California Insurance Lawyer Blog

With the nation’s financial crisis affecting most American’s retirement accounts, well-known financial-planning expert Robert Valentine recently wrote about why Long Term Care (LTC) insurance is becoming more of an obvious choice than ever before. LTC insurance not only protects investment assets, he says, it also ensures you have a choice in the quality and type of care you receive, something we’ve been pointing out in many of our LTC posts.

Valentine encourages consumers to consider five factors before purchasing LTC coverage:
• Purchase from a solid “A” rated insurer who will likely keep premiums affordable and honor your claim.
• The policy should offer a yearly cost of living adjustment to keep up with inflation.
• Make sure the policy provides for both home and institutional care.
• To ensure tax-free status, opt for a qualified over a non-qualified policy.
• Only purchase a policy that is guaranteed for life and will not be cancelled if your health declines.

These are very good tips. We generally agree with the concept of LTC, but only from financially strong, and reputable carriers…and only when the coverage is clearly spelled out, and covers the things you specifically seek to have covered. There is nothing worse than paying premiums for years and years, all with the expectation of having insurance when you really need it, only to learn that the insurance company is relying on some loophole to deny your benefits. Believe it or not, denials like this happen every single day. We work hard to try and make sure it doesn’t happen to our clients.

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Posted In: LongTerm Care Insurance

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I recently had the privilege to speak to Associated Press reporter Steve Lawrence and alert him to some troubling California insurance regulation proposals that would weaken consumer protections, “California Insurance Commissioner Seeks Disability Changes,”

California Insurance Commission Steve Poizner, gearing up for his possible gubernatorial candidacy, is attempting to rescind important state rules about how disability insurers handle claims, rules that for the past several years prevented insurers from denying claims or using offsets from pensions, wages and other sources to deny coverage.

According to the article, former insurance commissioner Lt. Gov. John Garamendi, who instituted the consumer measures during his tenure, agrees with me. He says removing the regulations would be a “disaster for policyholders” and “provide no foundation for protection” of consumers from overly zealous insurance adjusters.

Garamendi, who also plans to run for governor, is understandably alarmed at Poizner’s blatant courting of insurance industry deep pockets prior to announcing his candidacy.

While this may all be politics as usual in California, I believe it’s nothing more trying to garner the support of the big insurance companies in anticipation of the need for future campaign support. It certainly is NOT looking out for the interests of consumers! People with legitimate disability claims already have to fight too long and too hard for insurance payouts, and rescinding these regulations will only make it more difficult to get benefits.
After all, no one plans to become disabled. Let’s not remove important safeguards from those who have a small measure of protection when they do.

Poizner’s poorly timed and ill-conceived proposals should have every California voter thinking twice when and if they see Mr. Poizner’s name on any future ballot. 1/23/09 GRK.

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Posted In: ERISA , LongTerm Disability (LTD) Insurance

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Lisa Girion of the Los Angeles Times reported this week that Blue Shield has become the latest California health insurer to reinstate policyholders whose insurance was rescinded when they applied for medical benefits. Nearly 700 people not only regained their coverage, but also were reimbursed for their medical bills. http://www.latimes.com/business/la-fi-insure7-2009jan07,0,2471877.story

The state Department of Managed Health Care had sued Blue Shield, along with most of the state’s other health insurers, for using innocent mistakes on policy applications as excuses to cancel policies after the insured became ill. Thousands of California policies have been illegally rescinded, the lawsuits allege.

While insurers continue to settle the suits and reinstate and reimburse their policyholders, we agree with consumer advocates who believe the Department of Managed Health Care should do more to regulate the practice of rescission in the future. Some have even suggested that Commissioner Poizner left Blue Shield off easy by this settlement, and that such a settlement will NOT discourage this practice by insurers in the future. We urge the department and state Insurance Commissioner Steve Poizner to complete the regulations he promised that would penalize insurers for their rescission practices, and deter such future conduct.

We also wish to applaud Ms. Girion and the Los Angeles Times for continuing to report about this important consumer-protection issue and keeping government officials accountable to the public. 1/8/09 AK

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Posted In: Health Insurance

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Investment News reported this week that the Pennsylvania Insurance Department has seized control of two subsidiaries of long-term care insurer Penn Treaty American Corp. because of their failure to maintain appropriate capital levels. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20090107/REG/901079993.
According to Commissioner Joel Ario, the department hopes to “rehabilitate” Penn Treaty Network and American Network Insurance Company and place them back in the private section. Although the companies are insolvent, says Ario, the state will continue to pay claims. If the insurer cannot be rehabilitated, it will be liquidated and the state will then guarantee each policy up to $300,000.

What this means for California policyholders is still unclear, but individuals with potential claims against the company should act now. The outcome will likely be far from positive. 1/7/09

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Posted In: LongTerm Care Insurance

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One of the most misunderstood terms in insurance contracts is “pre-existing condition.” It’s one of the biggest factors insurance companies look at when they decide whether or not you’re eligible for coverage and how much you’re going to pay for that coverage. It’s also one of the biggest reasons I see people getting their claims denied. What most people don’t know is that having a pre-existing condition DOES NOT preclude you from getting coverage, even long-term disability (LTD) insurance.

Under an employer-provided group plan, every qualified employee is eligible for coverage -- regardless of his or her pre-existing conditions. That’s one of the (few) benefits of the ERISA law; everyone can get insured. Specific to LTD insurance, not only are you able to get coverage, you can even go out on disability for the pre-existing condition! There’s only one catch, and it’s pretty simple to understand. Yet I see hundreds of people fall victim to the fine print year after year.

Here’s a standard clause: “Pre-Existing Condition Limitation: We will not pay Disability Benefits for any period of Disability which is caused by, or contributed to, or results from a Pre-Existing Condition.” That seems pretty simple, and would probably discourage some people from getting coverage at first glance. But then, you move on a couple sentences and find, “This limitation will not apply to a period of Disability that begins more than 12 months after your most recent effective date of insurance.”

Quite simply, the policy provision is saying that if you have a pre-existing condition, you have to be covered under the plan for one full year before you can make a claim based on that pre-existing condition. If you have a completely unrelated illness or injury you can go out on disability in that first year, but to make a claim for your pre-existing injury you just have to make it past one year.

It is always devastating to have to tell someone with a perfectly legitimate disability that had they tried to stick it out a little bit longer, they would have been entitled to disability benefits. We have spoken to people who left work with less than two weeks to go before the year is up and had to tell them there was nothing that could be done for them. Don’t become one of those people. Read your policy, and make yourself aware of these types of restrictions and limitations. If you have a pre-existing condition, and it becomes clear that you’re going to have to go out on disability for it, do whatever you can to get through that year or you’ll be left out in the cold. MH, AK 12/08

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Posted In: ERISA , LongTerm Disability (LTD) Insurance

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