DEPARTMENT ADVISES CONSECO
POLICYHOLDERS ON OPTIONS
response to numerous calls from seniors who have a home health care policy with
Conseco Senior Health Insurance Company, the Florida Department of Financial
Services is alerting them that notices are now arriving in their mailboxes with
options regarding their policies. Conseco Senior has approximately 18,650
policies in force.
On April 20, the Office of Insurance Regulation denied a rate increase request
of 212 percent and ordered the company to continue honoring the policies, along
with offering the following options to policyholders who had a policy in force
as of February 22, 2004.
Option 1 - Retain the current policy with no benefit changes but be
subject to a maximum 50 percent 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 notice from the company.
Option 2 - Choose a replacement policy. The policy will have a maximum 25
percent increase the first year with a 15 percent 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
Option 3 - Select the contingent non-forfeiture benefit option, which is
a “paid up” policy that equals 100 percent of the sum of all premiums paid.
This option is a set dollar amount held by Conseco Senior to pay an individual
policyholder’s future claims. It is not a cash refund of premiums paid. Claims
will be paid until the insured’s pool of benefits have been exhausted. The
policyholder will no longer be obligated to pay any premiums for their home
health care policy.
If a policyholder fails to make an election by the deadline, the default
election will be Option 1. 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.
Conseco Senior was also ordered by the Office of Insurance Regulation to address
claims-handling concerns after the company admitted during a public hearing that
there has been poor management of finances and claims. Conseco Senior Health
Insurance Company has experienced $510.8 million in operating losses and reserve
increases since 1999. The home health care policies currently involved have
generated losses of $337 million in Florida.
Consumers with additional questions can contact the Department of Financial
Services at 1-800-342-2762. Consumers can also call Conseco’s customer service
line at 1-800-493-3286.