Long-Term Care (LTC) Claims Denials
Caring for the growing needs of our aging loved ones can be a monumental task placing emotional and financial strain on families. The process often includes difficult decisions over care options and expenses. Many individuals wisely plan for these expenses by purchasing Long-Term Care insurance. These individuals pay insurance premiums for years or even decades with the expectation that most of the financial burden for the care they need at this stage of their lives will be covered. Unfortunately, in the ongoing effort to cut their own costs, insurance companies routinely deny valid Long-Term Care insurance claims based on technical requirements in the policies or by suggesting that those seeking benefits are receiving more care than is necessary or have been placed in the wrong type of facility.
When these claims are denied, your family may be left scrambling to figure out how to pay for ongoing care and assisted living services costing thousands of dollars per month. You may find yourself with significant bills piling up, while the insurance company drags out the appeal process or even denies your appeal without justification. Often a supporting letter from your family member’s doctor is simply not enough.
EWR can help you and your family get the benefits your family paid for.
What Is Long-Term Care Insurance?
Long-Term Care includes a variety of services provided to the elderly or infirm that are necessary to meet their personal care needs. This can include medical care, such as care provided by a licensed nurse in a nursing facility or at home, assistance with daily tasks, such as eating and bathing, or adult day care, which provides care and companionship for older adults who require assistance or supervision during the day.
Private health insurance typically does not cover non-medical expenses beyond short-term, rehabilitation-oriented care. Likewise, Medicare, which provides universal coverage for people receiving Social Security disability insurance benefits does not cover long-term services or support. This led to an obvious gap in the market and called for an insurance product that would cover these types of expenses.
When Long-Term Care policies were first introduced over 35 years ago, they were designed and marketed as nursing home insurance. They did not provide coverage for alternative forms of care and the language in most contracts relied on narrow definitions modeled after major medical insurance policies. They generally required the insured to spend some amount of time (usually 3 days) in the hospital before benefits became payable. If a patient required ongoing care after they were discharged from the hospital, the policy would kick in.
Over time, Long-Term Care policies have evolved to provide benefits for more than just care received in a nursing home. Today, policies provide benefits for skilled, intermediate, and/or custodial care. The best policies will cover all three types of care. Long-Term Care policies still place limitations on the type of residential facility covered. This makes examining the policy language early on a critical aspect of selecting the right type of facility for your loved one.
Long-Term Care insurance may be sold either on an individual or a group basis. Because most policies provide individual coverage, ERISA (the federal law governing employee benefits) is generally inapplicable. This enables claimants to take advantage of state law claims, which are usually more favorable than the remedies available for employer-based coverage.
In recognition of the risk of fraud (especially considering that Long-Term Care policies are generally marketed to the elderly), most states have enacted statutes and regulations that specifically govern these insurance policies. Furthermore, even where ERISA governs the claim, state regulations may still apply to the Long-Term Care policy.
Benefits are paid on either an “indemnity” or “reimbursement” basis. Under an indemnity policy, the insured is paid the daily or monthly benefit spelled out in the policy, regardless of the actual cost of care. Reimbursement policies, on the other hand, only pay what is charged by the facility or caregiver. In some cases, the unused portion may be carried over from one month to the next.
Today, most Long-Term Care policies provide a fixed daily benefit for the indemnity or reimbursement of expenses incurred for the following types of care:
- Nursing homes: A facility that provides a full range of skilled health care, rehabilitation care, personal care and daily activities in a 24/7 setting.
- Assisted living facilities: A residence with apartment-style units that makes personal care and other individualized services (such as meal delivery) available when needed.
- Adult day care services: Programs providing health, social and other support services in a supervised setting for adults who need some degree of help during the day.
Additionally, a Long-Term Care policy may provide benefits for care that is provided at home, such as:
- Home health care: An agency or individual who performs services, such as bathing, grooming and help with chores and housework.
- Home modifications: Adaptations, such as installing ramps or grab bars to make the insured’s home safer and more accessible.
- Care coordination: Assistance by a trained or licensed professional for determining needs, locating services and arranging for care. Policies may also cover the cost of training care providers.
Whichever type of care is being provided, eligibility for benefits is triggered by certain conditions spelled out in the insurance policy.
One of the most common triggers is the loss of the insured’s ability to perform Activities of Daily Living (ADLs). ADLs are basic household activities that everyone regularly does on a daily basis. They include:
- Eating
- Bathing
- Dressing
- Toileting (being able to get on and off the toilet and perform personal hygiene functions)
- Transferring (being able to get in and out of a bed or chair without assistance)
- Maintaining continence
Under most Long-Term Care policies, benefits are triggered when you need assistance with at least two of the six ADLs. Each policy may contain its own specific definition of these activities, and those definitions may or may not be modified by state regulations that apply based on when and where the policy was first issued. Knowing the precise definitions that apply to your claim is critical to satisfying the requirements of the policy and getting benefits paid.
A separate basis for claiming Long-Term Care benefits under some policies is the existence of a Cognitive Impairment such as dementia. Policies often define the criteria for a qualifying cognitive impairment and what type of testing is required to prove the impairment.
In either case, the definition that must be satisfied as to that type of care required may be narrowly defined in the policy, and state regulations may or may not apply to change that definition. Many policies only cover specified types of care received in specified types of facilities. Furthermore, the type of care often must be received under a “Physician’s plan of care.” Part of satisfying the policy, then, may include getting the correct written statement from your doctor.
The process of successfully making a claim for benefits requires serious planning and attention to detail. When you consider the complexity of the proof required, it is unsurprising that claimants often have difficulty satisfying the terms of the policy and getting their benefits paid.
Why Did the Insurance Company Deny My Claim?
Simply put — to save money. Insurance companies across the country issued thousands upon thousands of Long-Term Care policies in the 80s, 90s, and 2000s that were priced based on faulty assumptions about the future demographics of the U.S. population. Insurance companies underpriced their own products because people are living much longer than they anticipated when they issued those policies, and the cost of caring for the elderly has risen astronomically. As a result, insurance companies stand to lose billions on Long-Term Care claims. To deal with this, the insurance companies have adopted several strategies, such as increasing premiums, cancelling policies wherever possible, and denying as many claims as they can.
Typically, the reason given by an insurer for denying a Long-Term Care claim is tied to onerous and/or technical proof requirements of the policy. In that case, a knowledgeable insurance attorney can help to correct the errors and submit proof or testing that will force the insurance company pay the claim.
Other times, the reasons stated in the denial of Long-Term Care claims are mere excuses by the insurance company to avoid paying. Such reasons are often inadequate under the law, contrary to the terms of the policy, or factually inaccurate. This makes them subject to attack by a knowledgeable insurance attorney.
How Can EWR Help?
EWR’s attorneys are experts at assessing the complex requirements of insurance contracts and formulating strategies to get benefits paid. Whether you are preparing to file a claim, or your claim has recently been denied, EWR can help determine what proof the policy requires, gather the necessary evidence, and get you and your family the benefits you deserve. When necessary we file also suit to enforce our clients’ rights under their insurance policies.