This article is courtesy of Pittsburg Post-Gazette (November 27, 2023) Tim Grant: Love and frustration: A daughter cares for her 99-year-old mom while battling insurance red tape
Mary Therese Tiedemann, 99, started paying premiums for a long-term-care insurance policy 24 years ago.
She’s still paying.
The annual premium has gone up to $5,187 for the policy she’s had since 1999. She started collecting long-term-care benefits in February, 2021, but here’s the catch — if Ms. Tiedemann stops paying her annual premium, she loses the insurance.
“She gets some benefit out of it [the insurance policy],” said her daughter Donna Carosella, of Upper St. Clair. “But not as much as she had hoped.”
Ms. Carosella, 68, manages the long-term-care policy for her mother, who lives with her and her husband, and for her mother’s sister — Margaret Sellmayer, 93 — who lives in a retirement community outside Baltimore. While handling the business side of two long-term-care health insurance policies, Ms. Carosella has found that insurance doesn’t cover all the costs. And it can be confusing — she has filed a complaint with the Pennsylvania Insurance Department about the difficulty of being reimbursed for her mother’s expenses.
Long-term care of the elderly is heavy on many families’ minds these days: An estimated 10,000 Baby Boomers will turn 65 every day until 2030, according to the Pew Research Center. And according to LongTermCare.gov, someone turning 65 today has almost a 70% chance of needing some type of long-term care service. Women, on average, need care longer (3.7 years) than men (2.2 years).
Middle-class families usually benefit the most from owning long-term-care insurance because they face the greatest risk of spending all their lifetime savings on long-term healthcare. The wealthy can pay out-of-pocket if necessary for their healthcare, and the poor might automatically qualify for government benefits.
But middle class people must spend themselves into near poverty in order to meet the financial requirements for Medicaid.
The cost of long-term care can easily run into six figures a year.
Insurance can help with the expenses.
But it’s not a silver bullet.
Middle class retirees risk losing savings to nursing homes
‘They get confused’
For Ms. Carosella, it’s becoming more difficult to get reimbursed for her mother’s healthcare expenses.
In her Oct. 25 complaint with the Pennsylvania Insurance Department, Ms. Carosella said John Hancock Life Insurance Co. is eliminating manual processes and requiring insured people to use email and technology to seek reimbursement.
“Long term healthcare insurance is not cheap and most of those insured have paid a great deal of money throughout their lifespan to count on this money in their ebbing years,” she wrote in her complaint. “The insurance companies should not be imposing undue hardship on these policyholders, intentional or not, to receive their contractually obligated benefits.”
She said John Hancock once let her mother be reimbursed for an independent care nurse via fax and U.S. Postal Service with a form. But in June, the company began requiring scanned copies of time sheets, plus electronically uploaded digital checks for proof of payment. The company recently sent a notification that clients will need to submit reimbursement requests through the company app, CareGiver, which requires a smartphone and separate input from the insured and the caregiver to submit claims.
She said it feels like “a ploy.”
“How many 80- and 90-year-old people are computer literate? How many will remember when the aide came in?” Ms. Carosella said. “They get confused. And they’re supposed to be checking their email to see if the aide submitted her work correctly?”
Their primary agency — Visiting Angels — bills the insurance company directly. John Hancock officials declined to comment, citing the insurance company’s privacy policies. The Pennsylvania Insurance Department acknowledged on Oct. 31, that it had received Ms. Carosella’s complaint and said it would try to resolve the issue within 30 days.
‘She saved, and saved, and saved’
Ms. Tiedmann and her now-deceased husband bought their long-term-care policies in 1999 while they lived in Virginia. They later moved to Maryland. Ms. Tiedmann now lives in Upper St. Clair with her daughter and son-in-law, Dr. Nicholas Carosella, 66.
“We’re very tech savvy,” said Ms. Carosella, a retired nurse. “It’s old people who don’t have a younger person or a family member or somebody willing to do this for them that are at a disadvantage.”
Ms. Carosella’s aunt, Ms. Sellmayer, never married and has no children. She retired as a laboratory supervisor in Maryland. She lived rent-free in the house she was born in, took one vacation a year and lived frugally.
