I trust you’ll indulge me with a bit of a shaggy dog/consumer frustration story, in that many readers have dealt with similar issues, either personally or on behalf of aging relatives.
The case study involves long-term care insurance, otherwise known as nursing home care coverage. It’s one of those badly needed services that has become crapified on a widespread basis due to the combination of super-low interest rates squeezing all long-term investors, plus life expectancies becoming longer and potentially exceeding expectations when policies were written.
The overlapping reasons for seeing this area as a Naked Capitalism topic include:
1. Readers may be grappling with decisions regarding this product (long-term care policies) and would benefit from sharing experiences and intelligence
2. It illustrates some general problems:
– How older people can be manipulated/preyed upon
– The difficulty of making decisions with very little in the way of good information or reason to trust vendor assurances
Background
Many years ago, my father signed my mother up for a long-term care policy with Genworth, which then was arguably the premier provider. He did not get a policy for himself. He was frustrated with his inability to get any information that would help him analyze as to whether this was a good decision or not (as in what proportion of men and women wound up needing nursing care, and information on the distribution of how long they received this service). He got her but not him a policy based on the assumption that she would live longer than he did and would therefore be more likely to need care. Not much of a basis for making that decision, needless to say. And the inability to get any data puts the insurers at an overwhelming informational advantage relative to customers.
Having written multi-thousand-dollar checks for many years to have this policy, my mother psychologically has an investment in it, even though these policies have no surrender value. So the money spent so far is more properly regarded as a sunk cost to keep the renewal option open.
The principal terms are:
100 day exclusion
60% coverage of nursing home care or assisted living care if the individual needs a high level of support (my mother merely being feeble and using a walker is not impaired enough to qualify even though she is on a waiting list to get into assisted living) in a qualified facility. It also covers in-home care by qualified providers.
Three years maximum of coverage
Genworth’s Financial Train Wreck
We will skip over the usual Naked Capitalism level of detailed reporting here. The very short version (of which my mother was not aware as she continued to write checks) is Genworth started hemorrhaging losses in 2015 due in large part to its long-term care business. It had written a large book of business in the form of long-term care policies in which sales reps had promised no or minimal price increases. It apparently held that line for many years. Shareholders sued the company alleging accounting and reporting abuses.
Genworth struck a deal to be acquired by China Oceanwide Holdings Group in October 2016. Needless to say, that already introduces considerable uncertainty. The closing has been delayed twice by the Committee on Foreign Investment in the United States over concerns about foreign states obtaining US consumer data. Reuters reported yesterday that the planned purchase date has been extended to April 1, 2018.
Moody’s downgraded Genworth in March of last year and kept it under review for a downgrade. It’s now barely above junk. From its ratings action:
Moody’s Investors Service has downgraded the insurance financial strength (IFS) ratings of Genworth Financial’s (Genworth) long-term care (LTC) subsidiaries, Genworth Life Insurance Company and Genworth Life Insurance Company of New York (GLIC and GLICNY, collectively, GLIC) to Ba3 from Ba2. These actions follow Genworth’s announcement of Q4 2016 results that included a reduction in long-term care margins. These ratings remain on review for downgrade.
The Ba3 senior unsecured debt rating of Genworth Holdings, Inc. (Holdings), an intermediate holding company owned by Genworth, the Baa2 insurance financial strength (IFS) rating of Genworth Life and Annuity Insurance Company (GLAIC), the Ba1 IFS rating of Genworth Mortgage Insurance Corporation (GMICO), and the A3 IFS rating of Genworth Financial Mortgage Pty. Limited are not part of this rating action. Please see the complete list of ratings below.
RATINGS RATIONALE
The rating downgrade and continued review for downgrade reflects GLIC reduced and the uncertainty related to future LTC margins, as reported in its year-end 2016 results, and the continued execution risk of the company’s plan to restructure and isolate its LTC operations from its remaining businesses. In addition, the profitability and margins of the LTC business are heavily supported by Genworth’s assumption of significant future rate increases. Despite the significant rate increases that the company has submitted and received, we remain concerned about the tail risk associated with the LTC business in GLIC.
Needless to say, this is a prescription for crapification, in the form of rate increases and even more concerted efforts to deny claims.
Consumer Complaints
Web searches turn up only a few sites that give consumer reviews of Genworth, and the reviews are mainly not about claims-paying, which is my big concern. They are overwhelmingly by customers who bought the policies that promised few/no rate increases where in recent years, Genworth has made put through big rises policy renewal costs. However, if you look here and here, you will also see negative reviews about claim denials and lots of runaround that looks designed to delay claims submission and processing.
One form of run-around that concerned me was the lengths Genworth went to not to deal with family members with powers of attorney. A couple of complaints said they had repeatedly submitted valid powers, only to have Genworth claim they’d never received them. Shades of HAMP.
Our Negative Experience
My mother handles a lot of her finances herself, like her taxes and her routine bill payment, and had been paying the Genworth renewals as part of that. So I hadn’t even known she had a policy with Genworth in particular until early 2016.
She had broken her elbow and was unable to bathe herself or drive and was getting rehab. Due to her age, she was expected to be in a cast for at least three months and might need an operation to pin her elbow bones (don’t ask me why this was not done at the outset if it was under consideration at all).
My mother has even lower tolerance for frustration than I do, so one time when I was visiting, she had me call Genworth to see how to set up payment for home coverage if she wound up having to have the minor operation and hence was still having home health care aides come in for a few hours a day.
I must have called four or five times before I reached anyone. Genworth does not allow customers to initiate the claims process by e-mail or in writing, already a bad sign. I would be put on hold, then disconnected after 20 minutes.
I finally managed to reach a rep. I had to have my mother authorize that I could speak to the rep. After some back and forth, the rep acted as if it would be more efficient to have a nurse evaluate my mother and possibly set her up with caregivers. But then she claimed she couldn’t reach anyone to set up an appointment and would have someone call my mother to do that.
My mother never got a call. This is plain and simple bad faith.
So Why Are We Acting As If Genworth Should Not Be Dumped Immediately?
At the top, the post raised the issue of the difficulty of making decisions with inadequate information. You might be thinking, “How does that apply here? Insurance company under financial stress, which is a prescription for consumer fraud in the form of denial of valid claims. And you’ve already got evidence of that via your own experience and overwhelmingly bad reviews. Plus the pending rescue by the Chinese looks like a no-win situation. If it doesn’t get done, Genwroth is likely to be in even more hot water. And if the Chinese take over, they may cut service levels even more aggressively.”
Remember that I don’t have control of this aspect of my mother’s finances. She had decided not to renew the Genworth policy in August. She thought that the fact that Genworth mailed her to offer her to reinstate her terminated policy and then extended the reinstatement deadline indicted they were desperate, which told her she’d made a good decision.
But then she got a call from her insurance agent yesterday telling her what a big mistake she was making. That got her sufficiently agitated that she had me call the agent, who we’ll call A.
A gave me a spiel about how much value my mother had in the policy, of $7200 a month, and how it would pay $254 a day “and that goes a long way in Alabama.” She thought my mother must not be renewing for financial reasons and she’d rather have her reduce coverage than walk away from it.
This is misleading. First, value in a policy in insurance is a term of art. It means surrender value. That use of language plays on the fact that people like my mother have spent high five to six figures in premiums over time and are cognizant of those cumulative costs. But the only value to her is claims payment and there are plenty of red flags about that.
Second, as you may recall from the terms summary, Genworth pays only 60%. It’s not as if, as the agent implied, that if my mother got into assisted living at a price of $175 a day (the run rate at one local facility), the policy would cover it all.
I told her about the bad experience I’d had, that reviews were uniformly negative and specifically said that relatives got a run around on even getting Genworth to respect valid powers of attorney and demanded multiple submissions. I said I wasn’t willing to deal with a company where I could anticipate spending $10,000 of nastygrams to their general counsel to get them to start paying claims when my mother got past the exclusion period.
She said she’d never had any problems with her clients, that Genworth was the best long-term care company and that her clients had told her Genworth had done exactly what it had said it would do. I noticed the lack of the usual addition of specific examples (although my mother later told me the agent claimed she had customers in the facility my mother is considering). I reiterated that the reviews of Genworth had plenty of bad stories and no good ones. She said, “They must be from New York.” I said, “No they are from all over the US.” She insisted that she’d seen nothing of the kind.
I wasn’t inclined to waste further time talk to her about the elephant in the room of the lousy financials, even though I probably should have as a matter of sport.
But as a tax attorney buddy said when I recounted the call, people like A are very good at preying on older people. “She probably has a script from the company and sticks to it.” Even though I called my mother and explained long form why what A had said wasn’t convincing and shouldn’t change her original decision, the conversation with A had succeeded in making her worry that she might be giving up a good deal on her and felt torn.
And my mother is a smart woman, not at all cognitively impaired, and can be plenty stubborn. Imagine how well this sort of thing works on other people who are not financially savvy or are easily led. And in fairness, my mother is in a no-win position. It’s not pleasant to admit that you’ve poured a lot of money down the drain, nor to be in the position of worrying even more than before that you might run out of your money by winding up for years in a nursing home and not having an insurance policy to alleviate the cost. Yet the agent is probably correct that Genworth is the best, which means the best of a bad lot, so that seniors that want to mitigate this risk have no good options.
