Volume 3 Number 39
September 25, 2006

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LONG-TERM CARE INSURANCE PROTECTION

In June 2006 Governor Jeb Bush signed into law new protections for long-term care insurance policyholders. The measure prevents insurers from contesting policies years after selling them and also stops the practice that results in rapidly escalating premiums for aging policyholders.

The Florida Department of Financial Services Consumer Services Division receives hundreds of questions and complaints each year regarding long-term care (LTC) insurance. Consumers have lodged complaints regarding companies accepting premiums for years and then contesting the policies when claims were filed.

Specifically, the new law includes the following provisions:
1. provides that a long-term care policy is incontestable after being in force for two years, except for non-payment of premium;
2. prohibits an insurer from imposing a new waiting period when a policy is replaced through an affiliated insurer;
3. eliminates the current minimum nursing home benefit of 24 months of coverage;
4. prohibits existing policyholders from being charged premiums that exceed the premiums the insurer is charging to new policyholders;
5. requires the company to provide new benefit options to existing policyholders faced with a significant rate increase, including a modified benefit plan at the existing premium or a paid-up policy equal to the sum of all premiums paid during the life of the policy; and
6. requires insurers to pool the claims experience of all affiliated carriers when calculating rates rather than only the policy forms providing similar benefits of the insured.

Factors to consider before purchasing long-term care insurance:

1. Do your homework before signing a contract.
2. Look for a financially strong insurer as you are purchasing a policy that may not be used for many years.
3. Buy a flexible policy that will help you meet tomorrow’s advances in medical care.
4. Consider inflation coverage to meet future health care costs
5. Know what the qualifying requirements must be met before benefits can be received (most policies require that you be unable to perform certain "activities of daily living.”)
6. Ask what services are covered by the policy and what is excluded.
7. Find out about the daily benefits, the maximum benefit period and the elimination period.
8. Consider whether you can afford the policy and whether you can medically qualify.

Statistics show that a 65-year-old person faces a 40 percent lifetime chance of a nursing home stay, according to the U.S. Department of Health and Human Services.

The Florida Department of Financial Services offers a useful consumer guide called Long-Term Care & Other Options for Seniors. You can have the guide sent to you by calling our helpline at 1-800-342-2762 (TDD 1-800-640-0996) or you may download the guide from the website at www.MyFloridaCFO.com.

Before you purchase an LTC policy or any other insurance or financial product, verify that the agent, company and the products offered are licensed in the state of Florida. You can verify this on the Florida Department of Financial Services website, http://www.MyFloridaCFO.com/consumers/verify_before_you_buy/, or by calling the consumer specialists at 1-800-342-2762.