NU Online News Service, March 25, 2004, 1:24 p.m. EST – Penn Treaty American Corp., Allentown, Pa., is starting a Medicare supplement insurance program.[@@]

The insurer says it plans to begin selling Medigap insurance through independent agents in at least 30 states sometime this summer.

Penn Treaty has hired CHCS Services Inc., a unit of Universal American Financial Corp., Rye Brook, N.Y., to help it with administration of the new Medigap policies. CHCS also will process Penn Treaty’s Medigap program commissions and claims.

In related news, Penn Treaty says it has agreed to distribute its long term care and home health care insurance products through 2 other Universal American units, Pennsylvania Life and Pyramid Life.

Universal American units already write LTC products, but none of the Universal American LTC products has a benefit period longer than 3 years. The Universal American life units will sell Penn Treaty LTC products with longer benefit periods along with a Penn Treaty plan designed for individuals who are in poor health, Penn Treaty says.

Penn Treaty helped develop the modern LTC insurance market, but it ran into trouble in 2001 because of regulators’ belief that its LTC insurance sales were outstripping its capital reserves. The company has been working since then to revamp its operations and increase its capital level.