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I reviewed long term care policies awhile ago. Any product that can raise prices at anytime are not going to work. I was actually shocked to see that in the policies. As you imply that’s not insurance at all.
I opted for a Universal Life policy with a care provision rider years later. The insurer knows the maximum amount of loss and there is a surrender value. It is a hedge for our out of control healthcare. Lincoln Money Guard and Pacific Life’s offerings are the best policies I found.
Further if you never file a claim you can get all your money back. There is no possibility for an increase. If you cancel in the first several years the surrender charge is pretty awful.
I bought this at 58 and opted to self insure my better half who is older. This coverage is not cheap but neither is care (in-home or at a care facility). Simply a hedge and not a solution. You also need to have other funds available.
Fortunately, long-term care insurance premiums can’t be “raised at any time”. What made you believe that?
That is disingenuous. As you know, the premiums can be increased once the state regulator approves, and regularly are in light of the poor assumptions the industry made about policy lapses and other modeling flaws, as MikerW describes below.
Exactly. The poster stated that LTC insurers could “raise prices at anytime”. That is a lot different than LTC insurers can “raise prices if approved by your state’s insurance regulators”.
But as you well know – that distinction doesn’t actually matter. State regulators do indeed allow the price increases, all the time. You are making a trivial point that doesn’t matter to purchasers. What matters to them is that the cost increases in a way they can’t predict and can’t control.
Depends on who owns the regulators, doesn’t it?
If the raising of prices is not under the customer’s control, as in there’s a guarantee that it won’t happen, then it’s entirely legitimate as a customer to say “the prices could rise at any time”.
That’s why the regulations have been changed. To protect consumers purchasing LTC policies today, 41 states have passed strict pricing regulations. The new regulation has helped curb long-term care insurance rate increases because it forces long-term care insurance companies to lower their profits if they seek a rate increase. Even if a rate increase is approved, the result to the insurance company is less profits. Which insurance company wants to lower their profits?
Scott:
Where might I find a listing of states which have such regulations?
“The new regulation has helped curb long-term care insurance rate increases because it forces long-term care insurance companies to lower their profits if they seek a rate increase.”
That is no help if the company is in bad financial shape. They could drop profits to zero, and still need to raise rates, and they will be allowed to.
Thanks for a good and detailed story. I have always thought the the limited coverage rate (i.e., 60%) and term limitations (3 years) were escape hatches for the insurer. Meanwhile, the old person will have to spend down regardless. Makes one wish for a quick ending.
Genworth has never sold a policy that paid 60% of the costs of care. No long-term care insurance company has ever sold a policy like that. The author’s understanding of her mother’s policy is incorrect.
Putting aside the concrete issue of how to help Yves’s mother, you prove the point of the post quite forcibly:
A sharp old lady and a daughter with two Harvard degrees can’t figure out the terms of an insurance policy. That’s crapification, right there.
The cries of “Personal Responsibility,” “Meritocracy,” and “Free Markets,” goes nowhere when the financial sharks, barracudas, and blood sucking squids, are everywhere and increasing in numbers by the blasted day. Meanwhile, I keep hearing how the machines are gonna take all our jobs, and how there is no money, yet the actual unemployment rate is hovering around 8 plus percent at best, despite all the unmeant needs, and the profits of hundreds of billions of dollars goes straight to the already wealthy. Giving them evermore power to be the Devilish children playing with us toys.
There is plenty of work, and many, many, many people who need help. I think it is not the suffering of themselves, but of their loved ones, that will trigger the next real crisis. My Mom worries about me constantly, but I worry about her. Decades of work and preparation, and she still might go from relative comfort to actual suffering. Crud, I could rant out a book especially thinking about me and mine. Instead I’ll study for finals now, and start a paper in International Politics. Another joyous clusterfluck.
Yves,
My husband and I have life insurance through Genworth, and while he is in finance and we both read (just about) everything we can to keep abreast of such news, neither of us had heard of the company’s troubles. We have no interest in being a client of such a basketcase and will probably cancel the policies asap.
It is wretched to see what is happening to people like your mother, who took great pains to provide for their own self-sufficiency through old age, but may be thwarted by late-stage global kleptocracy masquerading as a free market. We are all to be pauperized and kept wrong-footed and fearful. We will be easier to control that way.
Information is our only hope and so few good outlets of that remain. I can’t thank you enough for all that you and your team do to keep the light on. Happy holidays and good luck to your mother.
To clarify one thing, your representation of the agent is pretty off base, unless they are exclusively a genworth agent (sounded like A was a general insurance broker).
Genworth is usually the best policy, with the only other big player being John Hancock and Mass Mutual has a small bit of scale. about all the other players got out of the game 10 years ago.
In regards to the agent, I actually would say that they really are looking out for your mom. An agent makes 50-80% of first year premiums, and maybe 2-8% (usually on the lower end) on renewals. So the agent may have made $1,500 on the initial sale and probably under $100-200 for renewals. A (the agent) is not tring to scam your mother, simply pointing out that to get more coverage now adays would probably be impossible or much more expensive in her health.
The other point in regard to price increases, is to realize that while it totally sucks that premiums are increasing, the underlying reason is that so many people are making claims (more claims, higher price increases, longer time using benefits than projected, combined with lower interest rates for the float for the company). What this means is that having the coverage is an undeniablely valuable asset as evidenced by how many claims are occuring.
I know its popular to hate big companies (i get that), but wanted to provide a balanced overview of the otherside since I understand the insurance and particularly long term care market very well. Hope its of some value to you and your readers, and if your mom can still legally renew / has the offer available, she should consider.
Ty for this. It’s helped me not to overreact to this post and helped me not to cancel our LTCI, which we’ve paid into now for 10 years and will one day likely need.
I say this even as I discovered that the original agent who sold me the policy “misrepresented” how long we’d need to pay in….. she led us both to believe it’d be 10 years….. Not so. In any case we have a new agent who is actually someone we know and trust. Oh and our premiums did increase, but only after 9 years.
Thanks again.
I described the agent as an insurance agent, not a Genworth agent, and I quoted what she told me accurately. I also said Genworth probably is the best of a bad lot. You are straw manning what I said.
Did you actually read the post or look at the links to consumer complaints, or even consider the implications of Genworth’s practice of allowing policyholders to initiate claims submission and interact with the company only by phone (save when finally submitting needed documentation), that they refuse to deal with customers by internet (which is a clearly cheaper route but would leave a paper trail)? And on top of that, Genworth then makes it well nigh impossible to reach any one (the repeated 20 minute holds and automatic hangup)?
Some policyholder complaints on that issue were even worse than my experience, that after making the heroic effort needed to reach phone rep, they would then misrepresent policy terms (and these comments were clearly from knowledgeable people) and/or the claims submission process, requiring the customer to make even more calls to get things going? If what I wrote wasn’t clear enough, different phone reps would provide conflicting information, and some clearly didn’t understand the terms of the policies they were discussing with customers.
Moreover, if you know anything about insurance, an insurer under financial duress, and Genworth is clearly under duress, given that it has bond rating on its subs, including its long care insurance subs, barely above junk, is still under downgrade watch, has been the subject of multiple very big ticket shareholder suits, and is implementing a “turnaround plan” is a prime candidate for insurance fraud, as in denial of valid claims? Moody’s said its only path (as in official permitted path) is raising premiums aggressively, and Moody’s expressed doubt that Genworth would get the needed approvals in many states.
And Genworth is in trouble as a direct result of its long-term care policies, so that is where the pressure to Do Something is most acute. Per my experience and that of the widespread negative customer reviews, it appears that Genworth is already engaged in aggressive practices to impede claims submission and deny valid claims.
Finally, companies do provide talking points and even scripts to sales personnel. Agents in independent agencies would be less likely to use them, but a company like Genworth that is getting bad press and in obvious financial difficulty would be remiss if it hadn’t sent all agents selling its policies a list of suggested responses to customer questions about its problems.
In other words, your view of Genworth appears to be dated. I suggest you get current. See also the comment of MikerW below, who describes how the LTC industry as a whole made bad assumptions about how many people who had policies would lapse, putting them in the position of having to pay out far more claims than they anticipated. Again, this is a prescription for insurance fraud, meaning refusing to pay out on valid claims.
Genworth collects about $2.5 Billion in LTCi premiums each year.
They are incurring about $1.5 Billion in LTCi claims each year.
And they have about $20 Billion in LTCi reserves (to pay future claims).
Why do you think they won’t be able to pay your mother’s LTCi claims?
I already had Genworth not pay my mother when she was entitled to be paid. She was in a cast not able to take care of her self long enough that she ran past the 100 day exclusion period. Yet Genworth would not even call to schedule a nurse to evaluate her.
Did you miss the Moody’s rating and its commentary?
Long-term insurance is not PAYG. You need to look at actuarial models.
Moreover the claims are the claims that they approve. See my experience above, plus the many complaints about Genworth denying valid claims and giving customers a massive runaround, which has the effect of denying claims and/or increasing the exclusion period.