“She saved and saved and saved,” Ms. Carosella said. “She has money. But now, it’s going out the door at a rate of $500 a day.”
Ms. Sellmayer requires 24-hour nurses’ assistance. She has a Genworth long-term-care insurance policy that pays a maximum benefit of $220 a day. But the cost of her care is $29 an hour, for a total bill of $696 daily. She’s responsible for paying the difference out of her own funds in addition to the annual premium of $5,705, which she must continue to pay or lose the coverage.
Ms. Carosella also has problems with the way Genworth reimburses her aunt. The reimbursement schedule is erratic, which makes it difficult to understand if her aunt is being reimbursed fairly, she said. Genworth representatives did not respond to questions about Ms. Carosella’s complaints.
Ms. Sellmayer is on a waiting list to go into a private Catholic nursing home. When that happens, her premiums will stop, according to the policy.
Ms. Tiedmann’s annual premiums also would stop if she went into a nursing home. However, Ms. Carosella is committed to being a caregiver for her mother and making the end of her life as comfortable as possible.
Is the policy working for her aunt?
“It is, and it isn’t,” Ms. Carosella said. “Because she relies on me.”
‘Planning for this risk’
The long-term-care insurance industry has struggled over the past few decades, largely due to miscalculations when policies were first offered in the mid-1980s. The companies didn’t anticipate the rise in cost of care, or that so many people who bought long-term-care insurance policies would keep paying the premiums. That led to losses when policyholders grew old and claims rolled in. Many insurers dropped out altogether.
Now, long-term-care insurance has shifted from standalone policies with most policies for long-term care now combined with a life insurance component.
It’s a win-win, according to an industry official.
“If you need long-term-care coverage then you have that benefit to draw on (through the combined insurance product). But if you’re fortunate enough not to have to go into a facility or need care at home, then the life insurance benefit pays,” said Karen Terry, director of product research at Limra, a Windsor, Conn.-based insurance trade industry organization.
In a recent Limra survey, only eight insurance companies reported they still offer standalone long-term-care insurance while 28 companies reported offering a combined product. Premiums collected from combined policies hit $4 billion in 2022. Sales from standalone long-term-care insurance dropped to $138 million in 2022, according to Limra data.
“Companies have made some changes to the product,” Ms. Terry said. “They made changes to the benefit amount. They’ve increased their rates over the years. They’ve changed their assumptions regarding the number of claims they are going to receive.”
While customers are interested in long-term-care insurance policies, most people can’t afford the premiums, which could run $8,575 or more for couples, according to aplaceformom.com.
Tim Sechler, a Cranberry-based elder law attorney, said fewer than 10% of clients own long-term-care insurance policies.
“A lot of people just find it to be so darn expensive that they can’t afford a great policy,” he said. “Then, you have families that can afford it, but don’t need it because they have enough money and they’re not worried. There’s only a small window in the net-worth category where people have enough savings that they find the long-term-care insurance is worth the money.”
While long-term-care insurance isn’t perfect, Mr. Sechler noted that policyholders at least have an idea of how they’re going to manage senior care if they need it.
“At least they’re planning for this risk,” he said. “I see people essentially going broke due to long term care expenses.”
Ms. Carosella believes insurance companies should do more to support family members acting as caregivers. Her mom gets a benefit of $245 a day, which is just enough to pay Visiting Angels $36 an hour from 9 a.m. to 1 p.m. Monday through Friday. She also gets six hours or care each day of the weekend. Family members are responsible for providing care for the majority of each day, so if she and her husband wanted to go away for a weekend, they’d have to pay for a nurse.
A provision in her mother’s policy pays for respite care — a short break for the caregiver — but Ms. Carosella said the coverage only applies to the paid caregiver.
“You pay for this insurance and it doesn’t even consider what’s beneficial for the family,” she said. “If my husband is at work, I can’t leave the house after 1 p.m. What about people who have long-term-care insurance and don’t have family to help them? Are they falling through the cracks?”
Reference: Pittsburg Post-Gazette (November 27, 2023) Tim Grant: Love and frustration: A daughter cares for her 99-year-old mom while battling insurance red tape
