Conseco long term care policyholders need to make a decision soon that will impact their long-term health care security.
Over the next two weeks, as part of a December class action settlement offer valued at $25 million to $30 million, up to 750,000 holders of Conseco long-term care, home health care and nursing home policies will have to decide whether to participate in a class action settlement agreement or opt out of it and pursue individual remedies.
Their choices include accepting a new Conseco policy, accepting a nonforfeiture benefit or holding on to their existing Conseco LTC policy.
In addition to the LTC options, policyholders can also purchase a new Conseco annuity contract or indexed universal life policy. The option is being offered to provide an “added benefit” to contract holders, says Jim Kochinski, vice president and chief counsel with Conseco’s supplemental health division. Contract holders can also pass the right to purchase the annuity or UL policy on to family members.
Policyholders have to meet a Feb. 4 postmark deadline in anticipation that a settlement in Philadelphia Court of Common Pleas (Case No. 03775) will be approved during a hearing on Feb. 13. The case, Irene Milkman v. American Travellers Life Insurance Company, ATL Life Insurance Company, and Conseco Senior Health Insurance Company, covers policyholders who purchased Conseco policies from 1975 to the present.
Bonnie Burns, director of consumer education with California Health Advocates in Scotts Valley, Calif., notes the importance of one provision: a class member who has cancelled a policy or let it lapse because of a premium increase can participate in the settlement.
Burns says she is hearing from California contract holders who are concerned about making the right choices (see related story on this page.)
Those who choose to replace their current Conseco LTC policy will receive a Conseco LTC policy based on attained age and current medical underwriting.
Selection of the nonforfeiture benefit option will equal all premiums paid less any claims paid by a Conseco company. The sum will be kept by Conseco in a fund in case home health care or nursing home care is needed at a later date. “As far as we know, this has never been offered before,” says Kochinski.
If policyholders choose to keep their existing policies and premiums are increased beyond a prescribed amount, a contingent nonforfeiture option will be made available.
The settlement states that if an annuity is selected, the company will match 5% of the initial premium but not in cash. So, if, for example, a LTC contract holder were to purchase a $100,000 annuity, that policyholder would receive an annuity worth $105,000, Kochinski says.
If the UL option is chosen, Conseco will match a 50% non-cash payment of first year premium to a maximum of $500. So, the premium would be reduced by half up to the $500 maximum, he explains.
Reproduced from National Underwriter Life & Health/Financial Services Edition, January 21, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.