Insurance for long-term policies are under stress generally around the world, due to protracted negative real interest rates which wreaks havoc with their investment return. Every insurer of long-term policies is having significant trouble due to shortfalls against their anticipated investment returns for policies they wrote ~2010 and earlier.
My bad. I thought that Moody’s had only downgraded the bonds. Regardless of the downgrade, Genworth has about $20 Billion in LTCi reserves which can’t be touched by creditors.
This year I had two Genworth claims, both of which took only a few days to be approved. That has been my experience with all of my Genworth clients.
Genworth usually sends a “care coordinator” to meet face-to-face with the claimant. Didn’t they do that with your mother’s policy? That is their standard operating procedure. This makes the claims process fast and easy for both parties.
Also, nearly all of Genworth’s policies do NOT have an elimination period for care received at home. If your mother was needing care at home, then she would not have to wait 100 days. The policy benefits would kick in from the first day of needing home care. Were you aware of that?
You are still trying to obfuscate what Moody’s said. A Ba3 rating is barely above junk, and Genworth is STILL listed as being on watch for another downgrade. That rating is specifically on its LTC subs and on their “insurance financial strength” meaning claims paying ability.
You are not a actuary. You have not obtained Genworth’s state statutory filings, as Moody’s presumably did, and asked questions directly of Genworth’s financial executives, as Moody’s can. You are in no position to second-guess their rating.
You are not familiar with my mother’s policy. The 100 day exclusion applies to both home care and nursing home care. That was what the policy summary said and the rep (when we finally got one) confirmed that on the phone. As I clearly wrote (now three times), Genworth told her they wanted to schedule her to see one of their nurses to ‘evaluate” her. The rep then said she couldn’t reach anyone who could do that, which even at the time sounded like “dog ate my homework” and someone would call her to set that up. No one ever did.
My relative is in an assisted living facility. She doesn’t need a walker all the time but she does use one when she goes to the grocery store. Her LTCi policy is paying 100% of the cost of care. She needs “standby assistance” with dressing and she needs “hands on” assistance with bathing. If your mother needs a walker, she could probably qualify for benefits.
Also, the policy doesn’t pay “60% coverage of nursing home care or assisted living care”. The amount the policy pays is based upon the Daily Benefit, not based upon a percentage of the cost of care. You stated the policy had a Daily Benefit of $254. If your mother lives in Alabama, that will pay for A LOT of care.
Also, the policy doesn’t have “Three years maximum of coverage”. Three years is the shortest period of time for which the policy would last. Your mother’s policy has over $270,000 in benefits. If she uses $5,000 per month, the policy will pay benefits for over 5 years.
Lastly, with many of the older Genworth policies the Elimination Period was waived for care at home if you use the care coordination service. (e.g. the nurse who wanted to come see your mom.) Again, that’s why my clients’ claims were processed very quickly because they all took advantage of the care coordinator.
You are now trying to play MD without a license. My mother uses a walker and bathes and dresses herself. The time she couldn’t is when she had a broken elbow. She has a friend who is in much worse shape than her (serious vision and hearing problems as well as mild cognitive damage due to TIAs). She lives in a house with her husband, gets about with a walker, and bathes and dresses herself.
How many times do I have to tell you that my mother’s policy has a 100 day elimination period including for home care? The rep who gave us the run-around about scheduling a nurse’s visit confirmed that.
This is not consistent with what my mother’s agent said to me this week. She said, “Your policy is worth $7200 a month…$254 a day buys a lot of care in Alabama.” Why would she state the value in per month terms? My father when he got the policy for my mother repeatedly said it covered only a maximum of three years of care. Since his father had been in a nursing home for ten years, this feature bothered him.
Oh, and now that you made me look further, Fitch has also downgraded the LTC care ability to pay in 2016.
From Reuters:
https://www.reuters.com/article/idUSFit948684
Bond ratings are not the same as claims-paying ability.
These are not ratings for bonds. No one sells bonds on individual insurance subs. And there are no bonds listed as rated. Moody’s and Fitch rated LTC subs as on the verge of junk for “insurer financial strength.” That IS a rating of their claims-paying ability. I’ve been in finance for 35 years. You could have Googled that and instead you challenge me on bogus grounds.
Here is S&P’s description of what type of rating means:
Similarly, a paper presented at the General Insurers’ Convention has in its opening paragraph:
The parties listed after the colon were presumably in order of importance. Policyholders come first.
If you had bothered reading Genworth’s financial reports, you would see it treats the long-term care business as a gunshot wound. Genworth says explicitly and repeatedly that it is forecasting that its current profits on its long-term care business will become losses. For instance:
More claims are a function of demographics which actuaries should have priced in to premiums years ago, no?
The agent may not be trying to scam, but instead be resistant to recognizing that she is selling a scam. And she is selling to other customers with the high initial commission, so the fact that she only gets a low amount for an individual renewal doesn’t mean she doesn’t have a psychological and pecuniary interest in defending the policy.
Finally, the author wasn’t attacking the agent’s motives, but explaining why his concerns were addressed by the agent’s arguments. You didn’t address his arguments either – the value of the policy is in claims properly and promptly paid, not claims made. If Genworth is in fact the best of the three companies in the business, that means the whole business is in serious trouble.
You are 100% correct that “the value of the policy is in claims properly and promptly paid, not claims made.” The LTC insurance industry incurred over $10 Billion in LTCi claims in 2015, over $100 Billion since 1974. Genworth pays more claims every year than any other LTC insurance company.
fyi….there are 13 companies selling long-term care insurance today, not 3.
I, and many others in the market are struggling to find any providers which are not more trouble than they are worth. You don’t have to look far to find several accounts from reasonably well regarded media channels backing up Yves’ anecdotal.
In the U.K. it is only because of a not hopelessly toothless regulator that the insurance providers have not followed such totally brazen scamming practices as exhibited in the US.
Until the US effectively regulates these products, the industry will continue its death spiral. It doesn’t matter how many market participants there are if there is lax regulations. Eventually Gresham’s law will kick in and they will all have to either exit the market or succumb to creeping crapification.
Scott, you seem to be very ” familiar” with the industry, so it is curious why you failed to address the claims evading methods, no doubt formulated (with deniability built in) from senior management.
I must state that when dealing with Met Life on LTC claims for both my mother and father from 2012 through 2016, they went above and beyond in helpfulness and actually made payments above and beyond what was technically required. This was all for at-home care for terminal illness. I was anticipating the worst because Metlife had already exited this business (e.g. was not writing new policies) but every contact with them was positive,
Yves, I am sure your mother’s instincts about the motives for Genworth seeking to keep her business were spot on- the only rational for trying to keep customers in a money losing business is if you intend to Not lose money by denying/delaying valid claims, and this is fully supported by your own and others experience. Imagine frail 80 year-olds trying to navigate this sordid maze designed by sharp MBA’s.
Dealing with United Healthcare for an ex’s medical claims I found that they too were never willing to put ANYTHING in writing or e-mail. These companies can always disavow the Reps
statements.
I am glad you wrote the above because my parents had a Metlife policy as well, which they purchased in the late 90’s, and our experiences concerning both in home and residential nusring home care were all positive exactly like yours. At one time, indeed, all LTC insurance was not crapified. And yes, Metlife quit writing new policies in 2010. They stated at the time that it was in good part because they had over-estimated the number of lapse policies there would be. What boggles my mind is why they ever thought many people would let them lapse. My parents policy was such a good deal (and so necessary given the possibility of needing expensive personal care in the future) that the only reason they would have ever opted out would have been for dire financial reason – precisely what they had bought the policy to help prevent in the first place.
AARP policy?
AARP dropped MetLife and went with New York Life for LTC. What they did not do is tell their subscribers. In 2015 AARP made the announcement of a new LTC policy with NYL. In 2017, all AARP holders of MetLife policies received a letter from MetLife saying the 10 year price guarantee expires 12/2017 and there will be a cost increase over 3 years of 21.75%. This comes on top of any inflationary increases which you must take.
MetLife gave two alternative, none of which are good to the policy holder.
No AARP was not involved at all. They bought direct from MetLife in i think 1997 or 98. My father needed in home nursing care in 2001 due to brain cancer and we picked the nursing care, with MetLife honoring our claims in a timely fashion. My mother later needed long term nursing home care and we submitted claims on a monthly basis with Metlife reimbursing within a month of each submission for a number of years starting in 2004. They never missed and where never late.
I do not know what might be up with AARP holders of MetLife policies, but in 2010 when MetLife stopped offering new LTC policies they promised to honor all the policies already out there already as is. However, since by then my mother had exhausted her coverage, i do not know if MetLife’s treatment of customers changed then for the worse. While we dealt with them the system was easy to use and they covered all care as they had said they would.
saved:
Thank you. I was nosey.
No, they bought directly from MetLife in 97 or 98. My father used in home nursing coverage in 2002 and my mother used long term nursing home coverage starting in 2004 for a number of years. For both, we picked the nursing providers, submitted claims and were reimbursed in a timely fashion with my mother making monthly submissions for years which were each met in a months time. MetLife never missed a payment or was late that i can remember, and the system was very easy to use. However by 2010 my parents coverage had been exhausted, so even though MetLife promised to honor all policies as written when they stopped issuing new LTC insurance, i do not know if their treatment of customers remained as sound and reputable.
