LTCI Watch: Claims

Idea: Maybe insurers should get ahead of the news cycle and do something about long-term care insurance (LTCI) claims, and claims for related or semi-related products, now, rather than waiting for consumer groups to get Congress to start hollering, and for Congress to goose the state regulators.

Some of the inspirations for this idea:

• A life insurance agent readers who doesn’t sell much disability insurance wrote to ask me which carriers pay their claims smoothly.
• When I searched for LTCI legislative news, I found a few state bills that deal with payment of LTCI claims.
• I’ve been posting few articles about “gap filling” products, such as critical illness insurance and short-term care insurance (STCI), written by outside contributors.
• A wonderful reader who, I know is right, and has my best interests at heart, tried to get me to buy LTCI coverage for myself.

For me, some of the barriers to buying LTCI coverage for myself include the usual cash flow concerns and fear of future cash flow fluctuations; underwriting concerns, including the health record consequences of a growing aversion to the idea of having anything to do with primary care doctors (a.ka., thieves with stethoscopes); and, really, anxiety about the prospects of civilization. 

Personally, I trust the big suppliers of LTCI to manage themselves better than the government manages Social Security and Medicare, and to do a better job of meeting their obligations, but I’m not that confident about things like dollars, or the coastline.

For me, thinking about what life might be like in the United States is 2050s is troubling. I’d rather just float along in a nice little bubble of comfort in which “Soylent Green” still seems to be a work of fiction.

Ron Iverson sent us a great article about STCI, and it hit me that, for an extreme economic pessimist, one of the advantages of STCI is that it seems to be a lot simpler and more practical than LTCI for an insurer to write, and that it seems to be the kind of product that I could envision possibly needing while the current version of the United States still exists.

The problem, though, with any type of insurance product that isn’t in every responsible taxpayer’s filing cabinet is wondering about claims. If insurance agents have trouble knowing which issuers of disability insurance pay claims well, how could I, consumer, possibly evaluate how well an insurer pays claims?

I would expect an insurer to be vigilant, and maybe somewhat hard on insureds who submit borderline claims, but I’d want an insurer to be good at paying clear-cut, clean claims promptly. If the insurer had financial problems, I would prefer that it simply be honest, figure out some way to get the rating agencies to stop throwing selective default hissy fits, and come up with a realistic plan for paying me in a way it could handle, not get me off its back by pretending that I’d messed up the paperwork.

My impression is that, aside from a few unlicensed programs run by obvious, outright crooks, the people at just about all medical and non-medical health insurers sincerely want to have their companies pay clean claims promptly. My guess is that stories about insurers stretching out payment cycles to deal with financial problems or boost profits are probably exaggerated. But, really, how do I know?

Some states have prompt-pay laws, and some post complaint statistics, but it’s hard to find those statistics.