CONSECO SENIOR
HEALTH INSURANCE COMPANY
HOME HEALTH CARE POLICIES
Frequently-Asked
Questions and Answers
1)
We heard that the Florida Office of Insurance Regulation (OIR) has made a
decision about the Conseco Senior Health Insurance Company’s (Conseco Senior)
Home Health Care policies. Can you tell me about the decision?
2)
When is Conseco Senior going to send us a letter advising us of what our
options will be?
3)
Who will be eligible for these options? I have cancelled my Conseco
Senior policy but I would like to review the options that are now being offered.
4)
I
think all of this information is very confusing. Is there a place I can go and
sit with someone to review my options?
5)
I just received a letter from
Conseco Senior prior to receiving the General Notice and the Election Notice
form required by the Florida Order. In this letter I was given two options:
either retain the current policy or select a non-forfeiture benefit option. I
am confused and need some guidance.
6)
I
have an agent from another insurance company soliciting me to purchase a
replacement policy from him/her. Should I go ahead and get another policy?
7)
What number can I call for Conseco
Senior to find out more information about my policy?
8)
What is a contingent non-forfeiture benefit option?
9) If I have a Survivor Waiver of Premium Benefit under
my current policy, will I have this coverage if I choose Option 2 (Replacement
policy)?
10) Did the OIR approve the 211.6% increase that Conseco Senior
applied for?
11) Did the OIR take into consideration the comments submitted during and after
the March 5, 2004, Public Hearing held in Davie, Florida?
12) Is Conseco Senior making these changes and
applying the rate increases to Florida policyholders only?
13) How do I know if my policy is one of the
policies affected by this Order?
14) What happens if I do not return the Election Notice form by the
deadline?
15) We believe that Conseco Senior has had such bad
financial losses because of poor management and claim-handling practices. What
is going to be done about these problems?
16) What would be the negative consequences if I
choose Option 1 (retain current policy)?
17) My policy is about to renew and I normally pay
my premium annually. Should I pay the annual premium or lesser time period?
18) How am I supposed to pay another large increase in premium on a fixed
income?
19) If I am currently receiving benefits, will they be reduced or will my rates
go up?
20) I have paid into this policy for years and was counting on these benefits.
I’m uninsurable now and you tell me they are going to reduce my benefits?
21) How many policyholders will this affect?
22) What do I have to do to be eligible/qualify for one of the new, reduced
benefit policies (Option 2)?
23) What is to prevent all those who are healthy and can get other coverage to
cancel their policy and run while the rest of us are stuck with Conseco Senior?
Will that drive the premiums up?
24) What do you mean by “the company is experiencing significant financial
losses?” What is significant?
25.) If a person chose the non-forfeiture benefit option in 2002
or 2003 due to the Milkman vs. Conseco class action settlement, will they have
the ability to choose Option 2 or 3 under the Order?
26) Does the company have to wait until the policy
anniversary date in order to implement benefit changes or rate increases to the
policy?
27) Where did the $534 million that the parent
company put in since 1999 come from/go? Why can’t they do that again rather
than raise my premium or change my benefits?
Answers
----------------------------------------------
(Answer To Question: 1)
An Order was issued by OIR on April 20, 2004, that
will provide three options to individuals that had a home health care
policy in-force with Conseco Senior as of February 22, 2004, and/or
received notice of the March 5, 2004, Public Hearing. All eligible
individuals will be receiving a General Notice from Conseco Senior in
late May that will outline the options in detail but here is some
basic information:
A.
Option 1 - Retain the current policy with no benefit changes but be
subject to a maximum 50% rate increase the first year with no caps on increases
in future years. The rate increase would take effect on the next premium due
date after receiving a 90-day advance written Election Notice form. Conseco
Senior would have to prove any future rate increases are actuarially sound and
that it has made improvements in its claim handling process. If the policy
lapses at a later date, the policyholder will be entitled to a contingent
non-forfeiture benefit option equal to 100% of cumulative premiums minus
claims paid.
B.
Option 2 - Choose a replacement policy that has been filed and approved
by the OIR. This policy will have a maximum 25% increase the first year with a
15% maximum increase per year for the lifetime of the policy. There will be
four changes on the replacement policy: 1) the removal of the restoration of
benefits; 2) eligibility of benefits will require a Licensed Health Care
Practitioner to certify the insured is unable to perform at least two activities
of daily living (ADLs) for a period of 90 days or suffers from severe cognitive
impairment; 3) minimum 20-day elimination period, and 4) lifetime benefit period
policies will be converted to seven (7) years. In addition to the preceding
changes, the policy must be modified such that it attains IRS qualified status.
The four changes noted are currently in compliance with IRS qualified status
requirements. The replacement policy shall be effective on the policyholder’s
next premium due date following a 90-day advance written Election Notice form.
