More dirt on long term care insurance
To avoid becoming a financial burden toher children and grandchildren, Vera Smith bought long-term-careinsurance. Like a growing number of Americans, the 87-year-old retireesaw it as a sensible way to cover caregiving costs not included inMedicare and conventional health insurance.
But nearly twoyears ago, Smith’s insurer stopped paying benefits, contending that sheviolated the policy’s terms by moving in with her daughter after shebecame too frail to take care of herself. That forced Veray Smith, thedaughter, to quit her supervisory job and sell her mother’s south LosAngeles house so she could afford to stay home with her.
“I’mthe full-time caregiver now. It’s hard,” said Veray, who along with hermother has sued the insurer for bad faith. The insurer, Penn TreatyNetwork America Insurance Corp., declined to comment.
Consumeradvocates and insurance regulators say that lawsuits and complaintslike the Smiths’ are likely to mushroom in coming years as more BabyBoomers and their ailing parents make claims on long-term-careinsurance.
Sales of such policies grew by 65 percent between2000 and 2004, but actual and projected payouts have caused a shakeoutthat could leave some policyholders with huge medical bills worriedthat insurers can’t or won’t pay. Some insurers who underestimatedtheir potential obligations have sharply hiked their premiums orabandoned the market altogether.