Yves,
After some very unpleasant experiences dealing with these issues for my loved ones it seems the classic Casablanca Vultures Everywhere scene https://youtu.be/mzfe6P6e5No or your mom noticing the birds singing outside her window are buzzards about sums finance, especially relating to ageing & long term care insurance.
How terribly tragic that events have overtaken preparations for your loved one. I wish I had more to offer.
Very best to you and yours.
LTC policies seemed like a great idea to insurance companies, at least to the CEO’s. They reaped millions upon millions in premiums and got paid massive bonuses. The payouts under the coverage would come years later when the CEO was retired and snorting coke with his third trophy wife somewhere in Greece.
My parents both have an old LTC plan , the kind you can’t get for any reasonable rates any more. The company has been incredibly difficult in all aspects of the policy from ignoring calls to simply refusing to accept physician’s assessments of incapacity. My siblings all have college degrees and above, but we still needed to hire a lawyer who still gets involved from time to time (after five years or so of working through this). The lawyer is not needed to understand either the legal or medical side (I worked in insurance in NY and my sister is an MD), but merely to intimidate the insurance company. It works, but it’s expensive.
I shudder to think what we would do without this insurance since my mother spent three years in assisted living (Alzheimer’s). My father is in and out of assisted living. They have good pensions but without the LTC coverage, they would have been bankrupt two years ago. Okay, they are in a top-notch place, but I have seen the next level down and think what they pay is worth every penny.
Healthcare is not about health or caring in America. It’s about money. HMO’s, Big Pharma, retirement communities and nursing homes are all corporations. Patients are not patients, they are clients.
i feel like a profit center, when it comes to healthcare.
You feel like that because you are.
I wonder how people of my generation will fare, reading over the stories of commenters’ parents here?
And how will the same generation (“You are up next!!!”), when we reach our 80s or older, needing long term care, but without kids, fight those sharp young MBA
Preying on the elderly? Welcome to my world.
I had to get involved with my parents’ finances a couple of years ago. And let me tell you, I found a lot of things. Like smarmy insurance agents and financial advisors. And endless solicitations from charities, both legitimate and bogus.
The long-term care insurer? I haven’t had too many problems with them, but the company is being liquidated.
I can’t help thinking that my folks would have been better off if they had skipped the LTC policy and invested the money they would have spent on premiums. Low cost index funds would have been a better choice.
> I haven’t had too many problems with them, but the company is being liquidated.
So, what’s happening with the liquidation? Presumably, there’s money set aside so patient beds aren’t wheeled out of the facility and left in the street, but who knows…
my mother was in a nursing home, covered by a genworth policy. all i can say is, she would have been in desperate straits without medicare.
Can you give details on what happened?
The most important part is over what time frame. As various news stories have made clear, the LTC business has gotten under more and more financial stress over time.
Yves:
Was getting ready to write on this topic also. It is not good.
Yves:
I am writing on this topic also.
I was solicited to buy LTC insurance through my municipal employer about 15 years ago. The solicitation began with the scare headline that one out of every two persons would need LTC insurance in their old age.
I did not read any further because it was immediately obvious to me that either (1) rates would have to be prohibitive to responsibly cover such a situation, and I might as well gamble on the coin toss that I would not be one of the two; or (2) the companies offering such policies would go bankrupt.
Sadly, both are happening today.
Over the past 40 years there have been roughly 150 different insurance companies that have sold long-term care insurance policies.
Three of those insurance companies went through liquidation (bankruptcy). All three companies were very small with financial ratings that were well BELOW average. Combined those three companies had less than a 2% market share of LTC insurance policies.
Genworth is nowhere near bankruptcy. Genworth has about $20 Billion in LTCi reserves. Yves is conflating the financial problems of the holding company with the claims-paying ability of the subsidiary insurance company.
That’s not what Moody’s says. I suggest you read their words:
And see MikerW’s comment:
The entire industry is modeling its economics incorrectly and needs to make big price increases and much higher reserves. The alternative is to engage in insurance fraud, which is deny valid claims.
Yves, we can assume that the Insurance “regulators” (should always be in quotes) definition of insurance fraud only includes consumers defrauding the insurance companies and that there exists no concept of the insurance companies defrauding the public. Just like the bank “regulators” definition of “mortgage fraud”.
True power allows one to frame reality itself.
In about 2003 I had professional reasons to research and publish a detailed study on LTC insurance. There are several important and structural reasons for the current situation that extend beyond Genworth.
First, as with almost all insurance products, the policy is complex, hard to understand and for almost all who purchase them it is unclear what the coverage really is until a claim filed.
Second, LTC became a hot area for growth in the industry and was being heavily pushed by the consulting actuaries. It was one of the few areas of growth once variable annuities collapsed with the market in 2001.
Third, this is a lapse supported product and the industry got the lapse assumptions horribly wrong. In other words, they assumed people would pay premiums for a few years then stop. People realized they need this coverage and kept paying the premiums.
Finally, there is an important regulatory component. Life insurers report their financial results in blue books and property-casualty (P&C) insurers in yellow books. LTC, while in blue books, is much more like workers comp insurance which is in yellow books. Yet, the life insurers treated it as though they could use existing life insurance data and thinking, as opposed the loss development triangles common to P&C insurance. In our analysis we constructed pro forma loss reserve triangles for LTC and they clearly showed that there were massive reserve deficiencies.
The result of this was that they needed to both increase rates and significantly increase reserves — billions of dollars worth.
Finally, at the time the reaction of the industry to this work, it was presented in a plenary at the annual meeting of the Society of Actuaries, was to attack the work during the session. Not rebut or say it was wrong.
The bottom line is that while this is not a front page issue today it is surfacing with consumers on a widespread basis as they realize what they bought vs. what they thought they bought. It will only get worse, but there is little recourse.
Here’s my thoughts on (possible) recourse: shift funding as quickly as possible away from financial products that we hope will pay for a corporation to provide crapified care to us in our last years, and into setting up multi-stakeholder or worker-owned co-op businesses to provide these services.
I can tell you from experience that there are a lot of care-providers who would much rather be working for themselves, providing assisted living and nursing care to their clients in their own homes, but who don’t have the time, skills, etc. to set up a business, figure out how to take medicare/medicaide/VA and private insurance payments, get enough clients to make it work, etc. And, of course, even the ones that can do all of the above, often lack the financial resources to make it happen (because they’re getting paid $9.50/hr working at the assisted-living facility).
So what needs to happen is people with financial resources, and who are going to want to make use of these businesses, should get together with people at Shared Capital, The Working World, New England Cooperative Development Fund, etc. to provide cheap, patient capital for co-op start-ups…and then start head-hunting the nursing homes for potential worker-owners.
And the corporate MBA chuckleheads who are running the mainstream system at present are charging such outrageous sums, while paying their frontline employees so little, that it’s relatively easy to both A) charge less than the suits, and B) pay the care providers more and provide greatly improved work environments.
Most healthcare co-ops that I’m aware of do in-home care, like CHCA and Cooperative Care in WI. However, there’s no reason that we can’t start building out our own facilities as well. My personal vision is for a combined permacultue ecovillage and long-term care facility, so that I can take care of my neighbors, get a decent salary, have some say over my job, be surrounded by gardens and good people, and provide the best care myself and co-workers can to Yves’ mom, and my folks, and yours, etc. (and so we can have a good place to be old too, one day). I recently re-located to a hyper-rural community specifically because the people here are so into this type of idea: http://www.geo.coop/blog/envisioning-cooperative-retirement
And here’s an article and a documentary on Cooperative Care:
http://www.geo.coop/story/cooperative-care-and-waushara-county
http://www.geo.coop/story/cooperative-care-empowered-caregiving
@diptherio, excellent ideas. I had similar thoughts a few years back. I’m a baby-baby boomer (born 1960) and realized a while back that the existing oldage systems wouldn’t be functional when I needed them. I think my age cohort will be quite amenable to your ideas… many of us grew up with at least passing exposure to food coops, group housing after college, etc. I have talked to a few friends about the possibility of forming a cooperative assisted living home when the time comes. It’s certainly within the realm of possibility.
Thank you for the links, and best of luck with your venture!
Thanks. I think a growing number of people these days are getting to where they can see themselves needing some assistance in the not too distant future, and have seen from their parents what the unfettered market has to offer.
And I can’t really claim credit for the ideas, I basically stole them from the originator of the whole assisted-living concept. She originally envisioned, and created, multi-generational care facilities with workers and their families living in a community setting with elderly clients. Then corporate Amerika got ahold of the idea and stripped the soul out of it, as they are wont to do.
I’ll say this to you and anyone else who thinks this sort of thing might be a good idea: start investing any spare income and energy you have into building this now. Everything takes time and cooperative projects often take more time than top-down ones (though they have many more-than-offsetting benefits) When “the time comes” for you, it will already be too late to get something going in time for you to make use of it. So help people build the infrastructure and organizations to do these things now, so that you’ll be able to call upon them when the time comes that you need some support.
