cancellation or denial complaints against long term care insurance companies:
Football coach denied policy due to “build”
Washingtonian reported he was denied a policy based on his “build” without further evaluation of his health. “Your assumption of my health based solely on this is a basis for discrimination. I am a former college athlete (football) who is now teaching and coaching three sports at the high school and middle school level. My ‘build’ is not the only factor as to level of health and activity that I have.” Complainant noted that his application was submitted the day before Mutual of Omaha doubled their minimum rates for residents of Washington State and increased the minimum age to apply from 30 to 40. Mutual of Omaha told him they were unable to change their decision “due to your build (6’3″ 350 lbs.) as indicated on your application. This build falls outside our guidelines of insurability.” (Complaint 1648583)
Cancelled policy for mother with dementia and history of strokes
The mother of the complainant had her policy suddenly cancelled after months of payment without having received benefits. Bankers Life claimed that her initial application did not list all diagnoses that she later received treatment for, and that if they had known about other pre-existing conditions, she would have been denied coverage. The complainant wrote to the OIC that she had no official diagnosis at the time of applying for the LTC policy and asked for the insurance provider to “do the right thing. Rephrase questions that are not misleading and easy for plain folk to understand.” Ultimately, the woman with dementia and a history of strokes in need of constant supervision was left without long term care coverage due to the fine print of the policy. (Complaint 1364332)
Elderly mother and father left without coverage after 30 years of payment
According to a couple’s daughter who filed the complaint, after receiving payment for more than 30 years, Bankers Life cancelled the couple’s long term care policy without notice. The insurance company said it sent the notice to an incorrect email address and did not mail a hard copy. To justify the cancellation, Bankers Life claimed Visiting Angels, a licensed home care provider, only provided “homemaker services” and was “not assisting with Activities of Daily Living” as defined by the Bankers Life policy. The 91-year old father was legally blind and the 88-year old mother had severe osteoporosis and depended heavily on Visiting Angels. Bankers Life canceled the policy after multiple refusals to reimburse or pay for the couple’s covered benefits. The daughter also pointed to bullying and harassment from Bankers Life: “At one point a nurse evaluated them for continuation of services. She asked my mother to bend over and touch her toes. My mother has severe osteoporosis and vertigo. Fortunately I was there and refused to allow my mother to do so. She would have certainly fallen and broken bones.” (Complaint 1402028)
Uncategorized Complaints
Documents provided by the OIC included many other complaints that do not fall cleanly in any of the above categories including:
- unsatisfactory or inadequate refunds
- unauthorized policies issued
- customer service agents making false promises
- no one at the insurance provider answering emails or phone calls to help consumers access benefits
Complaint Resolution Seems Rare
Many resolutions or “dispositions” for these complaints are marked as “Question of Fact/Contract Provision/Legal Issue” because the OIC as an administrative agency does not have legal authority to decide issues involving disputed questions of fact, law, or contract provisions. Most customers are referred to the judicial system.
Of the 29 cases for which we have the full files, only 6 (20.7%) were resolved by the OIC. Of these 29, there are only 3 examples where families received reimbursements or refunds requested.
The other 23 are concluded as “other,” “question of fact/contract provision/legal issue.” Some are listed as “no jurisdiction” when the policy was issued in another state, or the insurance company was not registered to do business in Washington State.
Many of these cases include more than 100 pages of documentation (some are over 1,000 pages), which means that the person in need of long term care or their family member spent substantial time coordinating with the OIC and following up with the insurance company only to learn that the OIC did not have the legal authority to solve the issue. Occasionally, the OIC will report violations, but unfortunately even the cases with violations rarely result in direct help for the complainant or insured.
Examples of OIC powerlessness to resolve consumer complaints against long term care insurance companies:
OIC acknowledges lack of solution
In their final letter to a complainant, the OIC employee begins with: “Unfortunately, nothing that follows will be much comfort, I suspect, but here’s what’s going on: Long-term care insurance is a relatively new product, dating back to about the mid-1980s for a few companies, and the 1990s for many others… What has become apparent in the ensuing years is that these policies, by and large, were underpriced compared to the fast-growing cost of health care, particularly in recent years. In addition, the companies expected a lot more people to cancel their policies before ever using them – this happens very often with life insurance – but that didn’t happen, meaning that their payouts will be significantly larger than they expected.”
They end the letter with: “I really wish there was a solution; we hear frequently from people about this issue. But the essence of the problem is that the companies are playing catch-up with unanticipated medical costs for the people they insure, and those costs are real. Unfortunately, there is no guarantee American General will not file for another rate increase next year.” (Complaint 1376929)
Violations reported without real solutions
While the OIC’s final report rendered the “conduct” of the insurance provider “not acceptable,” it did not result in a refund or lower premium as the insured wanted. Instead, the violations came down to the reporting logistics: “Please note Washington State insurance laws and regulations (WAC 284.30.360 and WAC 284.30.650) require all insurers to respond to consumer complaints via our Company Complaint Response System (CRS)… Insurance carriers which fail to do so will be charged a violation for each infraction. A consistent history of violations could result in a market conduct review.” (Complaint 1295863)
OIC acknowledges premium hike unfair
“I understand that the rate increase presents a difficult situation for you because you’ve paid into this policy for several years, and this large increase is not affordable. Now you are faced with difficult options. You are not alone – thousands of people across the country are affected by LTC premium increases each year. It is a problem with no good solutions, and it’s not fair that policyholders have to pay such large rate increases as a result.” (Complaint 1384618)
Methodology
A public disclosure request was submitted to the WA State Office of Insurance Commissioner on 7/8/21 for dates 1/1/2015 to present for all complaints to the OIC concerning long term care insurance. We resubmitted on 9/3/21 for any new complaints submitted after 7/18/21. We also requested full complaint files for selected entries; OIC redacted some information to protect complainant privacy.