West Branch, Iowa (National Park Service photo)

The Iowa Insurance Division wants issuers of long-term care insurance (LTCI) to come up with a systematic process for administering any “alternate plan of care” provisions.

The provisions give policyholders a chance to work with physicians and the policy issuer to come up with a plan for covered care. The plan might be different from the type of care normally covered by the policy.

The provisions allow for some flexibility in policy administration, but Nick Gerhart, the Iowa insurance commissioner, says in a recent bulletin sent to insurers that policyholders who see the provisions may end up thinking they are entitled to benefits they will not actually get.

“Insufficient explanations at the time of sale of such provisions may lead to confusion and uncertainty among policyholders,” Gerhart says. An insurer that sells a policy including the provision should make sure agents and brokers know how to describe the provision, according to Gerhart.

An insurer should document that any alternate plan of care actually covered is spelled out in writing, constitutes a qualified long-term care (LTC) expense under Internal Revenue Code rules, is subject to periodic review, and is not intended to pay for coverage the consumer could have elected when the consumer bought the coverage, the Iowa insurance commissioner says. 

Gerhart says insurers administering a request for an alternate plan of care should give the policyholder enough time to respond to any communications, answer any policyholder questions fully and quickly, and document any agreements about care in writing.