Dipthero,
Great post. Like the creative thinking.
Will check you links.
thank you!
Yikes.
Yves Smith: Thanks for the article. Of course, this is your beat, even if you are reporting a story from your private life. You describe rent seeking. Further, you expose just how bad health care is for the elderly, since the idea seems to be to make them poor rather than to maintain their health. Meanwhile, in Washington, D.C., we have tinkering with the Almighty Market to resolve issues with health care. Dystopian indeed.
Visit a range of adult living, assisted living and skilled nursing facilities in your area, and in other areas where any loved ones may attempt to retire or live out their years. You will see some great places, well-maintained, smiling residents, many activities, a decent cafeteria, even some hospice or similar wing. You will also seem some glorified people warehouses, where elderly people are left unattended for hours at a time staring at the wall, or at a television that is on too loud, surrounded by others who receive no visitors ever. Some have to be in beds on the floor to prevent fall risk. Others are restrained in chairs or similar devices due to many risks presented to Alzheimers or complications patients. Aging isn’t pretty. Educate yourself, your siblings and your offspring so that you may deal with any relatives needing care.
Unfortunately, even the good ones today can be crapified tomorrow, just like Genworth was. So while I definitely second your suggestion, I also think we need to be thinking a little bigger too, if we want to really address the root of the problem (which is that care isn’t something that should be left to the tender mercies of the market). See my comment above for what I think that looks like.
My grandmother recently passed due to complications of Alzheimer’s, and we saw this first hand. As it became clear she was going to need more care than her (excellent) assisted living facility could provide her kids spent weeks trying to find a quality facility. My grandfather left her with a decent nest egg so she paid out of pocket.
The place they put her in started out great, then deteriorated rapidly. My aunt (her primary caregiver in the last few months) believes that once she was no longer able to self-advocate she was ignored more and more. At one point my aunt found her sleeping on the floor of the common room like an animal. The aides stopped encouraging her to eat and she lost a tremendous amount of weight. Soiled linens were left on her bed for hours at a time.
The facility cost was over $5k / month, which her kids agreed was worth paying in order to allow her to pass her final days with dignity. So much for that.
This confirms my view that you cannot safely/reliably hire out the care of another creature. I don’t mean this as a criticism; please don’t take it as one. I know that the system is set up so that people almost never have any other option. Even trivial examples can tell you this. Last year we had to leave our dog at the best veterinary hospital in the world, to have a procedure done. She has to be wiped after each pee since she has a recessed vulva (otherwise she will quickly get a UTI, since she is also on prednisone). She was in the care of a vet student who was smart and motivated and well meaning. When we got her back after the procedure, she was still wet; she hadn’t been properly wiped. Multiply that by big issues and by a zillion.
My 93 year old father in law lives with us; maybe we will manage to have him here til the end. Maybe we’ll manage to have one or more of my parents here til the end, in our 1068 s.f. condo. My parents managed that with their parents, so I hope so. We’ll try. But then, on a related topic – what about all of us who don’t have kids, or any old fashioned relatives? Or who have nonfunctional kids? There are lots of people in that position, and more every year. Consumer Reports just did a issue on “who will care for you when you’re old.” It was all about what services middle-aged people could get for their parents. There was nothing about what old people without children should do, or what someone should do to prepare for being an old person without children (or functional children).
Right? This is why I had bought an LTC policy. I’m now wondering what to do?
About 15 years ago, my wife and I took out a LTCI policy from GE. GE was taken over by Genworth and went downhill from there. They will raise rates and the company can’t wait to dump you and keep all your money. This is just one of many articles on the crooks of Genworth and you can read a ton of bad reviews on consumer websites.Stay away from Genworth. The entire LTCI industry needs an overhaul and lots of govt review. The entire executive staff of Genworth lives in multi-million dollar homes so you know that Genworth makes ungodly profits.
Is it ok to have as a point of pride that my parents both died before things got this ugly? Furthermore could I feel unsettled about my own future, because it doesn’t seem like there are better choices? We’ve destroyed our ability to care for our own, and replaced it with a very expensive industry. Care for the elderly is expensive and going to get more so. I don’t have any solutions and our society doesn’t have enough actual capital (in a real sense) to re-allocate to this type of consumption. What’s a boy to do?
See diptherio’s comment above about cooperative care. As Stan points out the current system is designed solely to transfer wealth to a few executives. Cooperatives are designed to maximize the benefit to the co-owners, which could be the facilities’ residents and their families. I think that the cooperative model is going to become more common as people realize that the finance-profit system (aka capitalism) is irredeemable and irreparably broken.
To paraphase former Congressman Alan Grayson concerning the Republican health care plan, 1. Don’t get old, 2. If you do get old…3. Die quickly.
We need single payer health care. Think of all the jobs that would be created if we had trained, well supervised and regulated, in home health care workers to take care of all these people in their own homes vs. sticking them in a for profit health care facility.
Robots. /s
Adding…imagine if the amount of resources industry is allocating to “automated” cars could be spent creating an automated elderly-bathing-fecal-urine-collection-clothing-attire-applying-stimulating-conversation machine? AND leave a mint on the pillow when finished. Whew now I don’t have to visit mom and dad 2 days a year and just phone in my love.
We decided to forego LTC insurance after seeing the experience of my in-laws. They had both in-home and facility coverage, my mother-in-law was coming out of the hospital after heart surgery, and everyone agreed, including the insurance company (which was Bankers Life – perhaps no longer in that business) that she qualified for in-home care. Then the insurance company called back to inform us that the company they had contracted with to provide that care had no one available, so they wouldn’t be providing care after all.
That’s very odd. Long-term care insurance companies don’t contract with care providers. The claimant chooses and hires the care providers.
Huh? Genworth not only wanted to have their nurse evaluate my mother as a delaying tactic (see commentary above from the family who found it necessary to get lawyers involved to get their doctor’s assessment honored) but said they wanted to arrange to provide in-home care.
Genworth sends the care coordinator to meet with each claimant (and their family) to speed up the claims process, not delay the claim. And they don’t choose the care provider, the claimant does. It says that clearly in every policy.
That’s not at all what happened in my mother’s case. Stop giving corporate PR. Without belaboring my educational background and work experience, I am perfectly capable of filling out forms. My mother’s MD has mainly older patients and able to provide any needed medical content in a claim form or claim process.
I do not know how many times I have said:
1. It was extraordinarily difficult to reach a Genworth rep. They obviously have a policy of understaffing the phone. And the fact that the call is disconnected after a 20 minute wait with no opportunity to leave a callback number IS a delaying tactic right there.
2. The refusal to allow any other way of dealing with Genworth is a second delaying tactic. There is no sensible reason not to allow e-mail contact, particularly if Genworth’s first step is to set a meeting.
3. After considerable effort, I finally managed to get through. The rep told me that my mother would need to be ‘evaluated” by a nurse. There was no mention of starting the claim process or performing any other task. This sounded like she was being put through hoops.
4. The rep was unable to schedule the nurse visit. That again is a choice, there’s no reason for phone reps not to have access to scheduling software. Moreover she claimed the unit that scheduled visits was busy so she could not put the call through to them and would instead have to have them call her back.
5. My mother never got the promised call about scheduling a nurse visit.
If you had bothered reading the reviews to which I linked, there are many complaints about Genworth reps providing inconsistent and even conflicting information about policy coverage and terms, as well as impediments to submitting claims.
The “tax on your time” phone contact system is widely used in the medical insurance business, in my experience.
Customer representatives that are less than helpfull is a feature, not a bug. What I find amazing is that so many people do this sort of job knowing they are F****** people over. Has the workplace become this desperate?
Are we all going to our graves hating each other?
I believe Scott may be narrowly correct as far as sending a nurse to evaluate care needs etc., that would probably be standard with every insurance company on all kinds of claims, and makes sense. But clearly that evaluation was used here as just another trip-wire to delay/deny in Genworth’s case. With my Met-life referenced experience above, that process went well and was just part of getting claim/coverage started. And we did have to arrange for care providers, probably better than having to use “captive” providers that it sounds like Genworth used (like using auto insurers body shops for repairs, who are incented to cut corners).
Scott, I encourage you to imagine yourself at 85 years old and on the receiving end of this, for either yourself or a loved one. You might look back and regret defending the indefensible.
You sure do stick to the factually-inaccurate formula. GenworthDrone? Social Media Spinner?
Very transparent.
My LTC plan is suicide. Seriously. And I expect to repeat the pattern of early-onset Alzheimer’s and Dementia that encompassed all the females on my mother’s side of the family. My mother died in a memory care home at the age of 69 from an aneurysm after falling. I’m not going in a memory care home, I’m killing myself with a helium tent. The trick is going to be doing it before I lose my mental capabilities, but not so early that I miss out on good aspects of life. Who am I kidding? There’s not much in the way of good aspects of life left in this world.
At least I won’t be living out the rest of my years in the US. Good luck, and thanks for all the useless shit.