If the replacement policy lapses, the policyholder will have a contingent
non-forfeiture benefit option that includes 100% of all premiums paid from the
original and replacement policy. Please note that this non-forfeiture option
differs from Option 1 because claims are not deducted.
C.
Option 3 – Select the contingent non-forfeiture benefit option. The
policyholder will exchange their current policy for a contingent non-forfeiture
benefit equal to 100% of the sum of all premiums paid. This non-forfeiture
benefit is a set dollar amount held by Conseco Senior to pay an individual
policyholder’s future claims. Claims will be processed in accordance with the
provisions detailed in the insured’s existing policy until the pool of benefits
has been exhausted. It is not a cash refund of premiums
paid.
Back To Questions
(Answer To Question: 2)
Conseco Senior
is required to submit to the OIR for approval a General Notice that will go to
all insureds that received notice of the March 5, 2004, Public Hearing and/or to
all insureds that had an in-force home health care policy as of February 22,
2004. The General Notice is to be mailed by Conseco Senior no later than May
15, 2004. Please keep in mind this is only general notice advising you of the
three options – it is NOT an election form. You will not be required to
make a decision upon receipt of this General Notice. Conseco Senior will mail an
Election Notice form to you sometime after June 15, 2004.
Back To Questions
(Answer To Question: 3)
All policyholders that had an in-force home
health care policy as of February 22, 2004, and/or received notice of the March
5, 2004, Public Hearing, will receive the General Notice and Election Notice
form. This would include any policyholder that allowed their policy to lapse or
that requested to have the policy terminated within this time period.
Back To Questions
(Answer To Question: 4)
Conseco Senior and the Department of Financial
Services will be coordinating outreach programs for individuals that may want to
speak with a person face-to-face. It is too early to say exactly when and where
the programs will be but please check back with us once you receive your
Election Notice form. We should have more information available at that time.
You may call the Department of Financial Services toll free Consumer Helpline at
1-800-342-2762 within Florida or (850) 413-3131 from outside the state with any
questions about the Florida Order.
Back To Questions
(Answer To Question:
5)
We understand
that this could be somewhat confusing. There is one of two reasons why you may
be receiving this letter. First, if you have a long term care policy with Conseco Senior, you may be receiving this letter due to the Milkman vs.
Conseco class action settlement in 2002. Conseco Senior received approval
for a 27% rate increase on January 20, 2004, and this rate increase has
triggered the non-forfeiture benefit option for some of the long term care
policyholders. The letter you recently received does not have anything to do
with the recent Florida Order to Conseco Senior regarding its home health care
policies.
Secondly, if you
do have a home health care policy with Conseco Senior and you recently received
a non-forfeiture benefit option letter, it is probably because Conseco had
miscalculated the non-forfeiture benefit amount for some policyholders in 2002
and 2003. Since the error was discovered Conseco Senior is sending a corrected
letter to the affected policyholders. If you received notice of the March 5,
2004, public hearing and/or had an in-force home health care policy as of
February 22, 2004, you are still eligible for the three options laid out in the
April 20, 2004, Florida Order. You need to decide if you would rather accept the
non-forfeiture benefit option under the Milkman vs. Conseco settlement
(premiums paid minus claims) or wait to elect one of the options offered as a
result of the Florida Order. Please note that the non-forfeiture benefit option
under Option 3of the Florida Order is different from the non-forfeiture benefit
option under the Milkman settlement. The non-forfeiture option under Option 3 of
the Florida Order is 100% of premiums paid with no deduction for claims. If
you continue you have questions, please contact the Florida Department of
Financial Services toll free Consumer Helpline at 1-800-342-2762 within Florida
or (850) 413-3131 from outside the state.
Back To Questions
(Answer To Question:
6)
It is your
decision whether or not you want to get a policy with another insurance
company. We do want to be sure that you are aware of all of your options so
that you can determine what is best for you. If you are considering leaving Conseco Senior, please keep in mind that one of the options will be to select a
non-forfeiture benefit. If you select this option, you will have this set
dollar amount available to you for home health care claims in the future. All
home health care policyholders that received notice of the March 5, 2004, Public
Hearing and/or had in-force home health care policies as of February 22, 2004,
will receive an Election Notice form, even if those policies subsequently lapsed
or were terminated. You need to be sure you are covered by the new policy before
canceling your Conseco Senior policy and you need to compare the benefits
between the contracts. Do not let an agent pressure you into making a hasty and
ill-advised decision. If you have any questions about a licensed agent or
insurance company, please call the Florida Department of Financial Services our
toll free Consumer Helpline at 1-800-342-2762 within Florida or (850) 413-3131
from outside the state.
