Is It Possible To Avoid LTCI “Red-Tape”?

Read 3Last week I read an article from The Boston Globe entitled, “Beware of fine print and red tape in long-term care policies.”

From the tone of the article I inferred that the author was more interested in drama than in helping seniors.  The article points out the problems that some people have had with Long Term Care insurance and implies that you will have similar problems if you rely on Long Term Care insurance.

Unfortunately, it is all too common for politicians and press to find a “worst-case” scenario and imply that it is the norm rather than the exception.

Only a fool would say that there are never any problems with Long Term Care insurance.  Unfortunately, insurance companies are made up of humans.  Any time a human is involved there is a chance for mis-communications and mistakes to happen.

State departments of insurance will review complaints from consumers and force insurance companies to live up to the terms of the insurance policy for which the insured paid.

The problem is that many people who complain have paid for a limited plan but expected unlimited services.  In many cases they create the very problem they complain about.

Here are the facts.

  1. You cannot rely on anything that an insurance agent says during the sale process.  The Parole Evidence rules protect the insurance agent.  You cannot claim, “The agent said … but the insurance company is now saying …”
  2. Insurance policies are actually “contracts of adhesion.”  That means that one party, the insurance company, draws up the contract and the other party, you, have time to read the policy before it is official.  You need to review your policy, to make certain you understand everything, ASAP.  If there is a problem, you will have time to get it corrected if you act right away.  If you wait until you want to make a claim, it will be too late.
  3. Most Long Term Care insurance plans are very flexible when you first buy them.  All of the “problems” and “red-tape” that were highlighted in the Boston Globe article could have been avoided if they were anticipated when the policy was first purchased.
  4. Long Term Care insurance policies are constantly evolving.  Plans that were state-of-the-art 20 years ago could easily be obsolete by now.

What constantly amazes me is that articles like this one, in reputable newspapers, continually criticize private insurance companies but they do not offer any other solutions.

Title VIII of the Patients Protection and Affordable Care Act, a.k.a. Obamacare, was the portion of the Affordable Care Act that defined a plan for the federal government to help with Long Term Care expenses for future generations.

In December of 2011, president Obama, without consulting congress, unilaterally suspended all work trying to find a way to make the instructions from congress work.  In January, 2013 Title VIII of the Affordable Care Act was officially repealed and replaced with a committee to study the problem of Long Term Care.

Until a federal solution is found, the only governmental program to help people with Long Term Care expenses is state-based Medicaid.  Those who say that Medicare and private health insurance will help with Long Term Care expenses do not understand how those programs work.

Since there are no other government programs to help you with your future Long Term Care expenses, you will need to make plans now, while you are healthy, if you want private Long Term Care insurance during your retirement.

If you do, remember, Long Term Care insurance is constantly changing.  If you want to avoid hassles when you make a claim, do your home-work when you buy.  However, that is not enough.

After you buy an insurance policy, review it every few years to make certain that it still meets your needs and you have not forgotten how to use it.  I recommend reviewing it at least once every 10 years.  (It would not hurt to review it more frequently.)

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