I have a neighbor whose parents both died of Alzheimers; her mom after about ten years in a nursing home. She has an idea for a company. You would give them money up front, and their task would be to assassinate you when you developed dementia. The idea is that they’d do it as a surprise and painlessly of course. I’d pay for that service.
Years ago on YouTube I saw a video of an ancient woman in Ukraine. She was living with her chickens in a hovel. Actually the hovel was not much worse than the house one of my Ukrainian American relatives presently lives in in CT, which was bought around 1920 when her grandparents hadn’t been here very long (yes, I send her money). Anyway, the Ukrainian lady had no relatives left; her consolation for her physical and psychological pain was alcohol. So, a crappy house in a rural area with a lot of hard liquor; that’s a possibility.
I’m so sorry. Alzheimer’s isn’t like the descriptions of senility you see in literature and biographies from the eighteenth century and earlier. That makes me think that there is an environmental component even in cases like you family, with genetic susceptibility.
Some people think heavy metals or aluminum might be culprits. There are oral chelators for both that aren’t expensive and can’t hurt (just be sure to take extra minerals like calcium, iron, and copper, at very different times of the day away from the chelators, since some will leach all minerals. And only do this ~1 month a year).
Other things that seem to help keep cognition levels high are learning a new language (could you learn Portuguese?) and doing puzzles.
That’s not a new idea, Expat. My step-father did that by slowly reducing food intake (starvation). I’m told it’s not a pleasant experience (physically). My mother, after experiencing health issues (and a 3 month stint in a semi-private hospital room) simply decided to move on (and save her children a modest inheritance). She followed my step-father’s blueprint. It takes courage and some collaboration.
I am 74. Even when I had the income to buy long-term care insurance, I wouldn’t do it. I have always believed it (as most other things are in America) to be a scam. If I get to the point where I cannot take care of myself, I will just save up my pain pills and drink a bottle of my favorite liquor. This country has never cared much about the health or welfare of its citizens–just about how much money it can squeeze out of you.
If it’s a scam, why have the insurance companies incurred over $100 Billion in LTCi claims? If it was a scam, you’d think they’d have figured out how to not pay claims.
Good grief, it is possible for a product to start out as a legitimate product and then turn into a scam product. The whole point here is that that is what is happening. They used to pay claims; now they “have figured out how to not pay claims.” Maybe not all claims; then they’d get shut down right away. Sort of like making a counterfeit medicine that has a small amount of the active ingredient in it, so the patient thinks he’s getting the real thing.
Kareninca, there are thousands of trial lawyers dreaming every night and wishing that the insurance companies would fraudulently deny LTCi claims. There have been several audits conducted by the federal gov’t of the largest LTC insurance companies’ claims practices. Just google “Federal audit reveals LTC insurance claims practices” and you can read all about it. My mother-in-law’s claim was approved earlier this year. It took three weeks. We had to sign two forms. Not that hard.
I’ve worked in the financial services industry and have colleagues who consult to major insurance companies. It is astonishing to see you assert that insurers do not engage in practices to discourage the submission of claims and delay and minimize payments. Genworth’s rock bottom satisfaction ratings show that there are a lot of people who have had lousy experiences with Genworth, and they specifically discuss having been given a major run-around and having had valid claims denied.
Moreover, you are either not familiar with or misrepresenting legal practice. Suing is emotionally and financially draining. It’s generally not worth litigating given the costs (you get to $50,000 in fees and out of pocket costs in no time, particularly when up against a big company that knows how to run up the bill) unless the matter is worth at least $150,000, and more like $300,000. Even if my mother got the maximum payout on her policy, it would be less than $300,000.
It is very hard to get class certifications these days and long-term care denials or delays would be a poor candidate since the circumstances of each plaintiff would likely be so distinct (differences in policy terms and medical condition) for them not to be deemed to constitute a class.
And you know, or ought to know, how this works in practice. Insurers throw sand in the gears. Some people have the tenacity to go through the process. In more extreme cases, some are willing to get a lawyer to intercede. See the comment from Expat who has repeatedly found that necessary. Create impediments to getting paid that some people give up, other people wind up effectively having their exclusion period extended, some people have their claims improperly denied and don’t have the savvy or energy left to go another round.
The sort of people an insurer would be least likely to mess with are lawyers and independent agents, since you could stop selling an insurer’s policies if you felt you’d been treated badly and promote their competitors instead.
The elimination period does not start when the LTC insurance company approves a claim. The elimination period starts from the time the insured incurs a covered loss. Therefore, so-called “delay tactics” don’t extend the elimination period.
Your blog post and your subsequent comments demonstrate that you do not understand how long-term care insurance works.
Thought experiment: If I crash my car into a tree and tell my insurance company to pay for the damages, what will the insurance company think if I won’t let them come and inspect my car?
This is technically accurate but substantively misleading because incurring expenses for care is in some (I might hazard many) cases under the control of the insured, while a car wreck or house fire is pretty much not.
For instance, when we could not get Genworth to deal with my mother’s broken elbow, she had her cleaning woman act as home health care aide. She would bathe her and drive her about when needed. This was cheaper than hiring a home health care provider, since among other things, my mother was not subject to a four hour minimum. IIRC, my mother’s elbow was in a cast longer than planned, so it did go beyond 100 days, but not by much. But due to the fact that she was unable to get Genworth to send a nurse to assess her, and the rep had made it sound like this was necessary to get a claim in, she didn’t use a home health care aide. I would bet that the fact that she got by for 100 days without a home health care aide would be grounds for rejection irrespective of how she got by: “You didn’t hire one, ergo that service was not necessary. You really weren’t that badly impaired.”
And that came at a real cost. My mother had a fall and sprained her ankle badly when she went out shopping once with her cleaning woman because the cleaning woman didn’t watch carefully enough when my mother was getting in the car. Would that have happened with a professional minding her? Possible but much less likely.
Similarly, if someone is unsure of whether assisted living will in fact be covered (there are complaints on the Internet of people being denied coverage when they had two care units, which should in fact make them eligible), ones who could would delay entering a facility until they could get a definitive answer. Again, delaying starting to get the service benefits Genworth, since 1. later payments improves Genworth’s cash flow and 2. a fair number of patients die before they exhaust coverage.
Just curious, Mr. Olson. How long have you been working for Genworth? Asking for a friend.
I don’t work for Genworth. I’m an independent insurance agent.
Maybe Genworth treats your clients well because they know that you will go to blogs and lobby for the company. I’m not being snarky; I’m serious. Companies keep track of things like that. Free advertising for them.
Genworth’s claims process is very simple. Yves, for whatever reason, did not want to use the care coordination service, which is a benefit included in the policy at no cost. My clients used the care coordination service and got their claims approved very quickly.
That is complete and utter bullshit and grounds for banning. It is a flagrant misrepresentation of what I wrote several times in nauseating detail.
I did not “not want to use” the care coordinator. Genworth refused to send one or even call to set an appointment, as they had said they would do.
At the time we tried finding out about the claims process, the only route available was via phone. It was extremely difficult to get a rep, since the call would be automatically dropped after a 20 minute hold.
When I finally got one, she said my mother would need to be evaluated by a nurse. The phrase “care coordinator” was never used. It may or may not have been a care coordinator. The words used were “evaluated by a nurse”.
The phone rep said she was not able to reach the department that would schedule the nurse to visit my mother. That already sounded sus. The rep said Genworth would call my mother to schedule a visit.
Genworth never called my mother to schedule the appointment.
Again, you have flagrantly and willfully misrepresented what I wrote.
I cannot trust a single thing you wrote based on this.
On the bright side, by this point no-one reading this thread would believe a single thing that Scott has posted. He has made a bunch of bare assertions that reek of advertising copy, and ignored all counter examples. He’s overplayed his hand. He could have done a subtle job, and readers might have believed him, but he had to go whole-hog.
He has made Genworth look far worse by what he has written.
Thank you Yves and everyone for for this discussion, and thank you Scott A.Olson for showing us exactly what type of people, and how they operate, that infest the insurance industry.
My mother who has great difficulty even communicating due to the effects of a brain tumor, and the battling of it, would have likely been not survived under the US healthcare system. Thankfully we live in Canada and she is at a respectable home with Government subsidized to scale of 80% of her pensions (after some deductions), for full assisted care at a private institution subsidized by the Government. Which may seem alot, but it maxes out at I think around 3500$ and will run us about a bit under 1900$ Cad a month and is very sustainable at a respectable level at least for us. The Government workers that have helped set up and supported us through this ordeal have been very good to us to work the system in our favor as much as possible.
This is what is possible when predation is mostly taken out of the equation.
We were very lucky in placement as there are still a fair share of terrible retirement homes that operate with the subsidising of the Gov. Having said that the mentality is completely different in approach regardless and without the Government support for the medical expenses and assisted living even before she went in, she would have been broke many years ago.
So if any of those involved are reading this, Thank You.
When did Genworth refuse to send a care coordinator?
January 2016. And again, to be accurate, it was “refuse to call as promised to set up an appointment with a nurse”. The individual who was to see my mother was never described as a “care coordinator” but as a “nurse who would evaluate her”. It made it sound as if she would judge if my mother was eligible for at-home care, which was absurd, since my mother was paying for help to bathe and dress.