Back To Questions
(Answer To Question:
7)
You can call Conseco’s customer service line at 1-800-493-3286 to find out information about
your policy. If you have any questions about the Florida Order and how it may
affect your policy, you may call the Florida Department of Financial Services
toll free Consumer Helpline at 1-800-342-2762 within Florida or (850) 413-3131
from outside the state.
Back To Questions
(Answer To Question: 8)
The non-forfeiture benefit option provides for
the policyholder to have a “paid up” policy that equals 100% of the sum of all
premiums paid. This means that Conseco Senior will have a set dollar
amount available to pay an individual policyholder’s future claims. Claims
will be processed in accordance with the policy provisions outlined in the
insured’s existing policy until the pool of benefits have been exhausted.
The policyholder will no longer be obligated to pay any premiums for their home
health care policy.
This benefit is not a cash refund of
premiums paid – it is a set dollar amount that will be available for future
use. If the policyholder does not ever qualify for a claim, Conseco Senior
will use the money to pay claims for others.
Please note that the non-forfeiture option is
different for the policyholders that elect Option 1. The non-forfeiture benefit
under Option 1 is reduced by all claims paid while Option 2 and 3 is the
accumulation of all premiums paid without a reduction for prior claims paid.
Back To Questions
(Answer To Question: 9)
If you had the Survivor Waiver of Premium Benefit
under your original policy, you will have this coverage as a rider on the
replacement policy.
Back To Questions
(Answer To Question: 10)
No, the 211.6% filing Conseco made on February 5
and re-filed on March 18, 2004, was denied. However, Conseco Senior submitted
additional information and it appears that a 95% increase could be justifiable
if the policy terms remained unchanged.
Back To Questions
(Answer To Question: 11)
The OIR staff read all of the written comments
and reviewed the transcript from the public hearing in an effort to consider all
concerns expressed by policyholders and other interested persons. Many of the
requirements set forth in the Florida Order are a direct result of the comments
received. A copy of the Florida Order can be obtained by visiting the DFS web
page at
www.myfloridacfo.com. On the home page click on “Conseco Senior Health Insurance
Company Order” link, located on right hand side of the page. This link will also
allow you to view a copy of the General Notice and a list of Frequently-Asked
Questions to assist you in understanding how the Florida Order affects your Home
Health Care Policy.
Back To Questions
(Answer To Question: 12)
No. The Florida Order requires Conseco Senior
to make the same options available to all policyholders nationwide subject to
regulatory authority and approval by the individual states. Conseco Senior is
required to make all rate increase requests uniform in every state. This means
that Conseco Senior must request the same amount of increase for each state but
the final amount will be subject to each state’s regulatory authority and
approval.
Back To Questions
(Answer To Question: 13)
If you received a notice of the March 5, 2004,
Public Hearing and/or had an in-force home health care policy as of February 22,
2004, you are one of the affected policyholders. If you did not get a notice
for the hearing, you can check your policy to see if you have one of the
following policy forms (usually shown at the bottom left hand corner of the
first page of the contract): ATL-HHC1; ATL-HHC-2; ATL-HHC-3; ATL-HHC-4;
ATL-HHC-5; ATL-HHC-6; ATL-HHC-87; Transport 10918; 10922; and 10940A.
Back To Questions
(Answer To Question: 14)
If a policyholder fails to make an election by
the deadline, the default election will be Option 1 - to retain the current
policy and incur the maximum 50% rate increase the first year with no caps on
increases in future years. Conseco Senior will still have to prove the proposed
increase is actuarially sound and that it has improved claim-handing processes.
If the policyholder fails to make an election by the deadline and the home
health care policy thereafter lapses for any reason, the policyholder will be
entitled to a contingent non-forfeiture benefit. The contingent non-forfeiture
benefit is equal to 100% of cumulative premiums paid less claims paid.
Back To Questions
(Answer To Question: 15)
Conseco Senior admitted during the public
hearing that there has been poor management in past years that did contribute to
its troubles but current management was brought in to “clean up” these
practices. In order to address the claim-handing concerns, the OIR is
requiring Conseco Senior to conduct a comprehensive evaluation of its
claim-handling processes and submit the report to the OIR within 60 days of the
Order. The report must include changes the insurer proposes to make to improve
the claim process. In addition to this evaluation, the OIR will select an
independent contractor to conduct a separate evaluation of Conseco Senior’s
claim-handling processes. There will be continual follow-up with Conseco Senior
to be sure all necessary changes are implemented.
Back To Questions
(Answer To Question: 16)
If a home health care policyholder chooses to
elect Option 1, the insured will be subject to a maximum premium increase of 50%
the first year with no cap on future increases. Conseco Senior will still have
to demonstrate that the proposed rate increase is actuarially sound and that it
has improved claim-handing processes, but the amount of increase will not be
capped by the Florida Order. In addition, if the policy subsequently lapses,
the non-forfeiture benefit option will include a reduction of claims paid.
