Reimbursement-based claims a stumbling block for long-term care policy holders

by Leo Almazora04 Sep 2019

For long-term care insurance (LTCI) policy holders, their plans’ claims-payment methodology could represent a crucial but often-overlooked stumbling block.

That was the point made by Tricia Pilone, president of life-insurance brokerage agency CPI Companies, in a recent article.

“When it comes to indemnity versus reimbursement products, carriers sell either one type of product or the other, and they do not offer the option of switching from one model to another,” she wrote in InsuranceNewsNet magazine.

Noting that reimbursement-based and indemnity-based products don’t differ in price, Pilone said that most, if not all, policies that have been traditionally sold through the decades follow the reimbursement method of claims payment. For families of insured persons who qualify for the policy’s benefits, this creates a challenge of understanding how to submit bills for reimbursement for qualifying medical care.

“An average consumer, with an above-average level of education and competence … in almost all cases would need an insurance professional to help them deal with the claims department,” she said.

She shared her experience with a couple, Betty and Bob, who each had an LTCI policy from the same company. Bob was at an age when he needed a level of physical assistance that Betty could no longer provide. They lived in a retirement community with an assisted-living facility, though neither wanted Bob to move there.

“[T]he claims department will only speak with the agent or the owner,” Pilone said, adding that Bob did not want to deal with the claims examiners. The agent who had sold them their policies had died, and Pilone could not help with the claims process until the insurance company accepted her as the agent on record.

To coordinate the benefits provided by Bob’s reimbursement-model LTCI policy, Pilone said she had to go through an over-two-hour process just to get the policy information from the carrier, and another six hours of calls and paperwork to get the claim approved.

But since Bob had neither made a prior claim nor hired outside assistance prior to making a claim, the insurance policy required that he receive and pay out of pocket for 20 days of services; since he didn’t need daily care, the entire elimination period would take over 90 days to complete. Pilone also had to coordinate the benefits in such a way that the insurance carrier paid the assisted care provider directly in order to save the couple from having to deal with bills and reimbursements.

“After six months of meetings with the clients and calls to the carrier, Betty and Bob are finally receiving the benefits they paid for,” she said.