Yves & Scott, I think you both need to take a step back and expand the discussion vs. throwing rhetorical bombs … you may actually be saying essentially the same thing.
I’m very sorry about your experience, Yves, it is way outside of my experience with Genworth and many other companies. I can’t imagine why a nurse was never dispatched to evaluate your mother … that IS a huge mistake. I’ve had Genworth push this hard, to the point of contracting with a nurse who then got very aggressive with a client when she had the option, and was very clear about the the option of getting a claim assessment done by a nurse of her own choosing. And, yes, they can be very difficult to communicate with which is unfortunate and worthy of criticism, but while the egregious problems like yours get a lot of press and attention (and self-reported consumer complaints), there are thousands of claims that go very smoothly.
Depending on the contract (Genworth administers more than 1000 different policy forms/series dating back to 1974) it may say – as a majority of policies administered by Genworth do – that a “care coordinator” will asses for claims and assist with choosing a provider – Genworth uses RNs for this service who are independent contractors hired in the area where a policyholder lives.
Some contracts mandate the use of a Genworth “care coordinator”, others make it optional, still others make it optional but provide an incentive like waiving the Elimination Period or allowing for unlicensed, independent caregivers. It’s very possible – and in fact is my experience that at the start of a claim the phone rep will simply call this person a “nurse” even though they may be functioning as a policy-defined “care coordinator.”
(I have sold LTC insurance as an independent broker since 1992 and have specialized exclusively in LTCI since 2000. I also consult extensively with clients and home care providers to troubleshoot claims issues, and I have been an expert witness in claim lawsuits against insurance companies.)
Ding Ding Ding!
Mr Transparent Agenda is very transparent.
Yves has already exceeded my weekly fair and patient quota!
I’m guessing his motivation is the 7.5% pop upfront. Maybe quarterly bonuses for hitting sales targets? Perhaps extra gravy for X renewals per year?
That’s pretty much our plan as well…
Killing yourself is not a plan. Make a real plan. Your plan may or may not include long-term care insurance. For your family’s sake (and, especially if you’re married, for your spouse’s sake) make a plan that includes how the care is going to be provided (and paid for).
We should abolish your entire industry and handle what you do with a combination of Medicare for All and Social Security providing the dignity it was originally designed to provide.
Your industry is entirely parasitical and there’s no reason for it to exist.
This public policy issue is, of course, distinct from the issue of what to do to help Yves’ mother, sadly. I’m not seeing a great deal of clarity on that point from anybody.
Most 1st world countries with single-payer healthcare do not provide free long-term care. They either have mandatory long-term care insurance (e.g. Germany) OR they require each citizen to spend most of their savings and income on long-term care just like our Medicaid system (e.g. United Kingdom, Canada, France).
Did you read the comment? I didn’t say they did; you’re familiar with the concept of a conditional sentence?
Very pertinent to my life and my family, right now, today, as well as tomorrow. Thank you. Thank you all.
LAMO. Google and Faceborg have all that data, and will sell it.
Now to something more serious. Sates regulate insurance, and one the the requirements is the per state Guaranty Company for all insurance, into which all insurance carriers doing business in the state must pay to cover claims if an insurance company cannot pay claims.
In Alabama the guaranty company is the Alabama Life & Disability Guaranty Association.
in texas, the state agency that regulates insurance has no money to regulate the insurance companies
You appear to confuse Regulation with Guaranty. The first is a staye agency, the second a “club” of insurers.
but if no one regulates them, then who is making sure the insurer is paying at all, or the correct amount?
my wife’s mom had LTC policy from Genworth, and she had to get involved because her mom had dementia, this was about 12 years ago, what she learned was that the diagnosing doctor had to say exactly what was in the policy to even get a claim approved, and she did spend a lot of time with many different claim analyst over those years. I recall roughly that she had paid about 20000 in premiums, but the insurer paid out over 300000 in claims. She had one of the older policies that had no limit. What the entire thing shows is that you can’t save enough to be able to fund your retirement, no matter what seem to think. Won’t get into how many times she had to move her either. mainly cause she was in a place that more of a baby sitter than any thing else . Last place she was the absolute best ever. Only had 6 beds, owner was a nurse practitioner and had dr in gerontology
Just some fyi. Here in northern Utah we have a reasonably good system of health care through Intermountain Health Care. It’s almost a monopoly – the only good competitor being University of Utah Health Care. IHC is affiliated with a private company called Applegate Home Care and Hospice which provides a variety of services through an army of highly qualified nurses who seem to be independent contractors. They are very skilled and efficient and I’d be willing to bet their services save patients a boatload of money compared to a nursing home. I’m a believer in home care services after seeing these guys operate. They provide various therapies, rehab and technical advice which would cost an arm and a leg in some “facility”. I now think moving my or Bill’s old carcass into the Elvis Presley Rest Home would be just too creepy.
I agree 100%. One of the big reasons for the high costs are the facilities and 24/7 nursing. And with most older people having children dispersed and busy, there isn’t much they can do. But having a home health care aide for 4 or 8 or 12 hours a day, depending on the relative’s work schedule, and having that relative stay in the house and do occasional check-ins the rest of the time, is much better in terms of cost and care levels than an institution.
Therein lies the power, even in this digital age, of snail mail: the certified return receipt. My wife was having problems closing out a brokerage account, broker kept insisting they didn’t get the request. So she sent another CRR, called them, got the same “We didn’t get it” excuse. So she asked them, “Then who’s such-and-such? Because they signed for it on your behalf.” Suddenly the account got closed out real fast.
You haven’t dealt enough with recalcitrant financial service firms. :-)
With HAMP, for instance, banks would allow homeowners seeking mods to submit their documentation only by fax.
Even with sending documents by certified mail, if the business doesn’t provide a mail-in address, they can just say, “You sent it to the wrong place, we don’t accept powers of attorney sent there.”
They can also play the trick used by my health insurer: they can say your document didn’t scan properly, please send another.
Thank you for this article, Yves, although I’m sorry to hear your mother’s troubles. I’ve avoided the LTCI market since I checked into premiums when I was in my 40s and they were literally thousands of dollars a month. Forget that – there’s no way it would ever be worth it versus either just saving the money or investing it.
I will be evaluating my life insurance policy I took out with Genworth a long time ago, however. I didn’t know they were so shaky. It’s just standard Term, but if they’re on wobbly legs, it might not be worth it to keep it, since after I kick the bucket the very last thing I want for my family is to haggle with some godawful insurance company for a little bit of life insurance money. Good Grief.
Including all rate increases, the average long-term care insurance premium is $132 per month. Because of new consumer protections designed to prevent rate increases, policies purchased today cost more than older policies. In 2015, the average premium for a new policy was $211 per month.
The average age for purchasing long-term care insurance is 59. A single, 59-year old male, in good health can get $500,000 of long-term care insurance for $194 per month.
If you were quoted a policy that was “literally thousands of dollars a month” it was not a long-term care insurance policy.
How long have you been in the business, Scott? Years and years ago I remember reading articles about LTC policies that were thousands of dollars a month. I remember marveling at them at the time, and wondering how anyone afforded them. And I ended up doing as PQS has – saving money instead – since it didn’t seem rational to give a company that much money, when they might go under some day.
“Reading articles” is not the same as getting individually-tailored quotes. The financial press (and many agents) have historically over-quoted what is needed for reasonable protection and added potentially-unnecessary riders in the name of providing “full-coverage” (and full-commissions). Yes, a “Mercedes” is the best car out there … but a “Malibu” is great transportation and better than waiting for a “bus”.
The average cost of issued coverage per person has been edging up and is now just a bit over $200/day as Scott notes. Yes, you can design coverage that costs thousands of dollars a month, but no one (obviously) buys those. The average premium sold is $2400/year per person, that’s fact. Age, gender, marital (or partner) status, and health all impact the premium as well as how you design your coverage: monthly benefit, total benefit pool/period, inflation, and elimination period.
BTW, I have sold LTC insurance as an independent broker since 1992 and have specialized exclusively in LTCI since 2000. I also consult extensively with clients and home care providers to troubleshoot claims issues, and I have been an expert witness in claim lawsuits against insurance companies. (A recent case had a daughter about to cancel her mom’s LTCI because of a denied claim that appeared to be totally legit … after some follow up investigation, it turns out the “licensed” home care agency that was initially approved as a covered provider didn’t renew its state license and was unlicensed during her mothers temporary care period and therefore the payment was declined! Guess who’s in trouble now?! Yes, I wish the insurance company had just done “the right thing” but its criteria for home care providers was very clear, AND the agency was directly asked by both the client and insurance company about its licensure when it was hired.)
‘Yves,’
Very, very sorry to hear about your Mom’s horrible experience. It appears (has been appearing) that the US has no regard for its vulnerable Elderly, vulnerable Youth, nor vulnerable Middle Aged. Otherwise, there wouldn’t be such daily gut wrenching incidents via predatory entities (including so called Non Profits™). Further, the US has not supported, whatsoever, any capacity of an Elder person’s offspring being able to keep them out of a hellhole and still make enough money to survive, let alone support their offspring.
