Is LTC A Thing Of The Past?

Posted on November 19, 2010 by Michael Quiat

Wouldn’t you know that the future of long term care insurance as we know it is being seriously called into question this November, the month some marketing genius has labeled “Long Term Care Awareness” month. Ron Lieber of the New York Times recently reported that MetLife would stop underwriting long term care policies for individuals on December 30, while at the same time halting new enrollment of LTC insurance for groups and other plans sponsored by an employer.
 

According to Mr. Lieber’s article, many other insurance companies, leaders in the LTC insurance filed, are requesting large premium increases or are also seriously contemplating going out of the LTC business. The reason given: Companies were not charging policyholders enough to cover the quickly expanding costs of LTC.
 

After the blizzard of comment we all have weathered during the recent health care battle in Washington, this should not surprise us. It is obvious that we are living longer (although the affluent seem to be getting a bigger share of longer life than the rest of us). And, although we seem to have made great strides in battling heart, lung, cancer and other killers, we seem not to have made much headway against the major LTC afflictions: Alzheimer’s and dementia, which fill our nursing homes and assisted living facilities.
 

With demographics (the Baby Boomers) indicating that these afflictions will increase without a major breakthrough, the future looks bleaker and bleaker.
Mr. Lieber’s article points out how far off the mark insurance companies were in pricing these LTC policies. Many factors caused this, the major ones being:
 

* INTEREST RATES - Everybody knows that rates have hit bottom and are staying there for a while. This hurts insurance company income which relies heavily on invested premiums’ interest income. Low interest income adds to the already heavy load of ever-increasing cost of long term care.
 

* MORBIDITY – Miscalculating the number of LTC claims the insurer will be carrying on its books and how death and other causes will affect the policy payout.
 

* PERSISTENCE – This is where more turns out to be less for LTC companies. One would think that having policyholders continue to pay premiums for insurance would be to the benefit of insurers. Not so in LTC where premiums do not cover outlay without normal interest income. In LTC, when a policyholder stops paying the premium, there is no further obligation on the insurer to pay for care, so all monies already paid in, less administrative costs, are pure profit to the company. However, if the policyholder keeps paying premiums until he or she requires LTC benefits, the insurer faces the real prospect of losing money, depending on how long the policyholder draws benefits. So, if a company based its premium on a larger number of policies stopping payment before claim than actually do, the insurer may find its premium schedule too low. Clearly, insurance company underwriters, in their haste to sell product, have grossly miscalculated the risk of this coverage and carriers are now battling to head off future losses.
 

Is the long term care insurance policy doomed? Will Baby Boomers be left without financial protection when they face the uncertainty of later years? With insurance companies being uncertain about the risks and interest earnings on the bottom, who can tell?
 

The perfect solution would be for science to unlock the secrets of Alzheimer’s and dementia so they may be done away with, or at least, alleviated to the point where people can function. Without such a breakthrough, the future for this type of insurance looks grim.
 

Anyone have any ideas?

 

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The Phone Is A Client's Lifeline

Posted on November 8, 2010 by Michael Quiat

The practice of law involves many things – knowledge of the law, writing ability, speaking ability, ability to present a logical argument in an interesting way, but, most of all, compassionate understanding of the “human condition” of clients.
 

It has always amazed us to hear from clients that the “human condition” aspect of practicing law can be so low on the totem pole of legal services to some practitioners. Helping a client through tough times should be priority Number One for all lawyers.
 

This is especially true of those pursuing disability income (ERISA and private) claims against insurance carriers who reflexively don’t pay. Claimants in these types of claims usually are laid low, both physically and mentally, by a devastating illness or injury which prevents them from performing their daily occupation, thereby cutting off income to themselves and their families.
 

Add to this condition, that in most cases the “nest egg” claimants may have set aside to try to secure their future, is eaten up quickly with ordinary housing and food costs which they need to keep themselves and the family going through the “no-pay” period. What a “human condition”:  Being seriously incapacitated and having no income!
 

It’s at that low point in their lives that disability income claimants comes to lawyers for help. They recognize that they stand very little chance of getting disability income payments from insurance companies unless they have knowledgeable legal representation to stand up to the well-staffed, specialized attorney corps insurers use to try to duck policy obligations.
 

It’s at that low point in their lives that most attorneys practicing disability income law recognize that their clients need more than just good “lawyering”. They also need good “peopling”. They need to project to the client that the client’s case is important to the lawyer and is getting the attention it needs to give it the best chance of resolution in the claimant’s favor. The most important thing, while a disability claim is pending, is for the client to really feel the lawyer understands the client’s economic situation and is doing everything in the lawyers’ power to get the job done quickly and correctly.
 

One of the smaller, but most important aspects of this caring lawyer-client attitude is one that some lawyers seem to ignore – returning phone calls promptly. If you are a client, what could give you a better feeling about how your case is being handled than to have your lawyer respond reasonably promptly to a phone call from you? It demonstrates that you are important enough to have your attorney take time out of a busy schedule to talk with you.
 

On the other hand, what could give a client a worse feeling than having the lawyer fail to return n calls for several days after they are made, or even fail to return them at all? Imagine what this phone call “non-etiquette” does to the psyche of a client who had already been laid low physically, mentally and financially. It is an inexcusable way to treat any client, let alone one who is incapacitated and pressing a disability income claim against an insurance company.
 

These types of client generally need liberal doses of TLC. They need encouragement and assurance that everything is being done to get their lives back on track. What they don’t need, most of all, is short shrift or even silence from the attorney they are banking on to help them.
 

Our law firm was started by a lawyer who was licensed in New Jersey in 1958 and 52 years later is still practicing law every day. One thing he insisted on when I joined the firm was that I and everyone else return client phone calls as soon as possible. Clients don’t hire you for your good looks, he said, they hire you to look after their interests. The best way to do that is to respond to them in a timely, efficient way. The best way to do that is to talk to them promptly when they let you know they want to talk.
 

By following this advice through the years, we have found that sometimes these older geezers know what they are talking about.

 

 

 

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