Iowans need legislation that would give owners of long term care insurance policies the same rights to contest claims as those given for health insurance in the state, Insurance Commissioner Susan Voss says.
Voss made her recommendation in a report on LTC insurance submitted to Gov. Chet Culver on Sept. 18.
Gov. Culver requested the report in June following media accounts of unfair claims-handling, high premium increases and other problems affecting LTC insurance.
When a health insurer denies coverage, Iowa law allows the policyholder to ask a neutral third party to rule on the issue. That right is not extended to owners of LTC policies, Voss notes in her report.
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In 1999, the Iowa legislature enacted a requirement that allows a policyholder to request that an outside expert to determine the medical necessity of a treatment that is rejected by a carrier.
“A similar system for long term care insurance claims would provide an efficient and cost effective mechanism for consumers to have medical claim issues resolved,” Voss said in her report.
LTC insurance carriers have also done a poor job of pricing their products, Voss said.
Not only has the industry often provided poor customer service, but the state insurance division itself has also fallen short sometimes when LTC policyholders asked for help, said Voss.
Carriers often underestimated price components, such as the number of policyholders who would file claims and policy lapse rates, Voss observed.
When policyholders or their families call to complain or ask questions, carriers often leave them on hold for excessive periods or lose documents consumers send to them, Voss said.
Her division also had sometimes failed to review some policyholder’s complaints thoroughly, Voss acknowledged. Her staff will conduct a thorough review of closed cases in the division’s files to evaluate the problem and advise further action, she said.
However, the division’s survey of the top 20 LTC carriers found claims denials and rate increases in the state, for the most part, were not significant, she reported.
Claim denial rates were generally below 1% in Iowa last year. As for rate increases requested by a total of 15 carriers, the average approved increase last year was about 21%, compared to a requested average increase of 33%, Voss reported.
Approved rate increases affected 29% of policies in the state, she reported. “This means that 71% of the Iowa long term care insurance market did not have a premium increase in 2006,” Voss stated.
Using a weighted average for the year shows the overall increase for LTC policies in the state was just over 7%, compared to about 10% the year before, she added.
Among other measures to improve consumer protections for LTC insurance, Voss said the state should authorize consumer-initiated rating hearings for LTC insurance, okay a prompt-pay law for LTC claims and adopt the 2006 Long Term Care Insurance Model Act proposed by the National Association of Insurance Commissioners.
Voss also made the following proposals in her report:
Require carriers to make a one-time offer of other types of LTC benefits to policyholders who have only nursing home coverage.