Long-term care insurance: my 2¢

Now that my mom's long-term care insurance (hereafter, “LTCI”) has run out, I feel free to offer some observations. My observations are drawn from experience with a single company, Genworth (hereafter, “the company”), and everyone’s mileage varies. My mom has beaten the house, but my suggestion, nevertheless, would be to avoid LTCI. Here’s why:

~ The premiums are expensive and become more so. Stop paying in and you lose everything you’ve already put in: it’s the sunk cost trap. (My mom’s last premium, four years ago: $10,000.) No one counted on so many people living long enough to try to collect.

~ It’s necessary to have a persistent (and probably much younger) advocate willing to spend considerable time submittng a claim, submitting and resubmitting power of attorney documentation and other paperwork, making repeated phone calls to check on claim status, to argue, to report changes in living circumstances, and to spend lots of time on hold.

~ The company may be reluctant to pay up. Filing a claim begins a “elimination period” of 100 days or more before the claim can be considered. Elimination indeed: the company is no doubt wagering that the policyholder might die as those days count down.

~ When the elimination period is over, the company may still be reluctant to pay up. The two conditions for honoring a claim: (1) inability to manage two of the five so-called activities of daily living (bathing, dressing, eating, “toileting,” “transferring”¹) or (2) severe cognitive impairment. Even a statement from a doctor of geriatric medicine on hospital letterhead may not be enough to convince the company that (1) applies, because the company will perform its own assessment of the policyholder by way of a Zoom call conducted by an outside agency. It’s reported that such assessments may take a policyholder’s answers to questions at face value, though it’s well known that people with dementia will give the “right” answers to questions whether or not those answers are true. As for (2), what counts as severe cognitive impairment seems to be highly subjective. A representative of the company, offering an example: “You don’t need to know what year it is to fulfill the tasks of daily living.” One need not be a thoroughgoing cynic to suspect that the company might use the fuzziness of (2) to avoid paying a claim. Notice, by the way, that making a phone call and managing medication are two activities of daily living glaringly absent from the list. Their inclusion would immediately give more claims a shot at (1).

~ It may be necessary to submit a second (or third? or fourth?) claim as the policyholder’s abilities diminish.

~ If the company does finally honor a claim, the persistent advocate will need to keep up month by month. The monthly cost of assisted living or memory care is borne by the policyholder. The advocate then sends the monthly bill to the company and waits for reimbursement to show up in a bank statement. This paperwork is the easy part of the job, after all earlier obstacles are overcome.

I’m happy that I could do the work of dealing with LTCI for my mom. I don’t begrudge a minute of the time. And I don’t mind going up against a bureaucracy. But it’s far wiser to invest money elsewhere.

A bit of browsing will confirm that my observations about this company are not unusual. But they’re the ones I’ve got.

¹ “Transferring”: sitting down, standing up.