Options 2 and 3 do not have a reduction for claims from the accumulation of
premiums paid.
Back To Questions
(Answer To Question: 17)
It is your decision whether or not to pay the
annual premium. However, please keep in mind that all policy changes or rate
increases will be applied at the next premium due date after the 90 days advance
written notice. If a policyholder pays their premium annually, no changes or
increases will take effect on the policy until the year expires.
Back To Questions
(Answer To Question: 18)
We understand a large increase would be extremely difficult for many
policyholders to absorb so a contingent non-forfeiture benefit option is
available (Option 3).
Back To Questions
(Answer To Question: 19)
The Florida Order does not affect any policyholders that are currently
"on-claim". This means the policy benefits will not be changed and the
rates will not be increased. An "on-claim" policy means a policy where
there is an incurred claim on which the person is eligible for benefits; is
receiving benefits as of the date of the General Notice will be mailed; or if
the insured is within the elimination period and meets benefit triggers under
the policy. Once a policyholder is no longer eligible for benefits
(off-claim) and there are still benefits available under the policy, Conseco
Senior will send the insured an Election Notice form and they will have the same
options available under the Florida Order.
Back To Questions
(Answer To Question: 20)
The replacement policy with a reduction of
benefits (Option 2) is an option in order to limit the amount of premium rate
increases. We have a concern that the majority of policyholders could not
afford a substantial premium increase and would be left with no coverage. The
reduction of benefits still provides for a catastrophic situation. You can
choose to keep your existing policy and pay the increased premiums (Option 1) or
if you cannot afford this or the replacement policy with a smaller rate increase
(Option 2), you do have the option to select a contingent non-forfeiture benefit
(Option 3).
Back To Questions
(Answer To Question: 21)
Conseco Senior has approximately 18,653 policies
in-force with approximately 2,287 on-claim that will not be impacted by the
reduction of benefit or rate increase options until they are off-claim.
Back To Questions
(Answer To Question: 22)
All current home health care policyholders would
be eligible and qualify for the replacement policy, including those who had
in-force home health care policies as of February 22, 2004, and/or who received
notice of the March 5, 2004, Public Hearing (even if those policies subsequently
lapsed or were terminated). The policyholder needs to make this selection on
the Election Notice form and return the form by the deadline (within 90 days of
receiving advance written notice).
A policyholder will need to meet the new 20-day
elimination period and activities of daily living (ADL) or cognitive impairment
benefit triggers, if the original policy did not already have these provisions.
Back To Questions
(Answer To Question: 23)
It is possible that some of the younger or
healthy individuals will terminate their Conseco Senior policy and replace it
with another carrier if they are able to improve their benefits at a comparable
rate. However, in order to provide some protection for the remaining
policyholders, the first year rate increase under Option 1 is capped at 50% and
for Option 2 the increase is capped at 25%. In addition, for those choosing
Option 2, rate increases will be capped at 15% per year for the life of the
replacement policy. Before the OIR approves additional rate increases, Conseco
Senior will still have to demonstrate that requested rate increases are
actuarially justified and that it has improved its claim-handling practices.
Back To Questions
(Answer To
Question: 24)
Conseco Senior has experienced $510.8 million in operating losses and
reserved increases since 1999. The home health care policies
currently involved have generated losses of $337 million in Florida from
1998 through 2002. Unfortunately, without large rate increase or
policy benefit changes, the substantial losses are expected to continue.
Back To Questions
(Answer To Question: 25)
No, the benefits under the policy were locked in
when the non-forfeiture benefit option was chosen due to the Milkman vs.
Conseco class action settlement agreement. These policies are not
considered “in-force” so those individuals will not be receiving an Election
Notice form.
Back To Questions
(Answer To Question: 26)
No, after a 90-day advance written notice, Conseco Senior can implement the benefit changes, rate increase, or
non-forfeiture benefit option at the next premium due date. No changes will
take place until Conseco Senior has sent the Election Notice form with the
90-day advance written notice.
Back To Questions
(Answer To Question: 27)
Conseco Senior
Health Insurance Company (CSHIC) is one of many companies owned by the parent,
Conseco, Inc. The other companies under the Conseco umbrella have shifted $534
million from their assets to CSHIC. All of this money has gone to pay current
claims
and establish reserves for future
claims. According to the information submitted by Conseco Senior at the public
hearing, it will pay out $1.75 in claims for every premium dollar they receive
in 2004. By the year 2008, it projects that it will be paying out $2.71 in
claims for every dollar collected. These figures do not include any type of
administrative or claims processing costs, just pure claims.
The other Conseco companies cannot continue to
subsidize this block of business. The financial condition of the other Conseco
companies is being affected by this continual transfer of funds and cannot
continue.
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