Don’t know what to say, other than that, outside of the fact that Capitalism has always been a predatory failure.
Economist, Robert Heilbroner, touched on that reality (e.g. An Inquiry into the Human Prospect), yet ultimately embraced Capitalism – all the same – likely because he knew he couldn’t still pay his bills without supporting it, and would die before being crushed by it.
My comment is coming from someone who has never read any purportedly communist, or socialist literature outside of: the Seventh Cross (about Nazi Germany and those who were being locked up just prior those gas chambers for Semites, Poles, Undesirables, etcetera), by Anna Nettie Ryling (aka, Anna Segher), a German Jew, born and raised in Germany; and the Gospels of the New Testament.
(To clarify, I’m not the “D” who commented above, I’m another “D,” from Silicon Valley, who has been commenting here for about three months or so.)
Thanks for this post, Yves. I feel your concern for your mother.
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My mother is 84, lives alone far away, and has some dementia. She has refused to talk to me about estate planning of any kind including but not limited to how she will pay if she has to go into a nursing home.
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Correct me if I am wrong, but it’s my understanding that if you are on Medicaid then you have no worries other than finding a decent facility that accepts Medicaid. If you are smart you do estate planning to give most of your wealth away ahead of time (I believe it is 6 to 8 years depending on the state) so that you can qualify for Medicaid if it comes to that. I mean, the kids are going to eventually get it anyway, so why wait and risk losing it to nursing home expenses?
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But many affluent people don’t like to give away their wealth, and for that matter don’t like to face up to what will happen in their final years. My mother is one of those people.
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So I don’t know what will happen as my mother ages and eventually is not able to take care of herself. Maybe she has private LTC insurance — she won’t tell me — but after reading this post, it’s not clear that private insurance will be enough, anyway.
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As you know, we wouldn’t have to worry about paying for long term care in most 1st world countries.
Most countries that have single-payer healthcare systems do NOT provide long term care as part of that system. They have either mandated long-term care insurance (e.g. Germany) OR they require savings and income to be spent just like our Medicaid system (e.g. United Kingdom, Canada, France).
The nursing homes in the Silicon Valley area that take Medicaid are death traps, at least the ones I know of. They are terrifying – they let people die of simple UTIs that then go into the kidneys. Los Angeles is supposed to be hideous too; one place had a patient with a live mouse in his mouth. Maybe if your mom is in CT or RI she’ll be okay in a Medicaid home. My father-in-law’s sister was in one in the anthracite region of PA that was okay. I hope that if your mom ends up in a Medicaid home it is near you so that you can go and check on her often. I get the impression that you don’t know just how bad bad homes can be.
Regarding the rat…i think this is the incident in Mission Viejo back in 2007. Only in America.
Yes, I have heard stories about nursing homes, not to mention in-home providers. That said, I regularly visit a friend in a Medicaid home run by Good Samaritan and it’s as nice as you can expect a place full of dying people to be.
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Having the money to afford a better nursing home does not solve the problem for anyone other than that one person. It’s kind of like saying “I don’t care if poor people suffer in Medicaid nursing homes as long as I’ve got my upscale private nursing home.”
“Having the money to afford a better nursing home does not solve the problem for anyone other than that one person.”
Yes, of course. But it is often the case that we only have the power to help individuals. To not help an individual because we can’t help everyone, is a way of avoiding responsibility.
Oh my, what to say.
Just for one [STATE] Estate Recovery™
And worse, have you ever visited a one of the punitive Elder facilities or “treatment centers” which those on Medicaid – Medical in California – have been/are subjected to, despite the fact they spent their entire lives crime free, and just working in order to live and provide for their loved ones?
D, “estate recovery” is why the elderly need to do estate planning. The estate cannot be recovered if the estate has been given away sufficient years in advance.
The reason that old people don’t do that sort of “estate planning” is that they figure they’ll give their money to their kids, and then years later they will need to move into nursing home. And the kids will say, “great, Mom, you can now go into a deathtrap Medicaid home. We’ve got ours! No, we’re not going to spend any of the money you toiled for on you, Mom.” The old people figure that if they hold onto their money, they will get to go into a private pay home and get better care. They don’t trust their kids. And in some cases they are right.
Is the American insurance industry at large not worried that they are being branded in the public mind as legal scams, a waste of their money?
It seems to me that US health insurers mostly fight to not give back the money they’re paid, and are big and slow enough to stall vulnerable people till they die or give up. I suppose this works for individual companies in the short term.
But in the longer term, can their industry endure? To me, it seems they are mostly living on a reputation in the minds of a generation who are, if not disillusioned already, are passing away , taking their delusion and their spending power with them. And it doesn’t help that even younger people who might be the incoming clients have lost a lot of their spending power already, if not their own illusions.
Of course, I live in Canada, where health care isn’t tied to insurers and insurance companies in general are, I believe, much more stringently regulated. Peering across the border, it looks like the US is the Land of the Scam, where no large enterprise can be trusted farther than you can throw a calendar.
I know this cannot be the whole picture — after all, many Americans get health care and mostly they don’t go bankrupt, they still have a functioning economy. But insurers sell, more than anything else, their reputation for reliability. What happens to all insurers, whether operating in good faith or not, when that reputation dissolves?
PS I shepherded my blind mother in MN through the Medicaid process to get into what turned out to be an excellent care home, with caring staff, a pleasant setting, and a good kitchen (varied, interesting food with many choices makes a HUGE difference in an enclosed community like a care home.)
However, getting through the application process was a nightmare. Before she could even apply for long term Medicaid, she had to pay down her tiny remaining savings till she had a balance under, I think, $3000, and what she was allowed to spend that on was restricted to the care home fees (about $6000 a month!) existing medical bills, a funeral plan, and probably a few legal bills and taxes. This paydown includes property, too. If she’d still had her home, it would have to have been sold and the money put towards the above, restricted payments.
I was there for five months, getting her moved and settling the paperwork. I had to use my own money once her Medicaid filing was in process. Oh, and her social security cheques weren’t hers either — I believe she got to keep about $95 per month, the rest went to the care home.
When you hear the wealthy whine about “death taxes,” keep this in mind. Any family whose parents are going into Medicaid can kiss their inheritance goodbye.
“Any family whose parents are going into Medicaid can kiss their inheritance goodbye.”
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Unless the parents give away their estate sufficient years in advance. Many, like my parents, refuse to do estate planning because they are stubborn and/or ill informed.
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There is both a moral and practical case to be made for giving away all your wealth before you die.
There are two separate and equally important issues that are inter-related being discussed.
The first is whether Genworth is meeting its obligations to policyholders and if they are doing so in a manner that does not increase stress in what is otherwise a very stressful time. Yves experience is they are not. This is a simple question and the facts speak for themselves.
The second issue is the adequacy of Genworth’s reserves to pay expected claims. The fact that they have balance sheet reserves of $20 BN, I did not confirm this number, is nothing more than a static number. It tells you nothing about how that amount divides among there various product lines, how it has developed over time, what they currently estimate to have to pay in claims and if this is enough money plus their surplus (think shareholder equity) to do so.
We have every reason to believe that their LTC reserves are significantly deficient. The proof is what the rating agencies are saying, their history of taking significant reserve additions (as have many other LTC carriers) and their own admissions.
When an insurer gets into a jam like this they have a few options to pursue. Operationally they can cash-flow underwrite, i.e., use new premiums to pay claims whilst praying that they can work out of the jam, they can make new claims harder to file and pay, they can continue to lie to regulators and rating agencies about the condition of their balance sheet. Strategically they have three basic choices; raise capital to bolster reserves, sell the company or seek protection. Time will tell where they will end up, but there is little room for optimism.
Given the way financial disclosure in life insurance works we cannot as outsiders easily determine just how deficient their reserves are other than knowing with certainty that they are. Any agent or broker at this point who is selling a Genworth product is not acting as a fiduciary should.
Finally, and to reiterate the central point of one of my earlier posts, every line of business that the life insurance industry has entered that resembles property-casualty has blown up in their faces. The two prime examples are individual disability and LTC. These lines work along the exact same methods as workers compensation insurance and have little to nothing in common with mortality, accident or tax advantaged savings contracts (such as VAs, GICs, etc.).
Just look at a 10 year chart of Genworth, it remains down 90% from its 2007 high. It bounced from near zero in the Crash, but looks dead in the water.
Stock price has nothing to do with claims-paying ability. The stock price is the value of the holding company, not the claims-paying ability of the subsidiary.
Thank you for this Yves, and thank everyone for their comments.
It, obviously, speaks to the situation in which many of us find ourselves (or will soon).
I’m sure it’s not the first time most of us have wrestled with this problem, and the dearth of humane solutions is probably not new to most of us either. Yet, I find the discussion cathartic.
For those of us without functional/caring relations (children or otherwise), Co-op seems a possibility worth seriously looking into. Self imposed termination would be a less happy choice, yet may well be less hideous some of the other options (which seems a rather damning comment on the society we have built for ourselves).
I’m sorry about your mother’s difficulties. I know it’s difficult for you both to go through this. I hope everything will, somehow, work out for the best. She’s lucky to have such a caring daughter.